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 March 31, 2009
 
 OR
 
 o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 
 Commission
File No: 09081
 
 CYBRDI,
INC.
 (Exact
name of registrant as specified in its charter)
 CALIFORNIA
                
                95-2461404(State
      or other jurisdiction of incorporation or organization)
                
                (I.R.S.
      Employer ID No)
  No 29 Chang'An South Road
Xi'an Shaanxi P.R. China 710061
 (Address
of principal executive office)  (Zip Code)
 
 Registrant's
telephone number: (011)
86-29-8237-3068
  N/A
 Former
name, former address and former fiscal year,
 
 (if
changed since last report)
 
 Indicate
by check mark whether the registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x     No o
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check
one):
  Large
      accelerated filer o
              
              Accelerated
      filer o
              
              Non-accelerated
      filer o
                (Do
      not check if a smaller reporting company)
              
              Smaller
      reporting company x
  Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes o   No x
 
 The number of shares of common stock,
no par value per share, outstanding as of May 10, 2009 was
50,456,567.
 
 
  CYBRDI,
INC.
 FORM
10-Q
 QUARTERLY
PERIOD ENDED March 31, 2009
  
 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
                
                
                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
  2
  PART
I. FINANCIAL INFORMATION
 Item
1 Financial Statements
  CYBRDI,
      INC. AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETS
  ASSETS
              
              March
      31, 2009
              
              
              December
      31, 2008(Unaudited)
              
              
              (Audited)CURRENT
      ASSETSCash
      and equivalents
              
              $
              460,265
              
              
              $
              381,357Accounts
      receivable
              
              
              7,374
              
              
              
              15,674Inventories
              
              
              375,147
              
              
              
              393,354Deferred
      tax assets
              
              
              5,541
              
              
              
              5,550Loan
      to unaffiliated company
              
              
              995,083
              
              
              
              996,702Other
      receivables and prepaid expenses
              
              
              221,547
              
              
              
              189,706TOTAL
      CURRENT ASSETS
              
              
              2,064,957
              
              
              
              1,982,343PROPERTY,
      PLANT AND EQUIPMENT, NET
              
              
              501,539
              
              
              
              522,002CONSTRUCTION
      IN PROGRESS
              
              
              7,504,525
              
              
              
              7,375,243INTANGIBLE
      ASSETS, NET
              
              
              382,458
              
              
              
              938,073DEFERRED
      TAX ASSETS
              
              
              20,098
              
              
              
              20,131TOTAL
      ASSETS
              
              
              10,473,578
              
              
              
              10,306,252LIABILITIES AND
      EQUITYCURRENT
      LIABILITIESShort-term
      loan
              
              $
              146,336
              
              
              $
              -Accounts
      payable
              
              
              34,836
              
              
              
              4,928Accrued
      expenses
              
              
              959,318
              
              
              
              904,743Current
      maturities of long term debt
              
              
              1,377,270
              
              
              
              1,392,451Customers
      deposits
              
              
              82,346
              
              
              
              50,525Loan
      from related companies
              
              
              1,504,298
              
              
              
              1,436,423Amount
      due to stockholders/officers
              
              
              515,783
              
              
              
              471,649Other
      payables
              
              
              32,387
              
              
              
              41,644TOTAL
      LIABILITIES
              
              
              4,652,575
              
              
              
              4,302,363EQUITYPreferred
      Stock, $1.00 per value, 500,000 shares authorized, zero
      shares issued and outstanding
              
              
              -
              
              
              
              -Common
      Stock, no par value, 150,000,000 shares authorized, 50,456,567 shares
      issued and outstanding
              
              
              3,571,864
              
              
              
              3,571,864Reserve
      funds
              
              
              336,885
              
              
              
              336,885Accumulated
      deficit
              
              
              (661,874
              )
              
              
              (500,195
              )Accumulated
      other comprehensive income
              
              
              1,087,856
              
              
              
              1,086,747TOTAL
      STOCKHOLDERS’ EQUITY
              
              
              4,334,731
              
              
              
              923,437NONCONTROLLING
      INTEREST
              
              
              1,486,273
              
              
              
              1,508,588TOTAL
      EQUITY
              
              
              5,821,004
              
              
              
              2,432,025TOTAL
      LIABILITIES AND EQUITY
              
              $
              10,473,579
              
              
              $
              10,306,252
  3
 
 CYBRDI, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF OPERATIONS
  For
      The Three Months Ended,March
      31, 2009
              
              
              March
      31, 2008(Unaudited)
              
              
              (Unaudited)RevenueProducts
              
              $
              102,600
              
              
              $
              118,019Service
      rendered
              
              
              -
              
              
              
              11,811Total
      revenue
              
              
              102,600
              
              
              
              129,830Cost
      of SalesProducts
              
              
              78,517
              
              
              
              52,518Service
      rendered
              
              
              -
              
              
              
              -Total
      cost of sales
              
              
              78,517
              
              
              
              52,518Gross
      Profit
              
              
              24,084
              
              
              
              77,312Operating
      Expenses:Selling
      and distribution expenses
              
              
              15,425
              
              
              
              7,820General
      and administrative expenses
              
              
              170,610
              
              
              
              132,324Total
      Operating Expenses
              
              
              186,035
              
              
              
              140,144Loss
      from Operations
              
              
              (161,951
              )
              
              
              (62,832
              )Other
      Income/(Expense)Interest
      income
              
              
              948
              
              
              
              13,363Other
      income, net
              
              
              4,151
              
              
              
              121,688Loss
      on disposal of fix assets
              
              
              (188
              )
              
              
              -Total
      Other Income, Net
              
              
              4,910
              
              
              
              135,051(Loss)
      Income before Income Taxes
              
              
              (157,041
              )
              
              
              72,219Income
      Tax Expense
              
              
              -
              
              
              
              -Net
      (loss) income
              
              
              (157,041
              )
              
              
              72,219Net
      (loss) income attributable to the noncontrolling interest
              
              
              (22,315
              )
              
              
              33,011Net
      (loss) income attributable to common stockholders
              
              $
              (134,725
              )
              
              $
              39,208Net
      (Loss) Income Per Common ShareBasic
      and Diluted
              
              $
              0.00
              
              
              $
              0.00Weighted
      Average Number of Shares OutstandingBasic
      and Diluted
              
              
              50,456,567
              
              
              
              50,456,569
  See
      notes to consolidated financial
statements.
 
  4
  
 CYBRDI INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWS
  For
      The Three Months Ended,March
      31, 2009
              
              
              March
      31, 2008(Unaudited)
              
              
              (Unaudited)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Loss
              
              $
              (134,725
              )
              
              $
              39,208Adjustments
      to Reconcile Net Loss to Net CashProvided
      by Operating Activities:Depreciation
      and amortization
              
              
              54,878
              
              
              
              41,882Loss
      on disposal of fixed assets
              
              
              1,714
              
              
              
              -Deferred  taxes
      benefit
              
              
              -
              
              
              
              -Minority
      interest
              
              
              (22,315
              )
              
              
              33,011Changes
      in Operating Assets and Liabilities:Accounts
      receivable
              
              
              8,271
              
              
              
              (8,482
              )Inventories
              
              
              17,561
              
              
              
              (18,292
              )Other
      receivable and prepaid expenses
              
              
              (32,202
              )
              
              
              12,582Accounts
      payable and accrued expenses
              
              
              85,927
              
              
              
              (500,455
              )Other
      payables
              
              
              (9,185
              )
              
              
              (10,153
              )Customer
      deposits
              
              
              31,891
              
              
              
              (22,145
              )Net
      Cash (Used in) Provided by Operating Activities
              
              
              1,816
              
              
              
              (432,844
              )CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of property, plant, and equipment
              
              
              (12,055
              )
              
              
              (5,024
              )Payment
      for construction in progress
              
              
              (159,113
              )
              
              
              (563,919
              )Proceeds
      from loan to unaffiliated companies
              
              
              -
              
              
              
              68,544Net
      Cash Used in Investing Activities
              
              
              (171,169
              )
              
              
              (500,399
              )CASH
      FLOWS FROM FINANCING ACTIVITIESShort-term
      loan
              
              
              146,278
              
              
              
              -Proceeds
      from long-term debt
              
              
              (12,914
              )
              
              
              1,354,820Proceeds
      from loan from related companies
              
              
              70,181
              
              
              
              137,088Repayment
      of loan from related company
              
              
              -
              
              
              
              (137,088
              )Proceeds
      from shareholders/officers
              
              
              44,883
              
              
              
              9,445Payment
      to shareholders/officers
              
              
              -
              
              
              
              (229,679
              )Net
      Cash Provided by Financing Activities
              
              
              248,428
              
              
              
              1,134,586NET
      DECREASE IN CASH AND EQUIVALENTSNet
      Decrease in Cash and Equivalents
              
              
              79,075
              
              
              
              201,343Effect
      of Exchange Rate Changes on Cash and Equivalents
              
              
              (167
              )
              
              
              13,649Cash
      and Equivalents, at Beginning of Period
              
              
              381,357
              
              
              
              637,056Cash
      and Equivalents, at End of Period
              
              $
              460,265
              
              
              $
              852,048
  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, 2008 was derived from
the audited consolidated financial statements included in the Company’s Annual
Report on Form 10-K. These interim financial statements should be read in
conjunction with that report.  Certain comparative amounts have been
reclassified to conform to the current period's presentation.
 
 The
consolidated financial statements include the accounts of Cybrdi, Inc. and its
wholly-owned subsidiaries and joint ventures. All material intercompany balances
and transactions have been eliminated.
 
 2.
Description of Business
 
 Cybrdi, Inc. (f/k/a Certron Corporation) (the “Company” or
“Cybrdi”) was incorporated on August 1, 1966, under the laws of the State of
California. Until around June 2004, the Company’s business consisted of the
distribution of magnetic media products, primarily blank audio and video
cassettes. Due to continuing intense price competition and technological changes
in the marketplace for its products, the Company lost its remaining significant
customers and disposed of or wrote off its remaining inventory. As a result of
these occurrences, the Company concluded that its audio and videotape businesses
were no longer viable and some of its product lines were
obsolete.
 
 On
February 10, 2005, the Company, through a wholly-owned subsidiary, acquired all
the ownership interest in Cybrdi, Inc., a privately held company incorporated in
the State of Maryland ("Cybrdi Maryland"). As a result of the ownership
interests of the former shareholders of Cybrdi Maryland, for financial statement
reporting purposes, the transaction was treated as a reverse acquisition, with
Cybrdi Maryland deemed the accounting acquirer and Certron Corporation deemed
the accounting acquiree. Historical information of the surviving company is that
of Cybrdi Maryland.
 
 Cybrdi
Maryland was established in 2001 to acquire an interest in biogenetic products
commercialization and related services entities in Asia. On March 5, 2003,
Cybrdi Maryland acquired an 80% interest in Shaanxi Chao Ying Biotechnology Co.,
Ltd. (“Chaoying Biotech”), a sino-foreign equity joint venture established in
July 2000 in the People's Republic of China (“PRC”), through the exchange of 99%
of the Company’s shares to the existing shareholders of Chaoying Biotech. For
financial statement reporting purposes, the merger was treated as a reverse
acquisition, with Chaoying Biotech deemed the accounting acquirer and Cybrdi
Maryland deemed the accounting acquiree.
 
 Chaoying
Biotech is a sino-foreign equity joint venture between Shaanxi Chaoying Beauty
& Cosmetics Group Co., Ltd. (the “Chinese Partner”, a PRC corporation)
and Immuno-Onco Genomics Inc. (the “Foreign Partner”, a USA
corporation).  The joint venture agreement has a 15 year
operating period starting from its formation in July 2000 and it may be
extendedupon
mutual consent. The principal activities of Chaoying Biotech are research,
manufacture and sale of various high-quality tissue arrays and the related
services in the PRC.
  6
 
 Most of
the Company’s activities are conducted through Chaoying Biotech. Chaoying
Biotech, with its principal operations located in China, aims to take advantage
of China's abundant scientific talent, low wage rates, less stringent biogenetic
regulation, and the huge genetic population as it introduces its growing list of
tissue micro array products.
 
 On
February 10, 2005, the Company completed the merger with Cybrdi Maryland and
changed its name to Cybrdi, Inc.
 
 On July
26 , 2007, Chaoying Biotech entered into an acquisition agreement
with  its Chinese partner, which is a principal shareholder of the
company, Mr. Bai, the Company’s chief executive officer and  a
director is also a principal of its Chinese partner On July 28,2007, Chaoying
Biotech invested RMB15 millions (equivalent to US$1,983,078) to acquire an
83.33% equity ownership of Shandong Chaoying Culture and Entertainment Co., Ltd.
(“SD Chaoying”) from its Chinese partner, SD Chaoying is a corporation organized
in Shandong Province P.R.China. On September 5, 2007, Shandong Commercial
government had approved this acquisition and the ownership title of SD Chaoying
had been transferred to Chaoying Biotech from its Chinese partner. The future
business of SD Chaoying will primarily focus on culture and entertainment,
including spa activities, cosmetic and personal care, body building, gambling,
catering,  and lodging, etc. SD Chaoying will have a specific emphasis
on  casino gambling, which has been approved by Shandong
Administration for Civil Affairs. As of December 31, 2008, SD Chaoying is still
in the development stage and there is no actual business transaction. The
development and construction of the facility is anticipated to be completed in
December 2009.
 
 3.
Use of Estimates:
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ materially from those
estimates.
 
 4.
Revenue Recognition
 
 Revenue
represents the invoiced value of goods sold recognized upon the delivery of
goods to customers and service income is recognized when services are provided.
Deferred revenue represents the undelivered portion of invoiced value of goods
sold to customers. Sales transactions not meeting all the conditions of the full
accrual method are accounted for using the deposit method of
accounting.  Under the deposit method, all costs are capitalized as
incurred, and payments received from the buyer are recorded as customer
deposits.
 
  7
  5.
Reverse Merger
 
 On
February 10, 2005, (the "Closing Date") the Company closed on an Agreement and
Plan of Merger (the "Agreement") among Certron Corporation (“Certron”), a
California corporation, Certron Acquisition Corp., a Maryland corporation and a
wholly-owned subsidiary of Certron ("Acquisition Sub"), and Cybrdi, Inc., a
Maryland corporation (“Cybrdi – Maryland”) relating to the acquisition by
Certron of all of the issued and outstanding capital stock of Cybrdi -Maryland
in exchange for shares of common stock of Certron that will aggregate
approximately 93.8% of the issued and outstanding common stock of Certron.
Pursuant to the terms of the Agreement, at the Closing Date (a) Acquisition Sub
has been merged with and into Cybrdi - Maryland, with Cybrdi - Maryland being
the surviving corporation, (b) the common stock of Cybrdi-Maryland has been
cancelled and converted into the right to receive shares of the common stock of
Certron at an exchange ratio of 1.566641609 per share. This resulted in the
issuance of 47,328,263 shares of the Certron’s common stock, and (c) each share
of the common stock of Acquisition Sub has been converted in to and become one
share of the common stock of Cybrdi-Maryland. The share exchange has been
accounted for as a reverse merger under the purchase method of accounting.
Accordingly, Cybrdi, Inc. will be treated as the continuing entity for
accounting purposes and the historical financial statements presented will be
those of Cybrdi, Inc.
 
 In
connection with the Agreement, on February 10, 2005, the Company amended its
articles of incorporation to authorize the issuance of 150 million shares of
common stock no par value and 500,000 shares of preferred stock, $1.00 par value
per share, none of which are issued or outstanding.
 
 Concurrent
with the filing of the Articles of Merger, all of the Company then existing
officers and directors tendered their resignation and Yanbiao Bai was appointed
as its Chairman of the Board of Directors.  Mr. Bai then nominated the
balance of the Board of Directors.
 
 6.
Government Grant
 
 During
the first quarter of 2008, Chaoying Biotech  received a grant in the
amount of $4,390 (equivalent to RMB 30,000) from the government The Company
included the government grants in the other income, net in the accompanying
statements of operations.
 
 7.
Income Taxes
 
 Income
taxes are provided for the tax effects of transactions reported in the financial
statements and consist of taxes currently due plus deferred taxes related
primarily to the differences between the basis of assets and liabilities for
financial and income tax reporting. The deferred tax assets and liabilities
represent the future tax return consequences of those differences, which will
either be taxable or deductible when the assets and liabilities are recovered or
settled. Deferred taxes also are recognized for operating losses that are
available to offset future income taxes.
 
 8.
Recent Accounting Pronouncements
  In May
2008, the Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standards (“SFAS”) No.162, “The Hierarchy of Generally
Accepted Accounting Principles”. SFAS 162 indicates the entity (not its auditor)
that is responsible for selecting accounting principles for financial statements
that are presented in conformity with GAAP. Accordingly, the GAAP hierarchy
should reside in the accounting literature established by the FASB and is
issuing SFAS 162 to achieve that result. SFAS 162 also identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States (the GAAP hierarchy).SFAS 162 is effective 60 days following
the SEC’s approval of the Public Company Accounting Oversight Board amendments
to AU Section 411, The Meaning
of Present Fairly in Conformity With Generally Accepted Accounting
Principles.  The adoption of SFAS 162 did not have significant impact
on the Company's consolidated financial position, results of operations or cash
flows.
  8
  In
December 2007, the Financial Accounting Standard Board (“FASB”) issued SFAS No.
160, “Non-controlling Interests in Consolidated Financial Statements-an
amendment of ARB No. 51” which clarifies that a non-controlling interest in a
subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements. This statement also
changes the way the consolidated income statement is presented. It requires
consolidated net income to be reported at amounts that include the amounts
attributable to both the parent and the non-controlling interest. In addition,
it requires disclosure, on the face of the consolidated statement of income, of
the amounts of consolidated net income attributable to the parent and to the
non-controlling interest. SFAS No. 160 is effective for fiscal years, and
interim periods within those fiscal years beginning on or after December 15,
2008 (that is, January 1, 2009, for entities with calendar year-ends). Earlier
adoption is prohibited.  The adoption of SFAS 160 has changed the
financial statement presentation regarding non-controlling interests, but does
not have significant impact on the Company's consolidated financial position,
results of operations or cash flows.
  In
December 2007, Statement of Financial Accounting Standards No. 141(R), Business
Combinations, was issued. SFAS No. 141R replaces SFAS No. 141, Business
Combinations. SFAS 141R retains the fundamental requirements in SFAS 141 that
the acquisition method of accounting (which SFAS 141 called the purchase method)
be used for all business combinations and for an acquirer to be identified for
each business combination. SFAS 141R requires an acquirer to recognize the
assets acquired, the liabilities assumed, and any non-controlling interest in
the acquiree at the acquisition date, measured at their fair values as of that
date, with limited exceptions. This replaces SFAS 141‘s cost-allocation process,
which required the cost of an acquisition to be allocated to the individual
assets acquired and liabilities assumed based on their estimated fair values.
SFAS 141R also requires the acquirer in a business combination achieved in
stages (sometimes referred to as a step acquisition) to recognize the
identifiable assets and liabilities, as well as the non-controlling interest in
the acquire, at the full amounts of their fair values (or other amounts
determined in accordance with SFAS 141R). SFAS 141R applies prospectively to
business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2008 (that is, January 1, 2009, for entities with calendar year-ends). An
entity may not apply it before that date.  The impact of adopting SFAS
141R will depend on the nature and terms of future acquisitions.
  NOTE
B – ASSETS
 
 The March
31, 2009 balance sheet included total current assets of $2,064,957 and
non-current assets of $8,408,621. Of these amounts, $460,265 in cash and
equivalents and $7,374 in accounts receivable are planned for funding current
operations and for future business expansion.
 
 Other
current assets also included inventories, deferred tax assets, loan to
unaffiliated company, and other receivable and prepaid expenses. Inventories are
mainly finished goods. Other components of inventories include raw materials,
work in process, and packaging material. Inventories are stated at the lower of
cost or market.  Cost of raw materials is determined on the basis of
first in first out method (“FIFO”).  Finished goods are determined on
the weighted average basis and are comprised of direct materials, direct labor
and an appropriate proportion of overhead.
 
 As of
March 31, 2009, current assets also included the deferred tax assets of $5,541
which resulted primarily from (i) deferred depreciation of leasehold improvement
costs of Chaoying Biotech, (ii) deferred overhead costs of expenditures relating
to Chaoying Biotech and (iii) the amortization of organizational costs of SD
Chaoying.
  9
 
 The other
primary assets included in current assets are loans to an unaffiliated company,
QuanYe Security Co., Ltd (“QuanYe”), an unrelated PRC registered company located
in Xian, PRC. QuanYe is engaged in the pawnshop business and its primary
business is offering alternative financing sources to small, local companies.
According to the loan agreement, QuanYe has received loans from Chaoying Biotech
in a total amount of RMB 29.3 million (equivalent to $3,849,185) since January
2006. The remaining amount of RMB 7.3 million (equivalent to $1,069,989) was
extended to and expired on March 24, 2008. As of March 31, 2009, the loan
balance had been reduced to RMB 6.8 Million (equivalent to $995,083). The
interest rate for these loans initially was initially 8% per year, and
subsequently reduced to 5% since October 9, 2006.
 
 Management
views the QuanYe loan as an alternative financing source, and believes it is an
efficient way to use its cash on hand.  The regular market interest
rate in the PRC is 0.72% per annum.  Cybrdi expects to obtain higher
interest income for its unused funds through these types of loan arrangements.
However, despite these advantages, these advances are unsecured and thus have a
higher default risk than a bank deposit.
 
 Included
in-non-current assets are property, plant and equipment, construction in
progress, intangible assets and deferred tax assets. Property, plant and
equipment mainly consist of building, office equipments, motor vehicles,
leasehold improvement, software-website, and machinery used for product
manufacturing located in the People’s Republic of China
(“PRC”).  Depreciation on property, plant and equipment is computed
using the straight –line method over the estimated useful life of the assets.
The majority of the assets have estimated useful lives of 10 years. Building and
office equipment have estimated useful lives of 20 and 5 years,
respectively.  The “construction in progress” amount of $7,504,525
mainly consists of the cost of land use right and the associated development and
construction costs of an entertainment center and residential properties in
Shandong Province, which will be transferred to fixed assets or properties for
sale in SD Chaoying when it is finished.  Intangible assets include a
tissue chip patent. Effective January 1, 2002, with the adoption of SFAS No.
142, intangible assets with a definite life are amortized on a straight-line
basis.  The patent is being amortized over its estimated life of 10
years.
 
 As of
March 31, 2009, the deferred tax asset included in non-current assets in the
accompanying balance sheet includes the deferred tax asset and liability in the
amounts of $20,342 and $244 respectively. The deferred tax asset results from
(i) deferred depreciation of leasehold improvement and (ii) deferred
amortization of organizational costs. Without the foregoing, the deferred tax
liability results mainly from differences in the depreciation of fixed assets
between their book basis and their tax basis.
 
 NOTE
C - LIABILITIES
 
 As of
March 31, 2009, the balance sheet included total liabilities of $4,652,575 which
consisted of current liabilities. Included in the current liabilities was
Current maturities of long term debt of $1,377,270 (equivalent to RMB9,411,713)
from Changle Rural Credit Union, which is a bank located in Shandong Province of
the PRC. This long-term debt had been secured by the Company’s land use right in
SD Chaoying with book value at $3.5 million (equivalent to RMB 23.6 million) as
of March 31, 2009. The term of debt was from January 31, 2008 to May 30, 2009
(total sixteen months). The interest rate for this debt will be 1.3 times 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 approximately 6.3%.  Included in the current liabilities was
$1,504,298 of loans from related companies, Xi’an Yanfeng Biotechnology Co.,
Ltd., Shaanxi Yanfeng Real Estate Co. Ltd, and Shaanxi Chaoying Beauty &
Cosmetics Group Co., Ltd. These loans are non-interest bearing and have no set
repayment terms. Also included in the current liabilities was $515,783 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 March 31, 2009, the Company had 50,456,567 shares of common
stock issued and outstanding. Historical information of the surviving company is
that of Cybrdi – Maryland.
  10
 
 As of
March 31,2009, the balance sheet included total equity of $5,821,004 of which
$1,486,273 in the amount of non-controlling interest , which represents the 20%
minority interest in Chaoying Biotech and 16.67% minority interest in SD
Chaoying.
 
 NOTE
E – INCOME TAXES
 
 In
accordance with the relevant tax laws and regulations of the PRC, Chaoying
Biotech is entitled to full exemption from Corporation Income Tax (“CIT”) for
the first two years and a 50% reduction in CIT for the next three years,
commencing from the first profitable year after offsetting all tax losses
carried forward from the previous five years.  The year 2003 was
Chaoying Biotech’s first profitable year, thus the Company began to record 50%
CIT provision for the first quarter of 2005. Commencing in January 2008, the
Chinese government had adjusted the CIT rate to 25% instead of
33%.  According to Western Developing Plan of the PRC, the Company
enjoys a 50% reduction in preferential policy of CIT, but the effective tax rate
shouldn't less than 15%. So the company’s effective tax rate approximates to 15%
in the year 2009.
 
 The
Company’s income tax expense includes U.S. and PRC income taxes. There were no
U.S. current taxes for three months ended March 31, 2009 according to net loss
incurred in the U.S. Company which will not be anticipated to have any tax
benefit in the future since no revenue is expected to be generated in the U.S as
a result of discontinuing the U.S. operating company in Maryland in October
2007.  There were also no PRC current taxes for the three months ended
March 31, 2009 due to net loss incurred.
 
 Item
2. Management's Discussion and Analysis of Financial Condition and Results of
Operation
 
 The
following discussion and analysis should be read in conjunction with the
company’s Financial Statements and Notes thereto appearing elsewhere in this
Report on Form 10-Q as well as the company’s other SEC filings, including our
annual report on Form 10-K for the year ended December 31, 2008.
  PLAN
OF OPERATIONS
 
 The
Company focuses on biogenetics commercialization and healthcare product
applications. The Company’s primary business includes sales of tissue microarray
products and services. Tissue chips, also called micro tissue arrays, provide
high-throughput molecular profiling and parallel analysis of biological and
molecular characteristics for hundreds of pathologically controlled tissue
specimens. Tissue arrays can provide rapid and cost-effective localization and
evaluation of proteins, RNA, or DNA molecules, which is particularly useful for
functioning genomic studies. Cybrdi manufactures both human and animal tissue
microarray for a wide variety of scientific uses, including drug discovery and
development purposes.
 
 The
Company’s business strategy and focus in the near future include
  ·
              Enhancing
      R&D in TMAs and technical
service
  ·
              Expanding
      its product portfolio and virtual tissue array data bank
      (vTMAB)
  ·
              Launching
      the health diagnosis kit for obesity and skin
  disease
  ·
              Participating
      in the culture and entertainment
field
  11
  With its
sophisticated research in genes, the Company can provide the professional health
diagnostic service for its customers. The Company can check the reasons for
obesity and other skin diseases like freckles by its genetic analysis, which
offers more accurate and specialized diagnosis than other similar services in
the current market.  Such information can be utilized to guide
customers to set up the right health or fitness program.At present, the Company
provide genetic test for the mechanism of obesity or skin diseases.
 
 The
Company will also explore other business development opportunities that can
leverage its sales platform and relationship with affiliated companies. Until
such time as the Company can identify attractive marketing opportunities, the
Company will loan available cash on a short term unsecured basis to
non-affiliated third parties in order to generate interest income.
 
 Commencing
in the third quarter of 2007, the Company developed a new genedetective tissue
array, called New Kits, and began to offer them to its customers.
 
 On July
28, 2007 the Company acquired an 83.33% equity ownership of SD Chaoying from its
Chinese partner, which will be primarily engaged in developing and operating
culture and entertainment business which is expected to open in 2009. The
culture and entertainment business will consist primarily of a spa activities,
cosmetic personal care, hotel and casino. Its Chinese partner is a principal
shareholder of the Company and Mr. Bai, its chief executive officer and a
director is also a principal of its Chinese partner.  SD Chaoying
began constructing the facility in September 2007., The total useable land and
net building area for the project consists of approximately 50,000 and 33,000
square meters, respectively of which 52% will constitute property for business
use and 48% for residential use, The construction is anticipated to be completed
in December  2009, SD Chaoying intends to focus on Spa activities,
cosmetic personal care, hotel and casino gambling, which has been approved by
Shandong Administration for Civil Affairs.
 
 RESULTS
OF OPERATIONS
 
 FOR THE
THREE MONTHS ENDED MARCH 31, 2009 COMPARED TO THREE MONTHS ENDED MARCH 31,
2008
  12
 
 For
      The Three Months Ended,
              
              
              
              
              
              2009
      Vs 2008March
      31, 2009
              
              
              
              
              
              March
      31, 2008
              
              
              
              
              
              Increase/
      (decrease)(Unaudited)
              
              
              
              
              
              (Unaudited)RevenueProducts
              
              $
              102,600
              
              
              
              
              
              $
              118,019
              
              
              
              
              
              $
              (15,419
              )
              
              
              -13
              %Service
      rendered
              
              
              -
              
              
              
              
              
              
              11,811
              
              
              
              
              
              
              (11,811
              )
              
              
              -100
              %Total
      revenue
              
              
              102,600
              
              
              
              
              
              
              129,830
              
              
              
              
              
              
              (27,230
              )
              
              
              -21
              %Cost
      of SalesProducts
              
              
              78,517
              
              
              
              77
              %
              
              
              52,518
              
              
              
              44
              %
              
              
              25,999
              
              
              
              50
              %Service
      rendered
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              
              
              
              
              -Total
      cost of sales
              
              
              78,517
              
              
              
              
              
              
              
              52,518
              
              
              
              
              
              
              
              25,999
              
              
              
              50
              %Gross
      Profit
              
              
              24,084
              
              
              
              23
              %
              
              
              77,312
              
              
              
              60
              %
              
              
              (53,228
              )
              
              
              -69
              %Operating
      Expenses:Selling
      and distribution expenses
              
              
              15,425
              
              
              
              
              
              
              
              7,820
              
              
              
              
              
              
              
              7,605
              
              
              
              97
              %General
      and administrative expenses
              
              
              170,610
              
              
              
              
              
              
              
              132,324
              
              
              
              
              
              
              
              38,285
              
              
              
              29
              %Total
      Operating Expenses
              
              
              186,035
              
              
              
              
              
              
              
              140,144
              
              
              
              
              
              
              
              45,890
              
              
              
              33
              %Loss
      from Operations
              
              
              (161,951
              )
              
              
              
              
              
              
              (62,832
              )
              
              
              
              
              
              
              (99,119
              )
              
              
              158
              %Other
      Income/(Expense)Interest
      income
              
              
              948
              
              
              
              
              
              
              
              13,363
              
              
              
              
              
              
              
              (12,415
              )
              
              
              -93
              %Other
      (expense) income, net
              
              
              4,151
              
              
              
              
              
              
              
              121,688
              
              
              
              
              
              
              
              (117,538
              )
              
              
              -97
              %Loss
      on disposal of fix assets
              
              
              (188
              )
              
              
              
              
              
              
              -
              
              
              
              
              
              
              
              (188
              )
              
              
              N/ATotal
      Other Income, Net
              
              
              4,910
              
              
              
              
              
              
              
              135,051
              
              
              
              
              
              
              
              (130,140
              )
              
              
              -96
              %(Loss)
      Income before Income Taxes
              
              
              (157,041
              )
              
              
              
              
              
              
              72,219
              
              
              
              
              
              
              
              (229,260
              )
              
              
              -317
              %Income
      Tax Expense
              
              
              -
              
              
              
              
              
              
              
              -Net
      (loss) income
              
              
              (157,041
              )
              
              
              
              
              
              
              72,219
              
              
              
              
              
              
              
              (229,260
              )
              
              
              -317
              %Net
      (loss) income attributable to the noncontrolling interest
              
              
              (22,315
              )
              
              
              
              
              
              
              33,011
              
              
              
              
              
              
              
              (55,326
              )
              
              
              -168
              %Net
      (loss) income attributable to common stockholders
              
              $
              (134,725
              )
              
              
              
              
              
              $
              39,208
              
              
              
              
              
              
              $
              (173,933
              )
              
              
              -444
              %
 
 13
  Net
Sales
 
 The
Company generated two categories of revenues: tissue chip & kits products
and services. The net sales decreased $27,230 to $102,600 for the three months
ended March 31, 2009 from $129,830 for the three months ended March 31, 2008, a
reduction of 21%.
 
 Tissue
Chip & Kit Products: The net sales decreased $15,419 to $102,600 for the
three months ended March 31, 2009 as compared to $118,019 for the three months
ended March 31, 2008, a decrease of 13%.The decrease in net
sales of tissue chip & kit product was primarily because the chip
development industry is becoming more mature in China and we have more
competitors. Regarding  domestic sales,  we face more
serious competition, and such competition is expected to continue.
 
 Services:
No technical service order was received for the three months ended March 31,
2009, resulting in no services revenues for the three months ended March 31,
2009 as compared to $11,811 for the three months ended March 31, 2008. This decrease was
primarily attributable to reduced service demand in China.
 
 Gross
Margin
 
 Gross
margin as a percentage of sales decreased to 23% for the three months ended
March 31, 2009 from 60% for three months ended March 31, 2008.  Gross
profit for the three months ended March 31, 2009 decreased $53,228 to $24,084
from $77,312 for the three months ended March 31, 2008, a decrease of 69%. The
reason for the decrease was primarily due to decreased unit sales price of
tissue chip sold to the Company’s PRC clients, due to the increased competition
in the domestic market. The unit sales price of kit products sold to the
Company’s US distributor was also reduced during the quarter ended March 31,
2009 as compared to the same quarter of 2008. In addition, our production
reduced in the first quarter with the condition of the fixed costs remained
unchanged, which resulted in higher unit cost during the current
quarter.
 
 Operating
Expenses
 
 The
Company’s operating expenses increased $45,890 to $186,035 for the three months
ended March 31, 2009 from $140,144 for the three months ended March 31, 2008, an
increase of 33%. This was primarily due to an increase in general and
administrative expenses of $38,285 to $170,610 for the three months ended March
31, 2009 compared to $132,324 for the three months ended March 31, 2008. In
addition, the Company also had a slight increase in selling expenses of $7,605
to $15,425 for the three months ended March 31, 2009 compared to $7,820 for the
three months ended March 31, 2008. The increase in selling expenses was primary
due to Shandong Chaoying begin to occur the selling expenses sinceOctober,
2008. Selling expense for the three months ended March 31, 2009 at Shandong
Chaoying was $3,936 as compared to $0 during the same quarter prior year. Salary
expense and exhibition expense also increased at Chaoying Biotech during the
current quarter. In addition, the increase in general and administrative
expenses was primarily a result of recording the majority of professional fees
in connection with the preparation of the Company’s annual report on form 10K in
the current quarter. The audit fee was $50,000 and the lawyer's fee was $14,645
as recorded in the quarter ended March 31, 2009 compared to audit fees of
$25,000 and lawyer's fees of $1,278 as recorded in the same quarter prior year,
an increase of $38,367.
 
 Other
Income
 
 Interest
income decreased by $12,415 to $948 for the three months ended March 31, 2009 as
compared to $13,363 for the three months ended March 31, 2008, a decrease of
93%. Interest income was mainly earned from the loans to QuanYe in 2008. Due to
the expiration of the loan agreement and the uncertainty of collection, no
interest income was recorded for the loan during the three months ended March
31, 2009.
  14
 
 Other
(expense) income, net decreased by $117,538 to $4,151 for the three months ended
March 31, 2009 compared to $121,688 for the three months ended March 31, 2008, a
decrease of 97%. The reason was primarily attributable to Shandong Chaoying
received the government grant of $114,210 during the three months ended March
31, 2008, whereas the grant received during the current quarter was
$4,390.
 
 Income
Taxes
 
 The
Company did not record U.S. and PRC current income tax for three months ended
March 31, 2009, and 2008, since there was no taxable income during these
periods.
 
 LIQUIDITY
AND CAPITAL RESOURCES
 
 Operating
working capital (total current asset deduct total current liabilities) decreased
by $267,598 from $(2,320,020) as of December 31, 2008 to $(2,587,618) as of
March 31, 2009. The decrease was primarily due to increases in short-term loan,
accounts payable, accrued expenses, customer deposits, and loan from related
parties by $146,336, $29,908, $54,575, $31,821, and $112,010, respectively.
Contrarily, cash and equivalents increased $78,908 as of March 31, 2009 as
compared to the amount at March 31, 2008.
 
 For
investing activities, the Company incurred net cash outflow during the three
months ended March 31, 2009. The primary reason was due to the payments of
$159,113 used for the construction in progress of the SD Chaoying project during
the current quarter.
 
 For
financing activities, the Company obtained a short-term loan from an individual,
and increased proceeds from the Company’s related parties, Xi’an Yanfeng
Biotechnology Co., Ltd, Shaanxi Yanfeng Real Estate Co.,Ltd, and Shaanxi
Chaoying Beauty & Cosmetics Group Co., Ltd. in the amounts of $146,336 and
$70,181 during the first quarter of 2009, respectively. The loan obtained from
the individual was for three months and will expire on May 20, 2009, with 1.2%
monthly interest rate. Loans from related parties are non-interest bearing and
have no set repayment terms.  Accordingly, the Company had positive
cash provided by financing activities for the three months ended March 31,
2009.
 
 As of
March 31, 2009, we owed Changle Rural Credit Union a current maturity of long
term debt of $1,377,270 due on May 30, 2009. We pledged SD Chaoying’s land use
right worth of approximately $3.4 million dollars to secure the payment of the
loan.  As per the loan agreement, we can discuss with the bank an
extension of the terms of this current maturity of long term debt fifteen days
before the expiration date.  While we expect to extend it for another
year, there is not assurance the loan will be extended.
 
 The
Company has a construction project in Shandong for SD Chaoying which it
anticipates completing by the end of 2009. In order to finance this project, the
Company anticipates borrowing additional funds from related parties, other
banks, and to utilize the funds received from the repayment of loan proceeds
from Quan Ye. There can be no assurance, however, that the Company will be able
to obtain the necessary financing for the construction of the
project.  In the event that the Company is unable to secure such
financing, we believe that our cash and cash equivalents and revenue from
operations will be sufficient to finance our operations for the coming
year.
 
 INFLATION
 
 Inflation
has not had a material impact on our business.
  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 March 31, 2009, there has been no change in our
internal control over financial  reporting  (as defined in
Rule  13a-15(f) and 15d-15(f) under the Exchange Act) ) that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
  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 March 31, 2009, the Company has accrued a sufficient amount to
cover any potential liabilities from this matter.
  Item
1A.  Risk Factors
 
 A smaller
reporting company is not required to provide the information required by this
Item.
  Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
 
 None.
 
 Item
3. Defaults Upon Senior Securities.
 
 None.
 
 Item
4. Submission of Matters to a Vote of Security Holders
 
 None.
 
 Item 5. Other Information
 
 None
 
 Item
6. Exhibits
 31.1
                Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  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:  May
      15, 2009
                By:
                /s/Yanbiao
      BaiYanbiao
      Bai, Chief Executive Officer and presidentBy:
                Xue
      BuXue
      Bu, Principal Financial Officer
 18