**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 September 30, 2008





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 71006 1 ****


(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 filero
            
            Accelerated filero
            
            Non-accelerated
                filero
              (Do
                not check if a smaller reporting company)
            
            Smaller
                reporting companyx




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
      November 18, 2008 was 50,456,569 .











CYBRDI,
      INC.


FORM
      10-Q


QUARTERLY
      PERIOD ENDED September 30, 2008





INDEX


TABLE
        OF
        CONTENTS
 PagePART
                    I – FINANCIAL INFORMATIONItem
                    1:
                Financial
                    Statements
                
                3Item
                    2:
                Management’s
                    Discussion and Analysis of Financial Condition and Results of
                    Operations
                
                11Item
                    3:
                Quantitative
                    and Qualitative Disclosures About Market Risk
                
                18Item
                    4:
                Controls
                    and Procedures
                
                18PART
                    II – OTHER INFORMATIONItem
                    1:
                Legal
                    Proceedings
                
                19Item
                    1A:
                Risk
                    Factors
                
                19Item
                    2:
                Unregistered
                    Sales of Equity Securities and Use of Proceeds
                
                19Item
                    3:
                Defaults
                    Upon Senior Securities
                
                19Item
                    4:
                Submission
                    of Matters to a Vote of Security Holders
                
                19Item
                    5:
                Other
                    Information
                
                19Item
                    6:
                Exhibits
                
                19


2


**PART
      I. FINANCIAL INFORMATION**




**Item
      1 Financial Statements**


**CYBRDI,
        INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        BALANCE SHEETS**
  **September 30, 2008**
              
              **December 31, 2007****(Unaudited)**
              
              **(Audited)****ASSETS****CURRENT
                  ASSETS**Cash
                  and equivalents
              
              $
              430,532
              
              $
              637,056Accounts
                  receivable
              
              
              9,744
              
              
              3,364Inventories
              
              
              406,495
              
              
              390,421Deferred
                  tax assets
              
              
              6,666
              
              
              -Loan
                  to unaffiliated company
              
              
              1,001,488
              
              
              1,000,740Other
                  receivables and prepaid expenses
              
              
              184,305
              
              
              145,805TOTAL
                  CURRENT ASSETS
              
              
              2,039,230
              
              
              2,177,386PROPERTY,
                  PLANT AND EQUIPMENT, NET
              
              
              474,912
              
              
              493,273CONSTRUCTION
                  IN PROGRESS
              
              
              3,673,276
              
              
              1,929,002INTANGIBLE
                  ASSETS, NET
              
              
              3,904,541
              
              
              3,700,195DEFERRED
                  TAX ASSETS
              
              
              18,593
              
              
              -**TOTAL
                  ASSETS**
              
              
              10,110,552
              
              
              8,299,856**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY****CURRENT
                  LIABILITIES**Accounts
                  payable
              
              
              3,316
              
              
              3,917Accrued
                  expenses
              
              
              875,378
              
              
              1,700,363Current
                  maturities of long term debt
              
              
              1,399,137
              
              
              -Customers
                  deposits
              
              
              73,782
              
              
              74,321Loan
                  from related companies
              
              
              1,222,404
              
              
              274,175Amount
                  due to stockholders/officers
              
              
              387,963
              
              
              432,494Other
                  payables
              
              
              37,965
              
              
              45,826TOTAL
                  CURRENT LIABILITIES
              
              
              3,999,945
              
              
              2,531,096MINORITY
                  INTERESTS
              
              
              1,518,432
              
              
              1,499,125**TOTAL
                  LIABILITIES**
              
              
              5,518,377
              
              
              4,030,221**STOCKHOLDERS’
                  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, 50,456,569
                  shares
                  issued and outstanding
              
              
              -
              
              
              -Additional
                  paid-in capital
              
              
              3,571,864
              
              
              3,571,864Reserve
                  funds
              
              
              336,885
              
              
              336,885Accumulated
                  deficit
              
              
              (442,077
              )
              
              (301,323
              )Accumulated
                  other comprehensive income
              
              
              1,125,503
              
              
              662,209**TOTAL
                  STOCKHOLDERS’ EQUITY**
              
              
              4,592,175
              
              
              4,269,635**TOTAL
                  LIABILITIES AND STOCKHOLDERS’ EQUITY**
              
              $
              10,110,552
              
              $
              8,299,856
  See
        notes
        to consolidated financial statements.




3




**CYBRDI,
        INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS (UNAUDITED)**
  **Three Months Ended**
                **September 30, 2008**
              
              **Three Months Ended**
                **September 30, 2007**
              
              **Nine Months Ended**
                **September 30, 2008**
              
              **Nine Months Ended**
                **September 30, 2007****(Unaudited)**
              
              **(Unaudited)**
              
              **(Unaudited)**
              
              **(Unaudited)****Revenue**Products
              
              $
              125,918
              
              $
              178,649
              
              $
              355,834
              
              $
              496,370Service
                  rendered
              
              
              139
              
              
              8,333
              
              
              13,002
              
              
              47,171**Total
                  revenue**
              
              
              126,057
              
              
              186,982
              
              
              368,836
              
              
              543,541**Cost
                  of Sales**Products
              
              
              75,396
              
              
              98,348
              
              
              195,046
              
              
              229,942Service
                  rendered
              
              
              -
              
              
              -
              
              
              -
              
              
              3,962**Total
                  cost of sales**
              
              
              75,396
              
              
              98,348
              
              
              195,046
              
              
              233,904**Gross
                  Profit**
              
              
              50,661
              
              
              88,634
              
              
              173,790
              
              
              309,637**Operating
                  Expenses:**Selling
                  and distribution expenses
              
              
              23,953
              
              
              29,055
              
              
              44,652
              
              
              88,332General
                  and administrative expenses
              
              
              171,922
              
              
              192,934
              
              
              434,128
              
              
              470,032**Total
                  Operating Expenses**
              
              
              195,875
              
              
              221,989
              
              
              478,780
              
              
              558,364**Loss
                  from Operations**
              
              
              (145,214
              )
              
              (133,355
              )
              
              (304,990
              )
              
              (248,727
              )**Other
                  Income/(Expense)**Interest
                  income
              
              
              14,440
              
              
              16,419
              
              
              43,408
              
              
              94,261Other
                  (expense) income, net
              
              
              (5,827
              )
              
              1,729
              
              
              115,578
              
              
              70,264**Total
                  Other Income, Net**
              
              
              8,613
              
              
              18,148
              
              
              158,986
              
              
              164,525**Loss
                  before Income Taxes**
              
              
              (136,601
              )
              
              (115,207
              )
              
              (146,004
              )
              
              (84,202
              )Income
                  Taxes Benefit
              
              
              24,556
              
              
              -
              
              
              24,556
              
              
              -**Loss
                  before Minority Interest**
              
              
              (112,045
              )
              
              (115,207
              )
              
              (121,448
              )
              
              (84,202
              )Minority
                  Interest
              
              
              (5,096
              )
              
              (9,208
              )
              
              19,306
              
              
              9,171**Net
                  Loss**
              
              $
              (106,949
              )
              $
              (105,999
              )
              $
              (140,754
              )
              $
              (93,373
              )Other
                  Comprehensive Income:Foreign
                  Currency Translation Gain
              
              
              62,839
              
              
              143,886
              
              
              463,294
              
              
              237,413**Comprehensive
                  ( Loss) Income**
              
              $
              (44,110
              )
              $
              37,887
              
              $
              322,539
              
              $
              144,040Net
                  Loss Per Common ShareBasic
                  and Diluted
              
              $
              (0.00
              )
              $
              (0.00
              )
              $
              (0.00
              )
              $
              (0.00
              )Weighted
                  Average Number of Shares OutstandingBasic
                  and Diluted
              
              
              50,456,569
              
              
              50,456,569
              
              
              50,456,569
              
              
              50,456,569
  See
        notes
        to consolidated financial statements.


4


**CYBRDI
        INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS (UNAUDITED)**
  **For Nine Months Ended**
              
              **For Nine Months Ended****September
                  30, 2008**
              
              **September
                  30, 2007****(Unaudited)**
              
              **(Unaudited)****CASH
                  FLOWS FROM OPERATING ACTIVITIES****Net
                  Loss**
              
              $
              (140,754
              )
              $
              (93,373
              )**Adjustments
                  to Reconcile Net Loss to Net Cash Provided by Operating
                  Activities:**Depreciation
                  and amortization
              
              
              129,997
              
              
              125,350Loss
                  on disposal of fixed assets
              
              
              177
              
              
              4,142.00Deferred
                  taxes benefit
              
              
              (24,556
              )
              
              -Minority
                  interest
              
              
              19,307
              
              
              9,171**Changes
                  in Operating Assets and Liabilities:**Accounts
                  receivable
              
              
              (5,706
              )
              
              10,451Inventories
              
              
              12,051
              
              
              6,987Other
                  receivable and prepaid expenses
              
              
              (25,749
              )
              
              80,786Accounts
                  payable and accrued expenses
              
              
              (886,381
              )
              
              18,837Other
                  payables
              
              
              (10,488
              )
              
              3,302Customer
                  deposits
              
              
              (5,644
              )
              
              -**Net
                  Cash (Used in) Provided by Operating Activities**
              
              
              (937,746
              )
              
              165,653**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Purchase
                  of property, plant, and equipment
              
              
              (8,178
              )
              
              (36,353
              )Payment
                  for construction in progress
              
              
              (1,610,390
              )
              
              (37,525
              )Purchase
                  intangible assets
              
              
              -
              
              
              (3,123,458
              )Proceeds
                  from property disposal
              
              
              -
              
              
              395Proceeds
                  from loan to affiliated companies
              
              
              -
              
              
              266,923Proceeds
                  from loan to unaffiliated companies
              
              
              68,544
              
              
              2,178,343**Net
                  Cash Used in Investing Activities**
              
              
              (1,550,024
              )
              
              (751,675
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Proceeds
                  from long-term debt
              
              
              1,399,137
              
              
              -Proceeds
                  from loan from related companies
              
              
              863,653
              
              
              -Proceeds
                  from minority shareholders contribution
              
              
              -
              
              
              354,319Proceeds
                  from shareholders/officers
              
              
              181,764
              
              
              257,473Payment
                  to shareholders/officers
              
              
              (227,438
              )
              
              (188,038
              )**Net
                  Cash Provided by Financing Activities**
              
              
              2,217,116
              
              
              423,754**NET
                  DECREASE IN CASH AND EQUIVALENTS**Net
                  Decrease in Cash and Equivalents
              
              
              (270,655
              )
              
              (162,268
              )Effect
                  of Exchange Rate Changes on Cash and Equivalents
              
              
              64,131
              
              
              124,190Cash
                  and Equivalents, at Beginning of Period
              
              
              637,056
              
              
              782,899**Cash
                  and Equivalents, at End of Period**
              
              $
              430,532
              
              $
              744,821
  See
        notes
        to 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, 2007 was derived
        from
        the audited consolidated financial statements included in the Company’s Annual
        Report on Form 10-KSB. These interim financial statements should be read
        in
        conjunction with that report.
 
 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) was incorporated on August 1, 1966, under
        the
        laws of the State of California. Until June 2004, the Company’s business
        consisted primarily 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. At that time, the Company placed its emphasis on attempting
        to find a buyer for the Company.
 
 In
        November 2004, the Company formed a wholly-owned subsidiary, Certron Acquisition
        Corp., a Maryland corporation ("Acquisition Sub") to acquire all of the
        ownership interests in Cybrdi, Inc., a privately held company incorporated
        in
        the State of Maryland ("Cybrdi Maryland"). The Company acquired Cybrdi Maryland
        in exchange for 47,328,263 shares of its common stock in a merger transaction.
        As a result of the merger, the former shareholders of Cybrdi Maryland acquired
        approximately 93.8% of the outstanding shares of the Company’s common stock. As
        a result of the ownership interests of the former shareholders of Cybrdi
        Maryland, for financial statement reporting purposes, the transaction was
        treated as a reverse acquisition, with Cybrdi Maryland deemed the accounting
        acquirer and Certron Corporation deemed the accounting acquiree. Historical
        information of the surviving company is that of Cybrdi Maryland.
 
 Cybrdi
        Maryland was established in 2001 to acquire an interest in biogenetic products
        commercialization and related services entities in Asia. On March 5, 2003,
        Cybrdi Maryland acquired an 80% interest 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 (the “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.
  6
  Chaoying
        Biotech is a sino-foreign equity joint venture between Shaanxi Chao Ying
        Personal Care Group Ltd. (the “Chinese Partner”), a PRC corporation and
        Immuno-OncoGenomics Inc. (the “Foreign Partner”), a US corporation. The joint
        venture agreement has a 15 year operating period starting from its formation
        in
        July 2000 and may be extended upon mutual consent. The principal activities
        of
        Chaoying Biotech are the research, manufacture and sale of various high-quality
        tissue arrays and related services, in the PRC. Cybrdi has established a
        comprehensive and integrated system to collect various normal and diseased
        human
        tissues, and continuing throughout the manufacturing process of hundreds
        of
        tissue microarrays. Together with DNA (gene) array techniques, tissue microarray
        technology is a powerful tool for the rapid analysis of molecular targets,
        discovery and assessment of new therapeutics, as well as helpful in determining
        the prognosis of a disease.
 
 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 Shaanxi
        Chaoying Personal Care Group Co., Ltd, 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 million (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
        the Shandong province of P.R.China. On September 5, 2007, Shandong Commercial
        government had approved this acquisition and ownership title of SD Chaoying
        had
        been transferred to Chaoying Biotech from its Chinese Partner. The future
        business of SD Chaoying will primarily be focused on culture and entertainment,
        including Spa activities, cosmetic and personal care, body building, gambling,
        catering, and lodging, SD Chaoying will have a specific emphasis on casino
        gambling, which has been approved by Shandong Administration for Civil Affairs.
        As of September 30, 2008, SD Chaoying was still in the development stage
        and
        there is no actual business. The development and construction of facility
        is
        anticipated to be completed in July 2009 **.**
 
 **3.
        Use of Estimates:**
 
 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 2008, SD Chaoying received a grant in the amount of
        $117,122 (equivalent to RMB 818,000) from the Shangdong Government for the
        Shandong Culture & Entertainment Square project that SD Chaoying created in
        2007. The Company included the government grants in the other income, net
        in the
        accompanying statements of operations and comprehensive income/
        (loss).
 
 **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 Company
        is in the process of evaluating the new disclosure requirements under SFAS
        162.
  8
  In
        March
        2008, the Financial Accounting Standards Board (“FASB”) issued Statement of
        Financial Accounting Standards (“SFAS”) No.161,“Disclosures about Derivative
        Instruments and Hedging Activities — An Amendment of SFAS No. 133” (“SFAS 161”).
        SFAS 161 seeks to improve financial reporting for derivative instruments
        and
        hedging activities by requiring enhanced disclosures regarding the impact
        on
        financial position, financial performance, and cash flows. To achieve this
        increased transparency, SFAS 161 requires (1) the disclosure of the fair
        value
        of derivative instruments and gains and losses in a tabular format;(2) the
        disclosure of derivative features that are credit risk-related; and
        (3)cross-referencing within the footnotes. SFAS 161 is effective for financial
        statements issued for fiscal years and interim periods beginning after November
        15, 2008 (that is, January 1, 2009, for entities with calendar year-ends).,
        with
        early application encouraged. The Company is in the process of evaluating
        the
        new disclosure requirements under SFAS 161.
  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 company is currently in the process of evaluating
        the effect, if any, the adoption of SFAS No. 160 will have on its consolidated
        results of operations, financial position, and financial disclosure.
  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 acquire 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 Company is currently evaluating
        the impact that adopting SFAS 141R will have on its financial statements.
  **NOTE
        B – ASSETS**
 
 The
        September 30, 2008 balance sheet included total current assets of $2,039,230
        and
        non-current assets of $8,071,322. Of these amounts, $430,532 in cash and
        equivalents and $9,744 in accounts receivable are planned for funding current
        operations and for future business expansion.
  9
  Other
        current assets also included inventories, deferred tax assets, loan to
        unaffiliated company, and other receivable and prepaid expenses. Inventories
        are
        mainly finished goods and very few raw materials, work in process, 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
        September 30, 2008, current assets also included the deferred tax assets
        of
        $6,666 which resulted primarily from (i)
        deferred depreciation of leasehold improvement costs of
        Chaoying Biotech, (ii)
        deferred overhead costs of expenditure s
        relating to Chaoying Biotech and (iii) the amortization of organizational
        costs
        of SD Chaoying.
 
 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 29.3Million (equivalent to $3,849,185) since January
        2006. As of September 30, 2008, the loan balance had been reduced to RMB
        6.8
        Million (equivalent to $1,001,488). The interest rate for these loans initially
        was initially 8% per year, and subsequently reduced to 5% as of October 9,
        2006.
        The Company anticipates being repaid most of the outstanding loan amount
        from
        QuanYe before the end of April 2009.
 
 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 $3,673,276 mainly consists of development and construction of a
        casino
        in Shandong Province; which will be transferred to fixed assets in SD Chaoying
        when it is finished. Intangible assets include a tissue chip patent and land
        use
        right. 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 September 30,
        2008, SD Chaoying is still in the development stage, accordingly, the land
        use
        right will be amortized in the estimated useful life from SD Chaoying operating.
 
 As
        of
        September 30, 2008, 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 $19,534 and $941 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.
 
 10
 
 **NOTE
        C - LIABILITIES**
 
 As
        of
        September 30, 2008, the balance sheet included total liabilities of $5,518,377
        of which $1,518,432 represents the 20% minority interest in Chaoying Biotech
        and  16.67%
        minority interest in SD Chaoying, and which $3,999,945 in the amount of the
        current liabilities, Included in the current liabilities was due to current
        maturity of Long term debt of $1,399,137 (equivalent to RMB9.5million) from
        Changle Rural Credit Union, which is a bank located in Shandong Province
        of the
        PRC. This long-term debt had been pledged by the Company’s land use right in SD
        Chaoying which is worth approximately $3.2 million (equivalent to RMB22
        million).the term of debt were from January 31, 2008 to May 30, 2009 (total
        sixteen months). The interest rate for this debt will be 30% more of the
        basic
        interest rate from “The People’s Bank of China” in PRC. At the time of the
        filing of this Form 10-Q, the basic monthly interest rate in China is 6.3%.
        Included in the current liabilities was $1,222,404 of loans from related
        companies, Xi’an Yanfeng Biotechnology Co., Ltd., Shaanxi Yanfeng Real Estate
        Co. Ltd, and Shaanxi Chaoying Personal Care Group Co. These loans are
        non-interest bearing and have no set repayment terms. Also included in the
        current liabilities was $387,963 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.
 
 **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 September 30, 2008, the Company had 50,456,569 shares
        of
        common stock issued and outstanding. Historical information of the surviving
        company is that of Cybrdi – Maryland.
 
 **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. 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%. The Company enjoys a 50% reduction
        in preferential policy of CIT, according to Western Developing Plan of the
        PRC,
        making the company’s effective tax rate approximately 12.5% in the year 2008.
 
 The
        Company’s income tax expense includes U.S. and PRC income taxes. There were no
        U.S. current taxes for nine months ended September 30, 2008 according to
        net
        loss occurred 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 the shutting down of the U.S. operating company in Maryland in
        October 2007. There were also no PRC current taxes for the nine months ended
        September 30, 2008, since there is no taxable income after offsetting the
        prior
        period losses carried forward in PRC Companies. There were, however, deferred
        tax benefits $24,556 for nine months ended September 30, 2008.
 
 **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-KSB for the year ended December 31, 2007.
 
 **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.
  11
  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
 
 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 since 2009, which 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. Commencing in
        September 2007, SD Chaoying began constructing the facility, 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 July 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 SEPTEMBER 30, 2008 COMPARED TO THREE MONTHS ENDED SEPTEMBER
        30, 2007
 **Three Months Ended**
                  **September 30, 2008**
                
                **Three Months Ended**
                  **September 30, 2007**
                
                **2008 Vs 2007**
                  **Increase/ (decrease)****(Unaudited)**
                
                **(Unaudited)****Revenue**Products
                
                $
                125,918
                
                
                
                
                $
                178,649
                
                
                
                
                $
                (52,731
                )
                
                -30
                %Service
                    rendered
                
                
                139
                
                
                
                
                
                8,333
                
                
                
                
                
                (8,194
                )
                
                -98
                %**Total
                    revenue**
                
                
                126,057
                
                
                
                
                
                186,982
                
                
                
                
                
                (60,925
                )
                
                -33
                %**Cost
                    of Sales**Products
                
                
                75,396
                
                
                60
                %
                
                98,348
                
                
                55
                %
                
                (22,952
                )
                
                -23
                %Service
                    rendered
                
                
                -
                
                
                
                
                
                -
                
                
                
                
                
                -**Total
                    cost of sales**
                
                
                75,396
                
                
                
                
                
                98,348
                
                
                
                
                
                (22,952
                )
                
                -23
                %**Gross
                    Profit**
                
                
                50,661
                
                
                40
                %
                
                88,634
                
                
                47
                %
                
                (37,973
                )
                
                -43
                %**Operating
                    Expenses:**Selling
                    and distribution expenses
                
                
                23,953
                
                
                
                
                
                29,055
                
                
                
                
                
                (5,102
                )
                
                -18
                %General
                    and administrative expenses
                
                
                171,922
                
                
                
                
                
                192,934
                
                
                
                
                
                (21,012
                )
                
                -11
                %**Total
                    Operating Expenses**
                
                
                195,875
                
                
                
                
                
                221,989
                
                
                
                
                
                (26,114
                )
                
                -12
                %**Loss
                    from Operations**
                
                
                (145,214
                )
                
                
                
                
                (133,355
                )
                
                
                
                
                (11,859
                )
                
                9
                %**Other
                    Income/(Expense)**Interest
                    income
                
                
                14,440
                
                
                
                
                
                16,419
                
                
                
                
                
                (1,979
                )
                
                -12
                %Other
                    (expense) income, net
                
                
                (5,827
                )
                
                
                
                
                1,729
                
                
                
                
                
                (7,556
                )
                
                -437
                %**Total
                    Other Income, Net**
                
                
                8,613
                
                
                
                
                
                18,148
                
                
                
                
                
                (9,535
                )
                
                -53
                %**Loss
                    before Income Taxes**
                
                
                (136,601
                )
                
                
                
                
                (115,207
                )
                
                
                
                
                (21,394
                )
                
                19
                %Income
                    Taxes Benefit
                
                
                24,556
                
                
                
                
                
                -**Loss
                    before Minority Interest**
                
                
                (112,045
                )
                
                
                
                
                (115,207
                )
                
                
                
                
                3,162
                
                
                -3
                %Minority
                    Interest
                
                
                (5,096
                )
                
                
                
                
                (9,208
                )
                
                
                
                
                4,112
                
                
                -45
                %**Net
                    Loss**
                
                $
                (106,949
                )
                
                
                
                $
                (105,999
                )
                
                
                
                $
                (950
                )
                
                1
                %
  13
  **Net
        Sales**
 
 The
        Company generated two categories of revenues: tissue chip & kits products
        and services. The net sales decreased $60,925 to $126,057 for the three months
        ended September 30, 2008 from $186,982 for the three months ended September
        30,
        2007, a reduction of 33%.
 
 Tissue
        Chip & Kit Products: The net sales decreased $52,731 to $125,918 for the
        three months ended September 30, 2008 as compared to $178,649 for the three
        months ended September 30, 2007, a decrease of 30%. **** The
        decrease in net sales of tissue chip & kit product was primarily
        attributable to the termination of Cybrdi - Maryland’s operations in October
        2007. During the third quarter of 2007, the net sales of tissue chip & chip
        products had included $49,847 of sales generated by Cybrdi - Maryland, whereas
        there were no such sales during the third quarter of 2008.
 
 Services:
        Fewer technical service orders were received for the three months ended
        September 30 2008 as compared to the same period in 2007, resulting in a
        decrease in sales of $8,194 to $139 from $8,333 for the three months ended
        September 30, 2008 as compared to September 30, 2007, a decrease of
        98%.  This
        decrease was primarily attributable to reduced service demand in China and
        the
        termination of Cybrdi- Maryland’s operations in October 2007.
 
 **Gross
        Margin**
 
 Gross
        margin as a percentage of sales decreased to 40% for the three months ended
        September 30, 2008 from 47% for three months ended September 30, 2007. Gross
        profit for the three months ended September 30, 2008 decreased $37,973 to
        $50,661 from $88,634 for the three months ended September 30, 2007, a decrease
        of 43%. The reason for the decrease was primarily due to decreased sales
        quantities and unit sales price of tissue chip sold to the Company’s PRC
        clients, and kit products with lower individual unit sales prices that were
        sold
        to the Company’s US distributor during the quarter ended September 30, 2008 as
        compared to the same quarter of 2007.
 
 **Operating
        Expenses**
 
 The
        Company’s operating expenses decreased $26,114 to $195,875 for the three months
        ended September 30, 2008 from $221,989 for the three months ended September
        30,
        2007, a decrease of 12%. This was primarily due to a decrease in general
        and
        administrative expenses of $21,012 to $171,922 for the three months ended
        September 30, 2008 compared to $192,934 for the three months ended September
        30,
        2007. In addition, the Company also had a slight decrease in selling expenses
        of
        $5,102 to $23,953 for the three months ended September 30, 2008 compared
        to
        $29,055 for the three months ended September 30, 2007. The decrease in selling
        expenses was primary due to the termination of the Cybrdi-Maryland operations
        in
        October 2007. For the three months ended September 30, 2007, the selling,
        expenses had included $13,413 of expenditures from Cybrdi-Maryland. In addition,
        the decrease in general and administrative expenses was primarily a result
        of
        the termination of the Cybrdi-Maryland operations, as the general and
        administrative expenses for the three months ended September 30, 2007, included
        $52,571 of expenditures from Cybrdi-Maryland.
 
 **Other
        Income**
 
 Interest
        income decreased by $1,979 to $14,440 for the three months ended September
        30,
        2008 as compared to $16,419 for the three months ended September 30, 2007,
        a
        decrease of 12%. Most of the interest income was earned from the loans to
        QuanYe .
        The
        repayment of the loans by Quanye in 2007 reduced the amount of interest income
        received by the Company in 2008.
 
 Other
        (expense) income, net decreased by $7,556 to $(5,827) for the three months
        ended
        September 30, 2008 compared to $1,729 for the three months ended September
        30,
        2007, a decrease of 437%. The reason was primarily attributable to Chaoying
        Biotech incurring additional abnormal manufacturing expenditures of $6,283
        during the three months ended September 30, 2008.
  14
  **Income
        Taxes**
 
 The
        Company did not record U.S. and PRC current income tax for three months ended
        September 30, 2008, and 2007, since there was no taxable income during these
        periods. However, the Company had recorded a deferred benefit for income
        tax in
        amount of $24,556 and $0 during the three months ended September 30, 2008
        and
        2007, respectively, due to the time
        difference between the book basis and the tax basis that will be deductible
        in
        the future year
 
 FOR
        THE
        NINE MONTHS ENDED SEPTEMBER 30, 2008 COMPARED TO NINE MONTHS ENDED SEPTEMBER
        30,
        2007
 **Nine Months Ended**
                  **September 30, 2008**
                
                **Nine Months Ended**
                  **September 30, 2007**
                
                **2008 Vs 2007**
                  **Increase/ (decrease)****(Unaudited)**
                
                **(Unaudited)****Revenue**Products
                
                $
                355,834
                
                
                
                
                $
                496,370
                
                
                
                
                $
                (140,536
                )
                
                -28
                %Service
                    rendered
                
                
                13,002
                
                
                
                
                
                47,171
                
                
                
                
                
                (34,169
                )
                
                -72
                %**Total
                    revenue**
                
                
                368,836
                
                
                
                
                
                543,541
                
                
                
                
                
                (174,705
                )
                
                -32
                %**Cost
                    of Sales**
                
                
                -
                
                
                
                
                
                -Products
                
                
                195,046
                
                
                55
                %
                
                229,942
                
                
                46
                %
                
                (34,896
                )
                
                -15
                %Service
                    rendered
                
                
                -
                
                
                
                
                
                3,962
                
                
                8
                %
                
                (3,962
                )
                
                -100
                %**Total
                    cost of sales**
                
                
                195,046
                
                
                53
                %
                
                233,904
                
                
                43
                %
                
                (38,858
                )
                
                -17
                %**Gross
                    Profit**
                
                
                173,790
                
                
                47
                %
                
                309,637
                
                
                57
                %
                
                (135,847
                )
                
                -44
                %**Operating
                    Expenses:**Selling
                    and distribution expenses
                
                
                44,652
                
                
                
                
                
                88,332
                
                
                
                
                
                (43,680
                )
                
                -49
                %General
                    and administrative expenses
                
                
                434,128
                
                
                
                
                
                470,032
                
                
                
                
                
                (35,904
                )
                
                -8
                %**Total
                    Operating Expenses**
                
                
                478,780
                
                
                
                
                
                558,364
                
                
                
                
                
                (79,584
                )
                
                -14
                %**Loss
                    from Operations**
                
                
                (304,990
                )
                
                
                
                
                (248,727
                )
                
                
                
                
                (56,263
                )
                
                23
                %**Other
                    Income/(Expense)**Interest
                    income
                
                
                43,408
                
                
                
                
                
                94,261
                
                
                
                
                
                (50,853
                )
                
                -54
                %Other
                    income, net
                
                
                115,578
                
                
                
                
                
                70,264
                
                
                
                
                
                45,314
                
                
                64
                %**Total
                    Other Income, Net**
                
                
                158,986
                
                
                
                
                
                164,525
                
                
                
                
                
                (5,539
                )
                
                -3
                %**Loss
                    before Income Taxes**
                
                
                (146,004
                )
                
                
                
                
                (84,202
                )
                
                
                
                
                (61,802
                )
                
                73
                %Income
                    Taxes Benefit
                
                
                24,556
                
                
                
                
                
                -
                
                
                
                
                
                24,556**Loss
                    before Minority Interest**
                
                
                (121,448
                )
                
                
                
                
                (84,202
                )
                
                
                
                
                (37,246
                )
                
                44
                %Minority
                    Interest
                
                
                19,306
                
                
                
                
                
                9,171
                
                
                
                
                
                10,135
                
                
                111
                %**Net
                    Loss**
                
                $
                (140,754
                )
                
                
                
                $
                (93,373
                )
                
                
                
                $
                (47,381
                )
                
                51
                %
 
 15




**Net
      Sales**





The
      Company generated two categories of revenues: tissue chip & kits products
      and services. The net sales decreased $174,705 to $368,836 for the nine months
      ended September 30, 2008 from $543,541 for the nine months ended September
      30,
      2007, a decrease of 32%.





Tissue
      Chip & Kit Products: The net sales decreased $140,536 to $355,834 for the
      nine months ended September 30, 2008 as compared to $496,370 for the nine months
      ended September 30, 2007, a decrease of 28%. **** The
      decrease in net sales of tissue chip & kit products was primarily
      attributable to the termination of Cybrdi - Maryland’s operations in October
      2007. During the nine months ended September 30, 2007, the net sales of tissue
      chip & chip product had included $115,798 of sales generated by Cybrdi -
      Maryland, whereas there were no such sales during the third quarter of 2008.





Services:
      Fewer technical service orders were received during the nine months ended
      September 30 2008 as compared to the same period of 2007, resulting in a
      decrease in sales of $34,169 to $13,002 from $47,171 for the nine months ended
      September 30, 2008 as compared to September 30, 2007, a decrease of
      72%.  This
      decrease was primarily attributable to reduced service demand in China and
      the
      termination of Cybrdi-Maryland’s operations in October 2007.





**Gross
      Margin**





Gross
      margin as a percentage of sales decreased to 47% for the nine months ended
      September 30, 2008 from 57% for nine months ended September 30, 2007. Gross
      profit for the nine months ended September 30, 2008 decreased $135,847 to
      $173,790 from $309,637 for the nine months ended September 30, 2007, a decrease
      of 44%. The reason for the decrease was primarily due to decreased sales
      quantities and unit sales price of tissue chip sold to the Company’s PRC
      clients, and kit products with lower individual unit sales prices that were
      sold
      to the Company’s US distributor during the nine months ended September 30, 2008
      as compared to the same period of 2007.





**Operating
      Expenses**





The
      Company’s operating expenses decreased $79,584 to $478,780 for the nine months
      ended September 30, 2008 from $558,364 for the nine months ended September
      30,
      2007, a decrease of 14%. This was primarily due to a decrease in selling
      expenses of $43,680 to $44,652 for the nine months ended September 30, 2008
      compared to $88,332 for the nine months ended September 30, 2007, and a decrease
      in general and administrative expenses of $35,904 to $434,128 for the nine
      months ended September 30, 2008 compared to $470,032 for the nine months ended
      September 30, 2007. The decrease in selling expenses was primary due to the
      termination of the cooperation agreement with the Leller Company on December
      31,
      2007, and the termination of the Cybrdi-Maryland operations in October 2007.
      For
      the nine months ended September 30, 2007, the selling, expenses had included
      $32,201 of expenditures from Cybrdi-Maryland. In addition, the decrease in
      general and administrative expenses was primary a result of the termination
      of
      the Cybrdi-Maryland operations, as the general and administrative expenses
      for
      the nine months ended September 30, 2007 included $154,087 of expenditures
      from
      Cybrdi-Maryland. For the nine months ended September 30, 2008, the Company
      also
      increased entertainment fees and gift expenses in SD Chaoying, and increased
      travel expenses in Chaoying Biotech as compared to same period of 2007. These
      increased fees and expenditures were offset, however, with the decreased
      expenditures from termination of Cybrdi-Maryland.


16





**Other
      Income**





Interest
      income decreased by $50,853 to $43,408 for the nine months ended September
      30,
      2008 compared to $94,261 for the nine months ended September 30, 2007, a
      decrease of 54%. Most of the interest income was earned from the loans to
      QuanYe. The repayment of the loans by Quanye in 2007 reduced the interest income
      received by the Company in 2008.





Other
      income, net increased by $45,314 to $115,578 for the nine months ended September
      30, 2008 compared to $70,264 for the nine months ended September 30, 2007,
      an
      increase of 64%. The reason for this increase was primarily attributable to
      SD
      Chaoying receiving a government grant in the amount of $117,122(equivalent
      to
      RMB 818,000) in the first quarter of 2008, whereas Chaoying Biotech only
      received a government grant in the amount of $59,903 (equivalent to RMB459,000)
      in the second quarter of 2007.





**Income
      Taxes**





The
      Company did not record U.S. and PRC current income tax for nine months ended
      September 30, 2008, and 2007, since there was no taxable income during these
      periods. However, the Company had recorded a deferred benefit for income tax
      in
      amount of $24,556 and $0 during the nine months ended September 30, 2008 and
      2007, respectively, due to the time difference between the book basis and the
      tax basis that will be deductible in the future year





**LIQUIDITY
      AND CAPITAL RESOURCES**





Operating
      working capital (total current asset deduct total current liabilities) decreased
      by $1,607,005 from $(353,710) as of December 31, 2007 to $(1,960,715) as of
      September 30, 2008. The decrease was primarily due to the current maturities
      of
      long term debt of $1,399,137 (equivalent to RMB9.5million) from Changle Rural
      Credit Union, which is a bank located in Shandong province of PRC. This debt
      is
      due on May 20, 2009.





For
      operating activities, the Company had a negative balance for cash used in
      operating activities for the nine months ended September 30, 2008, since the
      Company had paid significant amounts of accrued expenses in the current
      quarter,.





For
      investing activities, the Company had a negative balance for cash used in
      investing activities. The primary reason was due to the payment of $1,610,390
      used for the construction in progress of the SD Chaoying project during the
      nine
      months ended September 30, 2008.





For
      financing activities, the Company had loans from Changle Rural Credit Union
      and
      the Company’s related parties, Xi’an Yanfeng Biotechnology Co., Ltd., Shaanxi
      Yanfeng Real Estate Co. Ltd, and Shaanxi Chaoying Personal Care Group Co. in
      the
      amounts of $1,399,137 and $863,653 in year 2008, respectively. These loans
      from
      these related parties are non-interest bearing and have no set repayment terms.
      Accordingly, the Company had positive cash provided by financing activities
      for
      the nine months ended September 30, 2008.





Since
      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.


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 September 30, 2008, 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 September 30, 2008, 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
                  200231.2
              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
                  200232.1
              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
                  200232.2
              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:  November 19, 2008
            By:
            /s/ Yanbiao BaiYanbiao Bai, Chief Executive Officer and President




20