**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q**





(Mark
      One)





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





For
      the
      quarterly period ended March
      31, 2008





or





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





For
      the
      transition period from ______________ to_________________





Commission
      File Number: 000-52624





**CYBRA
      CORPORATION**


(Exact
      Name of Registrant as Specified in Its Charter)





New
                York
            13-3303290(State
                or Other Jurisdiction of Incorporation or
            (I.R.S.
                Employer Identification No.)Organization)





One
                Executive Blvd. Yonkers, New York
            10701(Address
                of Principal Executive Offices)
            (Zip
                Code)





(914)
      963-6600


(Registrant’s
      Telephone Number, Including Area Code)





Not
      Applicable


(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.


þ Yes   ̈ No




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
      the definitions of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.




Large
                accelerated filer ̈
            Accelerated
                filer ̈Non-accelerated
                filer ̈
            Smaller
                Reporting Companyþ




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




As
      of May
      1, 2008 the registrant had 12,610,954 shares of Common Stock outstanding.







**CYBRA
      Corporation**





Table
      of Contents




PagePart
                  I.
              Financial
                  InformationItem
                  1.
              Financial
                  Statements
              1Balance
                  Sheets
              1Statements
                  of Operations
              2Statements
                  of Cash Flows
              3Notes
                  to Consolidated Interim Financial Statements
              4Item
                  2.
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              7Item
                  3.
              Quantitative
                  and Qualitative Disclosures About Market Risk
              12Item
                  4T.
              Controls
                  and Procedures
              12Part
                  II.
              Other
                  InformationItem
                  6.
              Exhibits
              13Signatures
              14




i


**PART
      I. FINANCIAL INFORMATION**




**ITEM
      1. FINANCIAL STATEMENTS**





CYBRA
        CORPORATION
 
 BALANCE
        SHEETS
 
 March
                  31,
              
              December
                  31,2008
              
              2007(Unaudited)
              
              (Audited)ASSETSCURRENT
                  ASSETSCash
                  and cash equivalents
              
              $
              252,434
              
              $
              787,156Accounts
                      receivable, less allowance for doubtful accounts of
                      $5,000
              
              
              211,854
              
              
              352,647Loan
                  receivable
              
              
              -
              
              
              6,000Deferred
                  income taxes
              
              
              39,978
              
              
              104,093Total
                  Current Assets
              
              
              504,266
              
              
              1,249,896PROPERTY
                    AND EQUIPMENT, at cost, less accumulated depreciation and
                    amortization
              
              
              96,569
              
              
              98,495OTHER
                  ASSETS
              
              
              318,333
              
              
              318,333DEFERRED
                  INCOME TAXES
              
              
              1,313,669
              
              
              1,156,304DEFERRED
                  FINANCE COSTS
              
              
              351,493
              
              
              414,857SECURITY
                  DEPOSITS AND OTHER ASSETS
              
              
              11,558
              
              
              11,685$
              2,595,888
              
              $
              3,249,570LIABILITIES
                  AND STOCKHOLDERS' DEFICIENCYCURRENT
                  LIABILITIESAccounts
                  payable and accrued expenses
              
              $
              291,383
              
              
              550,397Accrued
                  interest
              
              
              386,725
              
              
              336,169Deferred
                  revenue
              
              
              290,254
              
              
              284,990Accrued
                  liquidated damages - registration rights agreement
              
              
              110,000
              
              
              110,000Total
                  Current Liabilities
              
              
              1,078,362
              
              
              1,281,5568%
                  CONVERTIBLE DEBENTURES
              
              
              2,197,942
              
              
              2,160,800COMMITMENT
                  AND LITIGATIONSTOCKHOLDERS'
                  DEFICIENCYCommon
                  stock, no par value, 100,000,000 shares authorized; 12,610,954
                  shares
                  issued and outstanding at March 31, 2008 and December 31,
                  2007
              
              
              1,329,545
              
              
              1,329,545Additional
                  Paid - in capital
              
              
              727,603
              
              
              727,603Accumulated
                  deficit
              
              
              (2,737,564
              )
              
              (2,249,934
              )Total
                  Stockholders' Deficiency
              
              
              (680,416
              )
              
              (192,786
              )$
              2,595,888
              
              $
              3,249,570
 
 See
        notes
        to Financial Statements
  1
 
 CYBRA
        CORPORATION
 
 STATEMENTS
        OF OPERATIONS
 
 Three
                  Months EndedMarch
                  31,2008
              
              2007(Unaudited)
              
              (Unaudited)REVENUES
              
              $
              276,457
              
              $
              368,247DIRECT
                  COSTSCosts
                  of goods sold
              
              
              33,492
              
              
              109,156Royalties
                  and consulting
              
              
              11,537
              
              
              7,50045,029
              
              
              116,656GROSS
                  MARGIN
              
              
              231,428
              
              
              251,591GENERAL
                  AND ADMINISTRATIVE EXPENSES
              
              
              664,822
              
              
              681,979LOSS
                  FROM OPERATIONS
              
              
              (433,394
              )
              
              (430,388
              )OTHER
                  INCOME (EXPENSE)Interest
                        expense, 2008 includes $58,546 of amortization of deferred
                        finance costs
                        for the period
              
              
              (151,062
              )
              
              (135,811
              )Interest
                  income
              
              
              3,376
              
              
              8,765Miscellaneous
                  income
              
              
              200
              
              
              -(147,486
              )
              
              (127,046
              )LOSS
                  BEFORE INCOME TAXES
              
              
              (580,880
              )
              
              (557,434
              )INCOME
                  TAXES (RECOVERY)
              
              
              (93,250
              )
              
              (208,794
              )NET
                  LOSS
              
              $
              (487,630
              )
              $
              (348,640
              )PER
                  SHARE DATABasic
                  and diluted net loss per share
              
              $
              (0.04
              )
              $
              (0.03
              )Basic
                  and diluted weighted-average shares outstanding
              
              
              12,610,954
              
              
              10,445,726
 
 See
        Notes
        to Financial Statements
  2
  CYBRA
        CORPORATION
 
 STATEMENTS
        OF CASH FLOWS
 
 Three
                  Months EndedMarch
                  31,2008
              
              2007(Unaudited)
              
              (Unaudited)CASH
                  FLOWS FROM OPERATING ACTIVITIESNet
                  loss
              
              $
              (487,630
              )
              $
              (348,640
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activitiesDepreciation
              
              
              6,912
              
              
              6,557Deferred
                  income tax credit
              
              
              (93,250
              )
              
              (208,804
              )Interest
                  expense - amortization of debt discount
              
              
              37,142
              
              
              55,212Amortization
                  of deferred finance cost
              
              
              63,364
              
              
              30,599Change
                  in operating assets and liabilitiesAccounts
                  receivable
              
              
              140,793
              
              
              45,117Loan
                  Receivable
              
              
              6,000
              
              
              -Prepaid
                  income taxes/income taxes payable
              
              
              -
              
              
              105Security
                  deposits and other assets
              
              
              127
              
              
              (38
              )Accounts
                  payable and accrued expenses
              
              
              (259,014
              )
              
              66,806Accrued
                  interest
              
              
              50,556
              
              
              38,218Deferred
                  revenue
              
              
              5,264
              
              
              7,157Sales
                  tax payable
              
              
              
              
              
              (1,410
              )Net
                  Cash Used in Operating Activities
              
              
              (529,736
              )
              
              (309,121
              )CASH
                  FLOWS FROM INVESTING ACTIVITIESAcquisition
                  of property and equipment
              
              
              (4,986
              )
              
              (7,460
              )Net
                  Cash Used in Investing Activities
              
              
              (4,986
              )
              
              (7,460
              )CASH
                  FLOWS FROM FINANCING ACTIVITIESRepayments
                  of loan payable - bank
              
              
              -
              
              
              (250,000
              )Proceeds
                  from private placement
              
              
              -
              
              
              58,050Net
                  Cash Used in Financing Activities
              
              
              -
              
              
              (191,950
              )INCREASE
                  (DECREASE) IN CASH AND CASH EQUIVALENTS
              
              
              (534,722
              )
              
              (508,531
              )CASH
                  AND CASH EQUIVALENTSBeginning
                  of period
              
              
              787,156
              
              
              1,263,370End
                  of period
              
              $
              252,434
              
              $
              754,839SUPPLEMENTAL
                  DISCLOSURES OF CASH FLOW INFORMATION:Cash
                  paid during the quarter for:Interest
              
              $
              -
              
              $
              -Income
                  Taxes
              
              $
              -
              
              $
              -
 
 See
        notes
        to Financial Statements
  3
 **Notes
          to Consolidated Interim Financial Statements**
  1.BASIS
        OF PRESENTATION
 
 The
        unaudited financial information of CYBRA Corporation (the “Company”), has been
        prepared by the Company pursuant to the rules and regulations of the Securities
        and Exchange Commission (the “SEC”) and reflects all adjustments, which in the
        opinion of management are necessary to fairly state the Company’s interim
        financial position and the results of its operations for the periods presented.
        Certain information and note disclosures normally included in financial
        statements prepared in accordance with GAAP have been condensed or omitted
        from
        these statements pursuant to such rules and regulations and, accordingly,
        this
        report on Form 10-Q should be read in conjunction with the Company’s financial
        statements and notes thereto included in the Company’s Form 10-K for the fiscal
        year ended December 31, 2007. The Company assumes that the users of the interim
        financial information herein have read or have access to the audited financial
        statements for the preceding fiscal year and that the adequacy of additional
        disclosure needed for a fair presentation may be determined in that context.
        Accordingly, footnote disclosure, which would substantially duplicate the
        disclosure contained in the Company’s Form 10-K for the fiscal year ended
        December 31, 2007, has been omitted. The results of operations for the three
        months period ended March 31, 2008 are not necessarily indicative of results
        for
        the entire fiscal year ending December 31, 2008.
  2.  NATURE
        OF OPERATIONS AND FINANCIAL STATUS OF COMPANY
 
 Description
        of Business and Credit Risk
 
 The
        Company is a software developer, publisher, and systems integrator in the
        IBM
        midrange market. Its flagship product, MarkMagic TM ,
        is an
        online bar code software product for IBM System i (formerly known as the
        AS/400)
        computers. Substantially all of the Company's accounts receivables are due
        from
        manufacturing companies and software vendors located throughout the United
        States.
 
 EdgeMagic TM , whose
        first release was in February 2008, is an integrated radio frequency
        identification (“RFID’) control solution for IBM System i customers that is
        capable of deployment on other platforms and is highly scalable. It is designed
        to manage edge readers and analog control devices, commission, read, filter
        and
        verify RFID tags to comply with Electronic Product Code (EPC) compliance
        mandates, and integrate with popular System i ERP and Warehouse Management
        application packages.
 
 At
        March
        31, 2008, the Company had cash and cash equivalents of $252,434, a working
        capital deficit of $574,096 and an accumulated deficit of $2,737,564.
        Additionally, the Company has incurred a net loss of $487,630 for the three
        months ended March 31, 2008.
 
 Management
        has taken several steps to improve sales, profitability and cash flows for
        2008, particularly the release of EdgeMagic TM, ,
        a new
        RFID edge control system product line with revenue potential far in excess
        of
        the current product mix, as well as the formation of a field level sales
        team.
 
 3.  SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES
 
 Research
        and Development Costs
  Research
        and development costs prior to completion of development of a product are
        expensed as incurred. In May 2005, the Company began development of MarkMagic
        Version 6 and has incurred research and development expense of $33,868 and
        $90,467 for the three months ended March 31, 2008 and 2007, respectively.
        The
        cumulative development costs for Version 6 are $554,683 at March 31, 2008.
        Total
        research and development expense for the three months ended March 31, 2008
        and
        2007 were $210,298 and $243,466, respectively. In 2007 most of that expense
        was
        included in payroll expenses. The cumulative cost for EdgeMagic TMt is
        $706,186. Of that amount, $379,203 has been included in general and
        administrative expenses and $318,333 has been capitalized and is classified
        as
        other assets.
 
 Advertising
        Costs
 
 Advertising
        costs are charged to expense as incurred. Total advertising costs for the
        three
        months ended March 31, 2008 and 2007 were $26,345 and $109,226,
        respectively.
 
 Revenue
        Recognition
 
 The
        Company recognizes revenues in accordance with AICPA Statement of Position
        (SOP)
        97-2, Software Revenue Recognition, as amended by SOP 98-9 (Modification
        of SOP
        97-2, Software Revenue Recognition, With Respect to Certain Transactions).
        Revenue from software license agreements is recognized when persuasive evidence
        of an agreement exists, delivery of the software has occurred, the fee is
        fixed
        or determinable, and collectibility is probable. In software arrangements
        that
        include more than one element, the Company allocates the total arrangement
        fee
        among the elements based on the relative fair value of each of the
        elements.
 
 Reclassifications
 
 Certain
        reclassifications have been made to the 2007 financial statements included
        herein to conform to the 2008 presentation. These reclassifications had no
        material effect on the financial position, results of operations, or cash
        flows
        of the Company.
  4
 3.  SUMMARY
          OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 License
        revenue allocated to software products generally is recognized upon delivery
        of
        the products or deferred and recognized in future periods to the extent that
        an
        arrangement includes one or more elements to be delivered at a future date
        and
        for which fair values have not been established. Revenue allocated to
        maintenance agreements is recognized ratably over the maintenance term and
        revenue allocated to training and other service elements is recognized as
        the
        services are performed. If evidence of fair value does not exist for all
        elements of a license agreement and post customer support (PCS) is the only
        undelivered element, then all revenue for the license arrangement is recognized
        ratably over the term of the agreement as license revenue. If evidence of
        fair
        value of all undelivered PCS elements exists but evidence does not exist
        for one
        or more delivered elements, then revenue is recognized using the residual
        method. Under the residual method, the fair value of the undelivered elements
        is
        deferred and the remaining portion of the arrangement fee is recognized as
        revenue.
 
 Cost
        of
        license revenue primarily includes product, delivery, and royalty costs.
        Cost of
        maintenance and service revenue consists primarily of labor costs for engineers
        performing implementation services, technical support, and training personnel
        as
        well as facilities and equipment costs.
 
 4.
        8%
        CONVERTIBLE DEBENTURES AND DERIVATIVE FINANCIAL INSTRUMENTS
  On
        April
        10, 2006, the Company issued 8% Convertible Debentures (the “Debentures”) with a
        principal (“face amount”) value of $2,500,000, along with 7,500,000 detachable
        Stock Warrants (the “Warrants”) to several investors. The gross proceeds of this
        transaction were $2,500,000, consisting of $2,080,000 cash, $151,000 from
        the
        cancellation of debt incurred in 2005, $19,000 from the cancellation of debt
        incurred earlier in 2006 and $250,000 applied as finders' fees. The convertible
        debenture balance at March 31, 2008 was $2,197,942. The amortization of deferred
        finance costs was $58,546 for the three months ended March 31, 2008. The
        deferred finance cost balance at March 31, 2008 was $351,493.
 
 Interest
        on the Debentures is due semiannually at 8% per annum. beginning December
        31,
        2006. Interest is also due upon conversion, redemption and maturity. The
        Debentures mature on April 10, 2009 at which point the full principal balance
        (“face amount”) is due. The Debentures are convertible, at the holders’ option,
        into Common Stock of the Company at a rate of $0.50 for each share of Common
        Stock. Interest on the Debentures may be paid by the issuance of Common Stock
        at
        the rate of $0.50 per share.
 Through
        April 10, 2007 the Company had the right, subject to certain conditions,
        to
        redeem the Debentures for 120% of the principal value. The Company declined
        to
        do so.
 
 While
        the
        Debentures are outstanding, the Company has the right to require conversion
        (“forced conversion”) of the Debentures provided that the Company’s Common Stock
        is publicly traded and has a quoted closing market price for the ten previous
        trading days that is at least 150% of the conversion price.
 
 The
        investors also received 7,500,000 Warrants, consisting of 2,500,000 Class
        A
        Warrants and 5,000,000 of Class B Warrants. Each Class A Warrant gives the
        holder the right to buy one share of Common Stock for $0.75. Each Class B
        Warrant gives the holder the right to buy one share of Common Stock for $1.75.
        The Warrants are exercisable at any time through April 10, 2011. The 7,500,000
        Warrants are the
        only outstanding Warrants at December 31, 2007 that were issued in connection
        with the sale of the Debentures. However, 730,000 Class A Warrants and 1,460,000
        Class B Warrants were issued together with 1,460,000 shares of Common Stock
        in
        connection with the sale of 1,460,000 units in 2007 at $0.75 per
        unit.
 
 As
        part
        of the transaction, Debentures having a principal amount of $250,000 were
        issued
        along with 125,000 Class A Warrants and 250,000 Class B Warrants as finders’
fees. The finders will also receive, as additional fees, 5% of any cash
        collected as on the exercise of any of the Warrants.
  5.
        STOCKHOLDERS’ DEFICIENCY
 
 During
        the three months ended March 31, 2008, the Company issued no shares of Common
        Stock.
 
 Share-based
        Compensation
 
 Total
        stock options outstanding at March 31, 2008 were 100,000 and 100,000 of these
        total options were vested at March 31, 2008.
 
 Stock
        option transactions to the employees, directors, and consultants are summarized
        as follows:
  5
  The
        100,000 options outstanding at March
        31,
        2008 were
        issued in December 2007, have a remaining outstanding life of 5 years and
        have
        an exercise price of $0.75 per share.
 
 6.
        COMMITMENT AND LITIGATION
 
 The
        Company occupies office space under a lease agreement that expires on January
        31, 2010.
  The
        minimum rental commitment is as follows:
  2008
              
              
              77,2502009
              
              
              77,2502010
              
              
              6,438$
              160,938
 
 LITIGATION
 
 A
        complaint was filed against the Company and its CEO on December 28, 2006
        in
        Magistrate’s court in Herzliya, Israel, by Raz-Lee Security Ltd. (“Raz-Lee”), a
        former distributor of the Company’s products (Case No. 8443/06). The action
        seeks $50,000 in damages plus interest, court costs and attorney’s fees. The
        action against the Company’s CEO was dismissed and an appeal of such dismissal
        is pending. The Company has counter-claimed against Raz-Lee for failure to
        report sales and royalties and seeks an accounting, with damages estimated
        at
        $50,000. Each of the parties has asked the court to order a deposit of security
        for costs. The parties are currently completing pre-trial procedures. Trial
        of
        the case is scheduled for June 4, 2008. At a pre-trial conference, the Court
        suggested that the Company pay Raz-Lee $25,000 in settlement of the claim
        and
        counter-claim. This suggestion was rejected by both parties. The Company
        intends
        to vigorously defend the claim and prosecute the counter-claim. The Company
        is
        not a party to any other pending or threatened legal proceedings.
 
 7.
        LOSS PER SHARE
 
 Loss
        per
        share for the three months ended March 31, 2008 does not include the effects
        of
        the 9,690,000 Warrants or the 5,000,000 shares into which the 8% Convertible
        Debentures are convertible because the effects would be anti-dilutive.
 
 6




**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**





**FORWARD-LOOKING
      STATEMENTS**





This
      Quarterly Report on Form 10-Q contains forward-looking statements within the
      meaning of Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as
      amended (the “Exchange Act”). The words “believe,” “expect,” “anticipate,”
“project,” “target,” “optimistic,” “intend,” “aim,” “will” or similar
      expressions are intended to identify forward-looking statements. Such statements
      include, among others, those concerning our expected financial performance
      and
      strategic and operational plans, as well as all assumptions, expectations,
      predictions, intentions or beliefs about future events. These statements are
      based on the beliefs of our management as well as assumptions made by and
      information currently available to us and reflect our current view concerning
      future events. As such, they are subject to risks and uncertainties that could
      cause our results to differ materially from those expressed or implied by such
      forward-looking statements. Such risks and uncertainties include, among many
      others: our significant operating losses; uncertainty of capital resources;
      the
      speculative nature of our business; our ability to successfully implement new
      strategies; present and possible future governmental regulations; operating
      hazards; competition; the loss of key personnel; any of the factors in the
“Risk
      Factors” section of the Company’s Annual Report on Form 10-K; other risks
      identified in this Report; and any statements of assumptions underlying any
      of
      the foregoing. You should also carefully review other reports that we file
      with
      the SEC. The Company assumes no obligation and does not intend to update these
      forward-looking statements, except as required by law.





The
      following discussion should be read in conjunction with our financial
      statements, together with the notes to those statements, included elsewhere
      in
      this report. Our actual results may differ materially from those discussed
      in
      these forward-looking statements because of the risks and uncertainties inherent
      in future events.





CYBRA
      Corporation (“the Company”) is a software developer, publisher, and systems
      integrator in the IBM midrange market. Its flagship product,
      MarkMagic TM ,
      is an
      online bar code software product for IBM System i (formerly known as the AS/400)
      computers. This software lets businesses design and print all types of
      documents, such as bar code labels, radio frequency identification (“RFID”)
      tags, e-forms, and other media, using live data, with little or no programming
      necessary. Mark Magic’s “what-you-see-is-what-you-get” design component, JMagic,
      was developed in Java specifically in order to be deployed across the Internet,
      as well as on diverse computing platforms, including Windows, UNIX and
      Linux.





The
      Company’s newest product, EdgeMagic TM ,
      released in February 2008, is an RFID control solution for IBM System i
      customers that is capable of deployment on other platforms and is highly
      scalable. It is designed to manage edge readers and analog control devices;
      commission, read, filter and verify RFID tags to comply with Electronic Product
      Code (EPC) compliance mandates; and integrate with popular System i ERP and
      Warehouse Management application packages.




7




**Comparison
      of the Three Months Ended March 31, 2008 to the Three Months Ended March
      31, 2007**





**The
      following table summarizes certain aspects of the Company’s results of
      operations for the Three Months Ended March 31, 2008 to the Three Months
      Ended March 31, 2007**





Three Months Ended March 31,2008
            
            2007
            
            Change $
            
            Change %**Revenues**
            
            $
            276,457
            
            $
            368,247
            
            $
            (91,790
            )%
            
            -25
            %**Direct
                Costs**Hardware
                and Supplies
            
            
            33,492
            
            
            109,156
            
            
            (75,664
            )
            
            -69
            %Royalties
                & Consulting
            
            
            11,537
            
            
            7,500
            
            
            4,037
            
            
            54
            %**Total
                Direct Costs**
            
            $
            45,029
            
            $
            116,656
            
            $
            (71,627
            )%
            
            -61
            %%
                of total revenues
            
            
            16
            %
            
            32
            %**Gross
                profit**
            
            $
            231,428
            
            $
            251,591
            
            $
            (20,163
            )%
            
            -8
            %%
                of total revenues
            
            
            84
            %
            
            68
            %**Software
                development costs**
            
            $
            210,298
            
            $
            243,466
            
            $
            123,851
            %
            
            143
            %%
                of total revenues
            
            
            76
            %
            
            66
            %**Sales
                and marketing expenses**
            
            $
            30,635
            
            $
            149,064
            
            $
            (118,429
            )%
            
            -79
            %%
                of total revenues
            
            
            11
            %
            
            40
            %**General
                and administrative expenses**
            
            $
            423,889
            
            $
            446,468
            
            $
            (22,579
            )%
            
            -5
            %%
                of total revenues
            
            
            153
            %
            
            121
            %**Interest
                expense**
            
            $
            151,062
            
            $
            135,811
            
            $
            15,251
            %
            
            11
            %%
                of total revenues
            
            
            55
            %
            
            37
            %**Other
                Income (Expenses)**
            
            $
            3,576
            
            $
            8,765
            
            $
            (5,189
            )%
            
            -59
            %%
                of total revenues
            
            
            1
            %
            
            2
            %(Loss)
                Income Before Taxes
            
            $
            (580,880
            )
            $
            (557,434
            )
            $
            (23,446
            )%
            
            4
            %**Provision
                (benefit) for income taxes**
            
            $
            (93,250
            )
            $
            (208,794
            )
            $
            115,544
            %
            
            -55
            %Effective
                tax rate
            
            
            16
            %
            
            37
            %**Net
                loss**
            
            $
            (487,630
            )
            $
            (348,640
            )
            $
            (138,990
            )%
            
            40
            %%
                of total revenues
            
            
            -176
            %
            
            -95
            %





**Revenues**





The
      decrease in revenues in absolute dollars for the three months ended
      March 31, 2008, as compared to the same period in 2007, is primarily due to
      lower demand for hardware and supplies in the 2008 quarter and a reduction
      in
      revenues from CYBRA's OEM partners. We believe that this is a reflection of
      lower spending on technology in the general economy. We expect that our revenues
      will increase throughout 2008, due to sale of our new product,
      EdgeMagic.





**Direct
      Costs**





The
      costs
      for hardware and supplies in the the three months ended March 31, 2008,
      were lower, as compared to the same period in 2007, due to less demand for
      these
      product types as compared to the same period in 2007.




8




The
      Company had a small increase in consulting costs for the the three months ended
      March 31, 2008, as compared to the same period in 2007, due to an increase
      in the use of consultants for sales and marketing activities.





**Gross
      Margins**





Gross
      Margins as a percentage of sales increased in the three months ended March
      31,
      2008, as compared to the same period in 2007, due to decreased sales of hardware
      and supplies, which are relatively low margin products.




We
      expect
      that our gross margins will increase in 2008 due to the sales of our new
      product, EdgeMagic, and the related relatively higher margin hardware and RFID
      supplies to be sold with our new product.





**Software
      Development Costs**





Software
      development costs consist primarily of compensation of development personnel,
      related overhead incurred to develop EdgeMagic and upgrade and enhance the
      Company’s current products and fees paid to outside consultants. The majority of
      these expenses have been incurred by the Company in the United States. Software
      development costs are accounted for in accordance with SFAS No. 86,
“Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise
      Marketed,” under which the Company is required to capitalize software
      development costs between the time technological feasibility is established
      and
      the product is ready for general release. Costs that do not qualify for
      capitalization are charged to research and development expense when incurred.
      The EdgeMagic software product was available in February 2008 for general
      release. All costs after that point in time, in accordance with SFAS No. 86,
      are
      expensed. During the three months ended March 31, 2008 and 2007, the software
      development costs that were expensed were $210,298 and $243,466,
      respectively **.**





**Sales
      and Marketing Expenses**





Sales
      and
      marketing expenses consist primarily of commissions and advertising and
      promotional expenses. The decrease in absolute dollars for the three months
      ended March 31, 2008, as compared to the same period in 2007, is due to the
      prior year having a major advertising campaign. Beginning with the second half
      of 2007 marketing and promotion were brought in-house as opposed to using
      outside agencies.





**General
      and Administrative Expense**





General
      and administrative expenses consist primarily of costs associated with the
      Company’s executive, financial, human resources and information services
      functions. General and administrative expenses decreased slightly in absolute
      dollars for the three months ended March 31, 2008, as compared to the same
      period in 2007. The overall rate of decrease for General, Selling and
      Administrative was 5%.





**Interest
      Expense**





Interest
      expense is due to the 8% convertible debentures holders and in total was
      $151,062 and $135,811 for the three months ended March 31, 2008 and
      2007.




9




**Other
      Income, Net**





Interest
      and other income decreased for the the three months ended March 31, 2008,
      as compared to the same period in 2007. The decrease is due primarily to less
      interest income earned on lower bank balances.





**Provision
      for Income Taxes**





The
      provision for income taxes consists of provisions for federal and state income
      taxes.





The
      preparation of consolidated financial statements in conformity with generally
      accepted accounting principles requires the Company to make estimates and
      assumptions that affect the reported amount of tax-related assets and
      liabilities and income tax provisions. The Company assesses the recoverability
      of the deferred tax assets on an ongoing basis. In making this assessment the
      Company is required to consider all available positive and negative evidence
      to
      determine whether, based on such evidence, it is more likely than not that
      some
      portion or all of our net deferred assets will be realized in future periods.
      This assessment requires significant judgment. In addition, the Company has
      made
      estimates involving current and deferred income taxes, tax attributes relating
      to the interpretation of various tax laws and historical bases of tax attributes
      associated with certain tangible and intangible assets.





The
      Company recorded a (benefit) for income taxes of $(93,250) and $(208,794) for
      the three months ended March 31, 2008, and 2007, respectively. The
      effective income tax rates were 16% and 37% for the three months ended March
      31,
      2008 and 2007, respectively.The effective tax rate differs from the statutory
      U.S. federal income tax rate of 35%, primarily due to state and foreign income
      tax and permanent differences between GAAP pre-tax income and taxable income
      and
      benefits from the increase in the valuation allowance against U.S. deferred
      tax
      assets for the the three months ended March 31, 2008.





Although
      the Company has presently determined that a valuation allowance is not required
      with respect to the U.S. federal deferred tax asset, recovery is dependent
      on
      achieving our forecast of future operating income over a protracted period
      of
      time. The Company will review the forecast in relation to actual results and
      expected trends on an ongoing basis. Failure to achieve our operating income
      targets may change the Company’s assessment regarding the recoverability of its
      net deferred tax assets and such change could result in a valuation allowance
      being recorded against some or all of the deferred tax assets. Any increase
      in a
      valuation allowance would result in additional tax expense and could have a
      significant impact on the Company’s earnings in future periods.





**Liquidity
      and Capital Resources**





The
      following table summarizes the Company’s cash and cash equivalents, working
      capital, long-term debt and cash flows as of and for the three months ended
      March 31, 2008 and 2007.





2008
            
            2007
            
            Change $
            
            Change %Cash
                and cash equivalents
            
            $
            252,434
            
            $
            754,839
            
            
            (502,405
            )
            
            -67
            %Working
                capital (deficit) surplus
            
            $
            (574,096
            )
            $
            177,885
            
            
            (751,981
            )
            
            -423
            %Net
                cash (used in) operating activities
            
            $
            (529,736
            )
            $
            (309,121
            )
            
            (220,615
            )
            
            71
            %Net
                cash (used in) investing activities
            
            $
            (4,986
            )
            $
            (7,460
            )
            
            2,474
            
            
            -33
            %Net
                cash (used in) financing activities
            
            $
            -
            
            $
            (191,950
            )
            
            (191,950
            )
            
            100
            %Long-term
                debt, less current portion
            
            $
            2,197,942
            
            $
            1,973,366
            
            
            224,576
            
            
            11
            %




10




The
      increase in net cash used by operating activities was due to increases
      in legal and accounting fees associated with the company’s public status as well
      as increased research and development, payroll and travel expenses in launching
      our new product, EdgeMagic.





As
      of
      March 31, 2008, the Company’s principal sources of liquidity included cash and
      cash equivalents of $252,434. The Company’s operations used $529,736 in cash
      during the three months ended March 31, 2008. This increase in cash used in
      operating activities is due to an increase in software development costs and
      payroll expenses in launching our new product, EdgeMagic. In 2008, the Company
      has added three people to its sales and marketing department to begin the
      marketing of our new EdgeMagic product. This, along with other administrative
      expenses added, results in the Company requiring $130,000 per month in total
      operating costs. The Company's cash balance at March 31, 2008 was $252,434.
      The
      Company’s working capital deficiency excluding deferred revenue is $283,842. The
      Company believes this is a relevant measurement of working capital, as deferred
      revenue represents an obligation to provide future services instead of a future
      cash outflow.





During
      2008 the company Company issued no shares of common stock to
      investors.





On
      March
      4, 2008, the Company's decided to extend its current private placement in order
      to raise a total of $1,500,000 through the sale of its common stock. The company
      anticipates closing this round of financing by June, 2008.





On
      April
      10, 2006, the Company issued 8% Convertible Debentures (the “Debentures”) with a
      principal (“face”) value of $2,500,000. The gross proceeds of this transaction
      were $2,500,000, consisting of $2,080,000 cash, $151,000 from the cancellation
      of debt incurred in 2005, $19,000 from the cancellation of debt incurred earlier
      in 2006 and $250,000 applied as finders' fees. The convertible debenture balance
      at March 31, 2008 was $2,197,942.





Interest
      on the Debentures is due semiannually at 8% p.a. beginning December 31, 2006.
      Interest is also due upon conversion, redemption and maturity. The Debentures
      mature on April 10, 2009 at which point the full principal balance (“face
      amount”) is due. The Debentures are convertible, at the holders’ option, into
      common stock of the Company at a rate of $0.50 face value for each share of
      common stock.





**We
      May Not Be Able To Raise Sufficient Capital To Successfully Operate Or Expand
      Our Business.**





Our
      continued operations will depend upon the availability of cash flow from
      operations and/or our ability to raise additional funds through various
      financing methods. If sales or revenues do not meet expectations, or cost
      estimates for development and expansion of our business prove to be inaccurate,
      we will require additional funding. If additional capital cannot be obtained,
      we
      may have to delay or postpone acquisitions, development or other expenditures
      which can be expected to harm our competitive position, business operations
      and
      growth potential. There can be no assurance that cash flow from operations
      will
      be sufficient to fund our financial needs, or if such cash flow is not
      sufficient, that additional financing will be available on satisfactory terms,
      if at all. Changes in capital markets and the cost of capital are unpredictable.
      Any failure to obtain such financing, or obtaining financing on unfavorable
      terms, can be expected to have a material adverse effect on our business,
      financial condition, results of operations and future business
      prospects.




11




***Off
      Balance Sheet Arrangements***




We
      do not
      have any off balance sheet arrangements that have or are reasonably likely
      to
      have a current or future effect on our financial condition, changes in financial
      condition, revenues or expenses, results of operations, liquidity or capital
      expenditures or capital resources that is material to an investor in our
      securities.





***Seasonality***




Our
      business has not been subject to any material seasonal variations in operations,
      although this may change in the future.





***Inflation***




Our
      business, revenues and operating results have not been affected in any material
      way by inflation


**ITEM
        3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
        RISK**





Not
      applicable to smaller reporting companies.





**ITEM
      4T. CONTROLS AND PROCEDURES** **





***Disclosure
      Controls and Procedures***





As
      required by Rule 13a-15 under the Exchange Act, we carried out an evaluation
      of
      the effectiveness of the design and operation of our disclosure controls and
      procedures, as of the end of the period covered by this report on Form 10-Q.
      This evaluation was carried out under the supervision and with the participation
      of our management, including our President and Chief Executive Officer, and
      our
      interim Chief Financial Officer. Based upon that evaluation, management
      concluded that the our disclosure controls and procedures are effective to
      ensure that information required to be disclosed in the reports that it files
      or
      submits under the Exchange Act is accumulated and communicated to management
      (including the chief executive officer and chief financial officer) to allow
      timely decisions regarding required disclosure and that our disclosure controls
      and procedures are effective to give reasonable assurance that the information
      required to be disclosed by us in reports that we file under the Exchange Act
      is
      recorded, processed, summarized and reported within the time periods specified
      in the rules and forms of the SEC.





Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in our reports filed or
      submitted under the Exchange Act is recorded, processed, summarized and
      reported, within the time periods specified in the SEC’s rules and forms.
      Disclosure controls and procedures include, without limitation, controls and
      procedures designed to ensure that information required to be disclosed in
      our
      reports filed under the Exchange Act is accumulated and communicated to
      management, including the Company’s Chief Executive and acting Chief Financial
      Officer as appropriate, to allow timely decisions regarding required disclosure.





***Internal
      Controls Over Financial Reporting***





Section
      404 of the Sarbanes-Oxley Act of 2002 requires that management document and
      test
      the Company’s internal control over financial reporting and include in this
      Quarterly Report on Form 10-Q a report on management’s assessment of the
      effectiveness of our internal control over financial reporting. Our
      CEO
      and interim CFO together with the our management have concluded, based on his
      evaluation of our internal controls over financial reporting, that as of March
      31, 2008, due to insufficient resources in the accounting function to establish
      the proper segregation of duties, our internal controls over financial reporting
      were not effective and did not provide a reasonable assurance of achieving
      their
      objective. Management believes that such material weakness in our control over
      financial reporting will be rectified by the end of the third quarter of 2008
      with the hiring of a part-time controller to assist in the monthly accounting
      functions.****Management
      believes that the indicated control deficiencies do not affect our financial
      strength or business prospects.


***Limitations
      on the Effectiveness of Controls.***





A
      control
      system, no matter how well conceived and operated, can provide only reasonable,
      not absolute, assurance that the objectives of the control system are met.
      Because of the inherent limitations in all control systems, no evaluation of
      controls can provide absolute assurance that all control issues, if any, within
      a company have been detected. The Company’s disclosure controls and procedures
      are designed to provide reasonable assurance of achieving their objectives,
      and
      the CEO and CFO have concluded that these controls and procedures are effective
      at the “reasonable assurance” level.





There
      were no changes in our internal control over financial reporting identified
      in
      connection with the evaluation performed that occurred during the period
      covered by this report that has materially affected or is reasonably likely
      to
      materially affect, our internal control over financial reporting.




12





**PART
      II. OTHER INFORMATION**





**ITEM
      6.**  **EXHIBITS.**





(a)  Exhibits.




31.1
            Certification
                  of the Chief Executive Officer required by Rule 13a-14(a) or Rule
                  15d-14(a).31.2
            Certification
                  of the Chief Financial Officer required by Rule 13a-14(a) or Rule
                  15d-14(a).32.1
            Certification
                  of the Chief Executive Officer required by Rule 13a-14(b) or Rule
                  15d-14(b) and 18 U.S.C. 1350.32.2
            Certification
                  of the Chief Financial Officer required by Rule 13a-14(b) or Rule
                  15d-14(b) and 18 U.S.C. 1350.





13





**SIGNATURES**





**** 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 under signed
      thereunto duly authorized.




Date:
                May 20, 2008
            
            **CYBRA
                Corporation**By:
            /s/
                Harold BrandHarold
                BrandChief
                Executive Officer andInterim
                Chief Financial Officer





14