**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, 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 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 18, 2008 was 50,456,569 .










CYBRDI,
      INC.


FORM
      10-Q


QUARTERLY
      PERIOD ENDED June 30, 2008





INDEX




TABLE
        OF
        CONTENTS
  PagePART
                    I – FINANCIAL INFORMATIONItem
                    1:
                Financial
                    Statements
                1Item
                    2:
                Management’s
                    Discussion and Analysis of Financial Condition and Results of
                    Operations
                9Item
                    3:
                Quantitative
                    and Qualitative Disclosures About Market Risk
                16Item
                    4T:
                Controls
                    and Procedures
                16PART
                    II – OTHER INFORMATIONItem
                    1:
                Legal
                    Proceedings
                17Item
                    1A:
                Risk
                    Factors
                17Item
                    2:
                Unregistered
                    Sales of Equity Securities and Use of Proceeds
                17Item
                    3:
                Defaults
                    Upon Senior Securities
                17Item
                    4:
                Submission
                    of Matters to a Vote of Security Holders
                17Item
                    5:
                Other
                    Information
                17Item
                    6:
                Exhibits
                17




**PART
      I. FINANCIAL INFORMATION**


**Item
      1. Financial Statements**


**CYBRDI,
      INC. AND SUBSIDIARIES**


**CONSOLIDATED
        BALANCE SHEETS**
 
 
 **June 30, 2008**
              
              **December 31, 2007****(Unaudited)**
              
              **(Audited)****ASSETS****CURRENT
                  ASSETS**Cash
                  and equivalents
              
              $
              469,058
              
              $
              637,056Accounts
                  receivable
              
              
              5,658
              
              
              3,364Inventories
              
              
              431,257
              
              
              390,421Loan
                  to unaffiliated company
              
              
              991,384
              
              
              1,000,740Other
                  receivables and prepaid expenses
              
              
              159,052
              
              
              145,805TOTAL
                  CURRENT ASSETS
              
              
              2,056,409
              
              
              2,177,386PROPERTY,
                  PLANT AND EQUIPMENT, NET
              
              
              491,127
              
              
              493,273CONSTRUCTION
                      IN PROGRESS
              
              
              3,311,039
              
              
              1,929,002INTANGIBLE
                  ASSETS, NET
              
              
              3,888,476
              
              
              3,700,195**TOTAL
                  ASSETS**
              
              
              9,747,051
              
              
              8,299,856**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY****CURRENT
                  LIABILITIES**Accounts
                  payable
              
              
              3,432
              
              
              3,917Accrued
                  expenses
              
              
              994,225
              
              
              1,700,363Current
                  maturities of long term debt
              
              
              1,385,021
              
              
              -Customers
                  deposits
              
              
              93,713
              
              
              74,321Loan
                  from related companies
              
              
              845,592
              
              
              274,175Amount
                  due to stockholders/officers
              
              
              227,777
              
              
              432,494Other
                  payables
              
              
              37,479
              
              
              45,826TOTAL
                  CURRENT LIABILITIES
              
              
              3,587,239
              
              
              2,531,096MINORITY
                  INTERESTS
              
              
              1,523,527
              
              
              1,499,125**TOTAL
                  LIABILITIES**
              
              
              5,110,766
              
              
              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
              
              
              (335,128
              )
              
              (301,323
              )Accumulated
                  other comprehensive income
              
              
              1,062,664
              
              
              662,209**TOTAL
                  STOCKHOLDERS’ EQUITY**
              
              
              4,636,285
              
              
              4,269,635**TOTAL
                  LIABILITIES AND STOCKHOLDERS’ EQUITY**
              
              $
              9,747,051
              
              $
              8,299,856
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
  1
  **CYBRDI,
        INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS (UNAUDITED)**
 
 **Three Months Ended**
              
              **Three Months Ended**
              
              **Six Months Ended**
              
              **Six Months Ended****June 30, 2008**
              
              **June 30, 2007**
              
              **June 30, 2008**
              
              **June 30, 2007****(Unaudited)**
              
              **(Unaudited)**
              
              **(Unaudited)**
              
              **(Unaudited)****Revenue**Products
              
              $
              111,897
              
              $
              149,625
              
              $
              229,916
              
              $
              317,721Service
                  rendered
              
              
              1,052
              
              
              29,659
              
              
              12,864
              
              
              38,838**Total
                  revenue**
              
              
              112,949
              
              
              179,284
              
              
              242,780
              
              
              356,559**Cost
                  of Sales**Products
              
              
              67,132
              
              
              54,155
              
              
              119,650
              
              
              131,594Service
                  rendered
              
              
              -
              
              
              3,957
              
              
              -
              
              
              3,962**Total
                  cost of sales**
              
              
              67,132
              
              
              58,112
              
              
              119,650
              
              
              135,556**Gross
                  Profit**
              
              
              45,817
              
              
              121,172
              
              
              123,130
              
              
              221,003**Operating
                  Expenses:**Selling
                  and distribution expenses
              
              
              12,879
              
              
              32,222
              
              
              20,699
              
              
              59,277General
                  and administrative expenses
              
              
              129,882
              
              
              112,424
              
              
              262,206
              
              
              277,098**Total
                  Operating Expenses**
              
              
              142,761
              
              
              144,646
              
              
              282,905
              
              
              336,375**Loss
                  from Operations**
              
              
              (96,944
              )
              
              (23,474
              )
              
              (159,775
              )
              
              (115,372
              )**Other
                  Income/(Expense)**Interest
                  income
              
              
              15,605
              
              
              34,823
              
              
              28,968
              
              
              77,842Other
                  (expense) income, net
              
              
              (283
              )
              
              64,948
              
              
              121,405
              
              
              68,535**Total
                  Other Income**
              
              
              15,322
              
              
              99,771
              
              
              150,373
              
              
              146,377**(Loss)
                  Income before Income Taxes**
              
              
              (81,622
              )
              
              76,297
              
              
              (9,402
              )
              
              31,005Income
                  Taxes Expenses
              
              
              -
              
              
              -
              
              
              -
              
              
              -**(Loss)
                  Income before Minority Interest**
              
              
              (81,622
              )
              
              76,297
              
              
              (9,402
              )
              
              31,005Minority
                  Interest
              
              
              (8,609
              )
              
              15,448
              
              
              24,403
              
              
              18,379**Net
                  (Loss) Income**
              
              $
              (73,013
              )
              $
              60,849
              
              $
              (33,805
              )
              $
              12,626Other
                  Comprehensive Income:Foreign
                  Currency Translation Gain
              
              
              140,657
              
              
              55,172
              
              
              400,455
              
              
              93,527**Comprehensive
                  Income**
              
              $
              67,644
              
              $
              116,021
              
              $
              366,650
              
              $
              106,153Net
                  (Loss) Income Per Common Share Basic and Diluted
              
              $
              (0.00
              )
              $
              0.00
              
              $
              (0.00
              )
              $
              0.00Weighted
                  Average Number of Shares Outstanding Basic and Diluted
              
              
              50,456,569
              
              
              50,456,569
              
              
              50,456,569
              
              
              50,456,569
  The
        accompanying notes are an integral part of these consolidated financial
        statements.
  2
  **CYBRDI
        INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS (UNAUDITED)**
 
 **For Six Months Ended**
              
              **For Six Months Ended****June 30, 2008**
              
              **June 30, 2007****(Unaudited)**
              
              **(Unaudited)****CASH
                  FLOWS FROM OPERATING ACTIVITIES****Net
                  (Loss) Income**
              
              $
              (33,805
              )
              $
              12,626**Adjustments
                  to Reconcile Net Loss to Net Cash Provided by Operating
                  Activities:**Depreciation
                  and amortization
              
              
              84,874
              
              
              84,271Loss
                  on disposal of fixed assets
              
              
              3,324
              
              
              -Minority
                  interest
              
              
              24,403
              
              
              18,379**Changes
                  in Operating Assets and Liabilities:**Accounts
                  receivable
              
              
              (1,956
              )
              
              30,602Inventories
              
              
              (15,089
              )
              
              (5,331
              )Other
                  receivable and prepaid expenses
              
              
              (3,751
              )
              
              (56,303
              )Accounts
                  payable
              
              
              (689
              )
              
              23,699accrued
                  expenses
              
              
              (765,495
              )
              
              -Other
                  payables
              
              
              (10,584
              )
              
              5,117Customer
                  deposits
              
              
              13,797
              
              
              -**Net
                  Cash (Used in) Provided by Operating Activities**
              
              
              (704,972
              )
              
              113,060**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Purchase
                  of property, plant and equipment
              
              
              (7,410
              )
              
              (1,651
              )Payment
                  for construction in progress
              
              
              (1,266,232
              )
              
              -Payment
                  to loan to affiliated companies
              
              
              -
              
              
              (2,496,059
              )Proceeds
                  from (payment to) loan to unaffiliated companies
              
              
              68,544
              
              
              2,050,205**Net
                  Cash Used in Investing Activities**
              
              
              (1,205,098
              )
              
              (447,505
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Proceeds
                  from long-term debt
              
              
              1,385,021
              
              
              -Proceeds
                  from loan from related companies
              
              
              520,934
              
              
              -Proceeds
                  from shareholders/officers
              
              
              32,031
              
              
              27,563Payment
                  to shareholders/officers
              
              
              (225,143
              )
              
              (31,024
              )**Net
                  Cash Provided by (Used in) Financing Activities**
              
              
              1,712,843
              
              
              (3,461
              )**NET
                  DECREASE IN CASH AND EQUIVALENTS**Net
                  Decrease in Cash and Equivalents
              
              
              (197,227
              )
              
              (337,906
              )Effect
                  of Exchange Rate Changes on Cash and Equivalents
              
              
              29,229
              
              
              17,886Cash
                  and Equivalents, at Beginning of Period
              
              
              637,056
              
              
              782,899**Cash
                  and Equivalents, at End of Period**
              
              $
              469,058
              
              $
              462,879
  The
        accompanying notes are an integral part of these consolidated financial
        statements.


3


**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.





4


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 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 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 June 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 December 2008 **.**





**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.


5


**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 had received a grant in the amount of
      $115,879 (equivalent to RMB 818,000) from the Shangdong Government for the
      Shandong Culture & Entertainment Square project that SD Chaoying created
      during year 2007. The Company included the government grants in the other
      income, net in the accompanying statements of operations and comprehensive
      income/ (loss).





**7.
      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.




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.




6




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 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 acquiree, 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
      June
      30, 2008 balance sheet included total current assets of $2,056,409 and
      non-current assets of $7,690,642. Of these amounts, $469,058 in cash and
      equivalents and $5,658 in accounts receivable are planned for funding current
      operations and for future business expansion.





Other
      current assets also included inventories, 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.





The
      other
      primary assets included in current assets are loans to an unaffiliated company. The
      loans
      to the unaffiliated company consists of loans to 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 June 30,
      2008, the loan balance had been reduced to RMB 6.8 Million (equivalent to
      $991,384). 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 ended of December 2008.




7




Management
      believes and views QuanYe as an alternative financial institution, 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
      process, and intangible assets. Property, plant and equipment mainly consist
      of
      building, motor vehicles, leasehold improvement, software-website, and machinery
      used for product manufacturing located in the People’s Republic of China
      (“PRC”), and office equipment located in PRC and United States. 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 process”
amount of $3,311,039 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 June 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.





**NOTE
      C - LIABILITIES**





As
      of
      June 30, 2008, the balance sheet included total liabilities of $5,110,766,
      of
      which $1,523,527 represents the 20% minority interest in Chaoying Biotech
      and  16.67%
      minority interest in SD Chaoying, and which $3,587,239 in the amount of the
      current liabilities, Included in the current liabilities was due to current
      maturity of Long term debt of $1,385,021(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 10Q, the basic monthly interest rate in China is 6.3%.
      Included in the current liabilities, was $845,592 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 $227,777 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.





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 from 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 first quarter
      of 2008. Since there is no taxable income after offsetting all tax losses
      carried forward, no income taxes provision is required as of June 30, 2008
      and
      2007, respectively.




8




**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, 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.
 
 **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,
        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 microtissue 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) ·
            Launch
                the health diagnosis kit for obesity and skin disease ·
            Participate
                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
        from the third quarter of year 2007, the Company had developed a new
        genedetective tissue array, called New Kits, and started 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 December 2008, 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.
  9
 
 **RESULTS
        OF OPERATIONS**
 
 FOR
        THE
        THREE MONTHS ENDED JUNE 30, 2008 COMPARED TO THREE MONTHS ENDED JUNE 30,
        2007
 **Three Months Ended**
                
                
                
                **Three Months Ended**
                
                
                
                **2008 Vs 2007****June 30, 2008**
                
                
                
                **June 30, 2007**
                
                
                
                **Increase/ (decrease)****(Unaudited)**
                
                
                
                **(Unaudited)****Revenue**Products
                
                $
                111,897
                
                
                
                
                $
                149,625
                
                
                
                
                $
                (37,728
                )
                
                -25
                %Service
                    rendered
                
                
                1,052
                
                
                
                
                
                29,659
                
                
                
                
                
                (28,607
                )
                
                -96
                %**Total
                    revenue**
                
                
                112,949
                
                
                
                
                
                179,284
                
                
                
                
                
                (66,335
                )
                
                -37
                %**Cost
                    of Sales**Products
                
                
                67,132
                
                
                60
                %
                
                54,155
                
                
                36
                %
                
                12,977
                
                
                24
                %Service
                    rendered
                
                
                -
                
                
                
                
                
                3,957
                
                
                13
                %
                
                (3,957
                )
                
                -100
                %**Total
                    cost of sales**
                
                
                67,132
                
                
                
                
                
                58,112
                
                
                
                
                
                9,020
                
                
                16
                %**Gross
                    Profit**
                
                
                45,817
                
                
                41
                %
                
                121,172
                
                
                68
                %
                
                (75,355
                )
                
                -62
                %**Operating
                    Expenses:**Selling
                    and distribution expenses
                
                
                12,879
                
                
                
                
                
                32,222
                
                
                
                
                
                (19,343
                )
                
                -60
                %General
                    and administrative expenses
                
                
                129,882
                
                
                
                
                
                112,424
                
                
                
                
                
                17,458
                
                
                16
                %**Total
                    Operating Expenses**
                
                
                142,761
                
                
                
                
                
                144,646
                
                
                
                
                
                (1,885
                )
                
                -1
                %**Loss
                    from Operations**
                
                
                (96,944
                )
                
                
                
                
                (23,474
                )
                
                
                
                
                (73,470
                )
                
                313
                %**Other
                    Income/(Expense)**Interest
                    income
                
                
                15,605
                
                
                
                
                
                34,823
                
                
                
                
                
                (19,218
                )
                
                -55
                %Other
                    (loss) income, net
                
                
                (283
                )
                
                
                
                
                64,948
                
                
                
                
                
                (65,231
                )
                
                -100
                %**Total
                    Other Income**
                
                
                15,322
                
                
                
                
                
                99,771
                
                
                
                
                
                (84,449
                )
                
                -85
                %**(Loss)
                    Income before Income Taxes**
                
                
                (81,622
                )
                
                
                
                
                76,297
                
                
                
                
                
                (157,919
                )
                
                -207
                %Income
                    Taxes Expenses**(Loss)
                    Income before Minority Interest**
                
                
                (81,622
                )
                
                
                
                
                76,297
                
                
                
                
                
                (157,919
                )
                
                -207
                %Minority
                    Interest
                
                
                (8,609
                )
                
                
                
                
                15,448
                
                
                
                
                
                (24,057
                )
                
                -156
                %**Net
                    (Loss) Income**
                
                $
                (73,013
                )
                
                
                
                $
                60,849
                
                
                
                
                $
                (133,862
                )
                
                -220
                %
 10


**Net
      Sales**





The
      Company generated two categories of revenues: tissue chip & kits products
      and services. The net sales decreased $66,335 to $112,949 for the three months
      ended June 30, 2008 from $179,284 for the three months ended June 30, 2007,
      a
      reduction of 37%.





Tissue
      Chip & Kit Products: The net sales decreased $37,728 to $111,897 for the
      three months ended June 30, 2008 as compared to $149,625 for the three months
      ended June 30, 2007, a decrease of 25%. **** The
      decrease in net sales of tissue chip & kit product was primarily
      attributable to the termination of Cybrdi - Maryland’s operations on October
      2007. During the second quarter of 2007, the net sales of tissue chip & chip
      product had included $14,852 of product sales generated by Cybrdi - Maryland,
      but there was none for the second quarter of 2008. In addition, the Company
      has
      reduced the unit sales price for the products sold to its US major distributor
      in the current quarter as compared to the same period of 2007





Services:
      Fewer technical service orders were received for the three months ended June
      30
      2008 as compared to the same period in 2007, resulting in a decrease in sales
      of
      $28,607 to $1,052 from $29,659 for the three months ended June 30, 2008 as
      compared to June 30, 2007, a decrease of 37%.  This
      decrease was primarily attributable to service demand decreased in China.





**Gross
      Margin**





Gross
      margin as a percentage of sales decreased to 41% for the three months ended
      June
      30, 2008 from 68% for three months ended June 30, 2007. Gross profit for the
      three months ended June 30, 2008 decreased $75,355 to $45,817 from $121,172
      for
      the three months ended June 30, 2007, a decrease of 62%. The reason for the
      decrease was primarily due to the increase in sales of tissue chip & kit
      product with lower individual unit prices to its US distributor during the
      quarter ended June 30, 2008 as compared to the same quarter of 2007.





**Operating
      Expenses**





The
      Company’s operating expenses decreased $1,885 to $142,761 for the three months
      ended June 30, 2008 from $144,646 for the three months ended June 30, 2007,
      a
      decrease of 1%. This was primarily due to a slight increase in general and
      administrative expenses of $17,458 to $129,882 for the three months ended June
      30, 2008 from $112,424 for the three months ended June 30, 2007, which was
      offset by a larger decrease in selling expenses of $19,343 to $12,879 for the
      three months ended June 30, 2008 from $32,222 for the three months ended June
      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 three
      months ended June 30, 2007, the selling, expenses had included $6,954 of
      expenditures from Cybrdi-Maryland, whereas the increase in general and
      administrative expenses was primary a result of the acquisition of SD Chaoying
      in the fourth quarter of 2007, whereby the company incurred $16,092 of start-up
      costs during the three months ended June 30 2008.





**Other
      Income**





Interest
      income decreased by $19,218 to $15,605 for the three months ended June 30,
      2008
      as compared to $34,823 for the three months ended June 30, 2007, a decrease
      of
      55%. Most of the interest income was earned from the loans to QuanYe .
      The
      repayment of the loans by Quanye during 2007 reduced the amount of interest
      income received by the Company.





Other
      (loss) income, net decreased by $65,231 to $(283) for the three months ended
      June 30, 2008 compared to $64,948 for the three months ended June 30, 2007,
      a
      decrease of 100%. The reason was primarily attributable to Chaoying Biotech
      receiving a government grant $59,466 (equivalent to RMB459,000) from Shaanxi
      government during the second quarter of 2007.




11




**Income
      Taxes**





The
      Company had not recorded a provision for income tax for the second quarter
      ended
      June 30, 2008 and 2007, due to no taxable income after offsetting all taxes
      losses carried forward from prior periods. In accordance with the relevant
      tax
      laws and regulations of the People’s Republic of China, 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 from the first quarter of 2005.
      Commencing from 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 PRC, making the company’s
      effective tax rate approximately 12.5% in the second quarter of 2008. Since
      there is no taxable income after offsetting all tax losses carried forward,
      no
      income taxes provision is required as of June 30, 2008 and 2007,
      respectively.




12





FOR
      THE
      SIX MONTHS ENDED JUNE 30, 2008 COMPARED TO SIX MONTHS ENDED JUNE 30, 2007


**Six Months Ended**
              
              
              
              **Six Months Ended**
              
              
              
              **2008 Vs 2007****June 30, 2008**
              
              
              
              **June 30, 2007**
              
              
              
              **Increase/ (decrease)****(Unaudited)**
              
              
              
              **(Unaudited)****Revenue**Products
              
              $
              229,916
              
              
              
              
              $
              317,721
              
              
              
              
              $
              (87,805
              )
              
              -28
              %Service
                  rendered
              
              
              12,864
              
              
              
              
              
              38,838
              
              
              
              
              
              (25,974
              )
              
              -67
              %**Total
                  revenue**
              
              
              242,780
              
              
              
              
              
              356,559
              
              
              
              
              
              (113,779
              )
              
              -32
              %**Cost
                  of Sales**Products
              
              
              119,650
              
              
              52
              %
              
              131,594
              
              
              41
              %
              
              (11,944
              )
              
              -9
              %Service
                  rendered
              
              
              -
              
              
              
              
              
              3,962
              
              
              10
              %
              
              (3,962
              )
              
              -100
              %**Total
                  cost of sales**
              
              
              119,650
              
              
              49
              %
              
              135,556
              
              
              38
              %
              
              (15,906
              )
              
              -12
              %**Gross
                  Profit**
              
              
              123,130
              
              
              51
              %
              
              221,003
              
              
              62
              %
              
              (97,873
              )
              
              -44
              %**Operating
                  Expenses:**Selling
                  and distribution expenses
              
              
              20,699
              
              
              
              
              
              59,277
              
              
              
              
              
              (38,578
              )
              
              -65
              %General
                  and administrative expenses
              
              
              262,206
              
              
              
              
              
              277,098
              
              
              
              
              
              (14,892
              )
              
              -5
              %**Total
                  Operating Expenses**
              
              
              282,905
              
              
              
              
              
              336,375
              
              
              
              
              
              (53,470
              )
              
              -16
              %**Loss
                  from Operations**
              
              
              (159,775
              )
              
              
              
              
              (115,372
              )
              
              
              
              
              (44,402
              )
              
              38
              %**Other
                  Income/(Expense)**Interest
                  income
              
              
              28,968
              
              
              
              
              
              77,842
              
              
              
              
              
              (48,874
              )
              
              -63
              %Other
                  income, net
              
              
              121,405
              
              
              
              
              
              68,535
              
              
              
              
              
              52,870
              
              
              77
              %**Total
                  Other Income**
              
              
              150,373
              
              
              
              
              
              146,377
              
              
              
              
              
              3,996
              
              
              3
              %**(Loss)
                  Income before Income Taxes**
              
              
              (9,402
              )
              
              
              
              
              31,005
              
              
              
              
              
              (40,407
              )
              
              -130
              %Income
                  Taxes Expenses
              
              
              -
              
              
              
              
              
              -
              
              
              
              
              
              -**(Loss)
                  Income before Minority Interest**
              
              
              (9,402
              )
              
              
              
              
              31,005
              
              
              
              
              
              (40,407
              )
              
              -130
              %Minority
                  Interest
              
              
              24,403
              
              
              
              
              
              18,379
              
              
              
              
              
              6,024
              
              
              33
              %**Net
                  (Loss) Income**
              
              $
              (33,805
              )
              
              
              
              $
              12,626
              
              
              
              
              $
              (46,432
              )
              
              -368
              %





**Net
      Sales**





The
      Company generated two categories of revenues: tissue chip & kits products
      and services. The net sales decreased $113,779 to $242,780 for the six months
      ended June 30, 2008 from $356,559 for the six months ended June 30, 2007, a
      decrease of 32%.





Tissue
      Chip & Kit Products: The net sales decreased $87,805 to $229,916 for the six
      months ended June 30, 2008 as compared to $317,721 for the six months ended
      June
      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 six months ended June 30, 2007, the net sales of tissue chip
      & chip product had included $65,951 of product sales generated by Cybrdi -
      Maryland, as opposed to none for the second quarter of 2008. In addition, the
      Company has reduced the unit sales price for the products sold to its US major
      distributor in the current quarter as compared to the same period of 2007




13




Services:
      Fewer technical service orders were received during the six months ended June
      30
      2008 as compared to the same period of 2007, resulting in a decrease in sales
      of
      $25,974 to $12,864 from $38,838 for the six months ended June 30, 2008 as
      compared to June 30, 2007, a decrease of 67%.  This
      decrease was primarily attributable to a decrease in service demand in China.





**Gross
      Margin**





Gross
      margin as a percentage of sales decreased to 51% for the six months ended June
      30, 2008 from 62% for six months ended June 30, 2007. Gross profit for the
      six
      months ended June 30, 2008 decreased $97,873 to $123,130 from $221,003 for
      the
      six months ended June 30, 2007, a decrease of 44%. The reason for the decrease
      was primarily due to the decrease of unit prices sold to its US major
      distributor during the six months ended June 30, 2008. In order to develop
      an
      international market share, the company offered the lower unit prices to its
      major US distributor during the second quarter of 2008 as compared to the same
      period in 2007, which, as a result, reduced the gross margin rate for the six
      months ended June 30, 2008.





**Operating
      Expenses**





The
      Company’s operating expenses decreased $53,470 to $282,905 for the six months
      ended June 30, 2008 from $336,375 for the six months ended June 30, 2007, a
      decrease of 16%. This was primarily due to a decrease in selling expenses of
      $38,578 to $20,699 for the six months ended June 30, 2008 compared to $59,277
      for the six months ended June 30, 2007, and a slight t decrease in general
      and
      administrative expenses of $14,892 to $262,206 for the six months ended June
      30,
      2008 compared to $277,098 for the six months ended June 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 six months ended June
      30, 2007, the selling, expenses had included $18,788 of expenditures from
      Cybrdi-Maryland,





**Other
      Income**





Interest
      income decreased by $48,874 to $28,968 for the six months ended June 30, 2008
      compared to $77,842 for the six months ended June 30, 2007, a decrease of 63%.
      Most of the interest income was earned from the loans to QuanYe. The repayment
      of the loans by Quanye during 2007 reduced the interest income received by
      the
      Company.





Other
      income, net increased by $52,870 to $121,405 for the six months ended June
      30,
      2008 compared to $68,535 for the six months ended June 30, 2007, an increase
      of
      77%. The reason was primarily attributable to SD Chaoying receiving a government
      grant of $115,879(equivalent to RMB 818,000) in the first quarter of 2008,
      in
      addition to the government grant $59,466 (equivalent to RMB459,000) from
      received from a Shaanxi government grant during the second quarter of
      2007.





**Income
      Taxes**





The
      Company had not recorded a provision for income tax for the six months ended
      June 30, 2008 and 2007, due to no taxable income after offsetting all taxes
      losses carried forward from prior periods. In accordance with the relevant
      tax
      laws and regulations of the People’s Republic of China, 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 from the first quarter of 2005.
      Commencing from January 2008, the Chinese government had adjusted the CIT rate
      to 25% instead of 33%. The Company enjoy a 50% reduction in preferential policy
      of CIT, according to Western Developing Plan of PRC, making the company’s
      effective tax rate approximately 12.5% in year 2008. Since there is no taxable
      income after offsetting all tax losses carried forward, no income taxes
      provision is required as of June 30, 2008 and 2007, respectively.





14





**LIQUIDITY
      AND CAPITAL RESOURCES**





Operating
      working capital (total current asset deduct total current liabilities) decreased
      by $1,177,120 from $(353,710) as of December 31, 2007 to $(1,530,830) as of
      June
      30, 2008. The decrease was primarily due to the pending maturity of long term
      debt of $1,385,021(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 six months ended June 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 $1,266,232
      used for the construction of the SD Chaoying project during the six months
      ended
      June 30, 2008.





For
      financing activities, the Company had loans from Changle Rural Credit Union
      and
      its related companies in the amounts of $1,385,021 and $520,934, respectively.
      Accordingly, the Company had positive cash provided by financing activities
      for
      the six months ended June 30, 2008.





Since
      the
      Company has a construction project in Shandong for SD Chaoying which it
      anticipates completing by the end of 2008. 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.





15


**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 June 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.





16


**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, 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





17





**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 18, 2008
            By:
            /s/
                Yanbiao BaiYanbiao Bai, Chief Executive Officer and President




18