UNITED ~~STATESSECURITIES~~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 September 30, 2012

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

For the quarterly period ended June 30, 2012

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to_________________

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 Organization)	(I.R.S. Employer Identification No.)

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

Registrant’s Telephone Number, Including Area Code	(914) 963-6600

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. [ x X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ x X] 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 Company [ x X]

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

As of ~~August~~November 816, 2012, the registrant had 15,~~529~~593,~~667~~000 shares of Common Stock outstanding.

~~CYBRA~~Explanatory ~~Corporation~~Note

Cybra Corporation (the “Registrant”) is filing its Form 10-Q for quarterly period ended September 30, 2012, (the “Q-3 Form 10-Q”) in reliance on Securities and Exchange Commission Release No. 34-68224, which extends the filing due date for issuers who have been affected by Hurricane Sandy to November 21, 2012 (the “Release”).

The Registrant is unable to file its Q-3 Form 10-Q by the original filing due date given the impact of Hurricane Sandy and its aftermath. In particular, the offices of its accountants, legal counsel, and controller lost power for one week or more, which delayed the preparation of financial statements and other portions of the Q-3 Form 10-Q. The original filing due date was November 14, 2012, which fell within the period from October 29, 2012 to November 20, 2012 provided for in the Release. Thus, all conditions set forth in the Release are met and the Registrant is eligible for the extension of its filing due date to November 21, 2012.

Table of Contents

		Page
Part I.	Financial Information	1
Item 1.	Financial Statements	1
	Balance Sheets as of June 30, 2012 and December 31, 2011	1
	Balance Sheets as of September 30, 2012 and December 31, 2011	1
	Statements of Operations for the three and six months ended June 30, 2012 and 2011	2
	Statements of Operations for the three months and nine months ended September 30, 2012 and 2011	2
	Statements of Cash Flows for the six months ended June 30, 2012 and 2011	3
	Statements of Cash Flows for the nine months ended September 30, 2012 and 2011	3
	Notes to Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1514
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2018
Item 4.	Controls and Procedures	2018
Part II.	Other Information	19
Item 3.	Defaults Upon Senior Securities	20
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 6.	Exhibits	21
Item 3	Defaults Upon Senior Securities	19
Signatures		21
Item 6.	Exhibits	19
Signatures		20

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CYBRA CORPORATION ~~BALANCE SHEETS~~

		June 30,			December 31,
		2012			2011
		Unaudited
ASSETS
CURRENT ASSETS
Cash	$	36,034		$	54,535
Accounts receivable, less allowance for doubtful accounts of $6,000		239,005			196,207
Total Current Assets		275,039			250,742
PROPERTY AND EQUIPMENT, at cost, less accumulated depreciation of $295,971 and $291,239		58,800			59,472
SOFTWARE DEVELOPMENT, at cost, less accumulated amortization of $678,388 and $678,136		312			564
SECURITY DEPOSITS AND OTHER ASSETS		11,645			11,645
TOTAL ASSETS	$	345,796		$	322,423
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
8% Convertible Debentures	$	1,420,000		$	1,420,000
Accrued interest		483,810			426,845
Accounts payable and accrued expenses		258,797			245,265
Deferred officer/director compensation		108,712			116,827
Loans from shareholders		47,500			47,500
Note payable under financial institution line of credit		-			86,822
Deferred revenue		463,086			424,966
TOTAL CURRENT LIABILITIES		2,781,905			2,768,225
SHAREHOLDERS' DEFICIT
Preferred Stock, Series A 10% Convertible Preferred Stock, par value $0.001 per share, 10,000,000 shares authorized; 2,090,000 shares issued and outstanding (liquidation preference $1,045,000)		2,090			2,090
Common stock, par value $0.001 per share, 100,000,000 shares authorized;
15,529,667 shares issued and outstanding at June 30, 2012 and December 31, 2011		15,529			15,529
Additional Paid - in capital		6,761,514			6,761,514
Accumulated deficit		(9,215,242	)		(9,224,935	)
Total Shareholders' Deficit		(2,436,109	)		(2,445,802	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	345,796		$	322,423

BALANCE SHEETS

CYBRA CORPORATION STATEMENTS OF OPERATIONS UNAUDITED

		September 30,			December 31,
		2012			2011
		Unaudited

ASSETS
CURRENT ASSETS
Cash	$	22,249		$	54,535
Accounts receivable, less allowance for doubtful accounts of $6,000		161,972			196,207
Total Current Assets		184,221			250,742


PROPERTY AND EQUIPMENT, at cost, less accumulated depreciation of $298,600 and $291,239		58,236			59,472
SOFTWARE DEVELOPMENT, at cost, less accumulated amortization of $678,513 and $678,137		187			564
SECURITY DEPOSITS AND OTHER ASSETS		11,645			11,645

TOTAL ASSETS	$	254,289		$	322,423

LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES
8% Convertible Debentures	$	1,420,000		$	1,420,000
Accrued interest		512,433			426,845
Accounts payable and accrued expenses		224,443			245,265
Deferred officer/director compensation		108,712			116,827
Loans from shareholders		-			47,500
Note payable under financial institution line of credit		40,000			86,822
Deferred revenue		459,880			424,966
TOTAL CURRENT LIABILITIES		2,765,468			2,768,225

SHAREHOLDERS' DEFICIT
Preferred Stock, Series A 10% Convertible Preferred Stock, par value $0.001 per share, 10,000,000 shares authorized; 2,090,000 shares issued and outstanding (liquidation preference $1,045,000)		2,090			2,090

Common stock, par value $0.001 per share, 100,000,000 shares authorized; 15,593,000 and 15,529,667 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively		15,593			15,529

Additional paid-in capital		6,808,950			6,761,514

Accumulated deficit		(9,337,812	)		(9,224,935	)

Total Shareholders' Deficit		(2,511,179	)		(2,445,802	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	254,289		$	322,423

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2012			2011			2012			2011
REVENUES
Products	$	262,665			222,525		$	490,075		$	553,148
Services		221,725			257,195			446,760			465,415
TOTAL REVENUES		484,390			479,720			936,835			1,018,563
Cost of Goods Sold		110,323			95,947			180,856			225,778
Consulting/Royalties		3,825			19,234			7,574			46,858
		114,148			115,181			188,430			272,636
GROSS PROFIT		370,242			364,539			748,405			745,927
Research and Development		60,002			55,543			118,777			117,086
Selling, General and Administrative		324,844			350,358			613,943			712,701
TOTAL OPERATING EXPENSES		384,846			405,901			732,720			829,787
INCOME (LOSS) FROM OPERATIONS		(14,604	)		(41,362	)		15,685			(83,860	)
OTHER INCOME (EXPENSE)
Interest expense, includes amortization		(28,386	)		(28,481	)		(57,474	)		(56,659	)
Refundable state tax credits		17,897						51,482			-
Interest income		-			4			-			9
Total Other income (expense)		(10,489	)		(28,477	)		(5,992	)		(56,650	)
NET INCOME (LOSS)	$	(25,093	)	$	(69,839	)	$	9,693		$	(140,510	)
PER SHARE DATA
Basic net income (loss) per share	$	0.00		$	0.00		$	0.00		$	(0.01	)
Basic weighted-average shares outstanding		15,529,667			15,519,668			15,529,667			15,519,668
Fully diluted net income (loss) per share	$	0.00		$	0.00		$	0.00		$	(0.01	)
Fully diluted weighted-average shares outstanding		20,479,667			15,519,668			20,479,667			15,519,668

The accompanying notes are an integral part of these financial statements

~~CYBRA~~1 ~~CORPORATION STATEMENTS OF CASH FLOWS UNAUDITED~~

		Six Months Ended
		June 30,
		2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)	$	9,693		$	(140,510	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and Amortization		4,985			104,088
Changes in operating assets and liabilities
Increase in accounts receivable		(42,798	)		(73,848	)
Increase in accounts payable and accrued expenses		5,417			30,682
Increase in accrued interest		56,965			56,333
Increase in note payable under financial institution line of credit					40,000
Increase in deferred revenue		38,120			9,808
Net Cash Provided by Operating Activities		72,382			26,553
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment		(4,061	)		(13,297	)
Net Cash (Used in) Investing Activities		(4,061	)		(13,297	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of note payable under financial institution line of credit		(86,822	)		-
Net Cash (Used in) Financing Activities		(86,822	)		-
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(18,501	)		13,256
CASH AND CASH EQUIVALENTS
Beginning of period		54,535			24,335
End of period	$	36,034		$	37,591
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income Taxes	$	875		$	797
Interest	$	-		$	-

CYBRA CORPORATION

~~CYBRA CORPORATION NOTES TO FINANCIAL~~ STATEMENTS ~~June~~OF ~~30,~~OPERATIONS ~~2012~~

UNAUDITED

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2012			2011			2012			2011

REVENUES
Products	$	91,851		$	150,459		$	581,926		$	703,608
Services		208,405			247,810			655,165			713,224
TOTAL REVENUES		300,256			398,269			1,237,091			1,416,832


Cost of Goods Sold		52,335			61,613			233,191			287,390
Consulting/Royalties		1,500			(7,296	)		9,074			39,561
		53,835			54,317			242,265			326,951

GROSS PROFIT		246,421			343,952			994,826			1,089,881

Research and Development		70,133			66,416			188,909			183,502
Selling, General and Administrative		270,200			295,589			884,143			1,008,289
TOTAL OPERATING EXPENSES		340,333			362,005			1,073,052			1,191,791

(LOSS) FROM OPERATIONS		(93,912	)		(18,053	)		(78,226	)		(101,910	)

OTHER INCOME (EXPENSE)
Interest expense, includes amortization		(28,658	)		(28,651	)		(86,132	)		(85,310	)
Refundable state tax credits					49,120			51,481			49,120
Interest income					1						10
Total Other income (expense)		(28,658	)		20,470			(34,651	)		(36,180	)

NET (LOSS) INCOME	$	(122,570	)	$	2,417		$	(112,877	)	$	(138,090	)

PER SHARE DATA
Basic and diluted (loss) per share	$	(0.01	)	$	0.00		$	(0.01	)	$	(0.01	)

Basic and diluted weighted-average shares outstanding		15,557,204			15,519,668			15,538,947			15,405,553

The accompanying notes are an integral part of these financial statements

STATEMENTS OF CASH FLOWS

UNAUDITED

		Nine Months Ended
		September 30,
		2012			2011


CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss)	$	(112,877	)	$	(138,090	)
Adjustments to reconcile net (loss) to net cash provided (used) by operating activities
Depreciation and Amortization		7,739			109,693

Changes in operating assets and liabilities
Increase (decrease) in accounts receivable		34,235			(38,760	)
(Decrease) in accounts payable and accrued expenses		(28,937	)		(95,727	)
Increase in accrued interest		85,588			84,966
Decrease in deferred revenue		34,914			(2,607	)
Net Cash Provided (Used) by Operating Activities		20,662			(80,525	)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment		(6,126	)		(16,014	)
Net Cash (Used in) Investing Activities		(6,126	)		(16,014	)

CASH FLOWS FROM FINANCING ACTIVITIES
(Repayments of) Advances from note payable under financial institution line of credit		(46,822	)		79,442
Net Cash (Used in) Financing Activities		(46,822	)		79,442

DECREASE IN CASH AND CASH EQUIVALENTS		(32,286	)		(17,097	)

CASH AND CASH EQUIVALENTS
Beginning of period		54,535			24,335

End of period	$	22,249		$	7,238

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income Taxes	$	1,314		$	931
Interest	$	-		$	-

Non cash financing activities:
Restricted common stock issued to shareholders in repayment of loans	$	47,500		$	-

The accompanying notes are an integral part of these financial statements

CYBRA CORPORATION

NOTES TO FINANCIAL STATEMENTS
September 30, 2012

1. ORGANIZATION, DESCRIPTION OF OPERATIONS, FINANCIAL STATUS OF THE COMPANY AND BASIS OF PRESENTATION

Organization and Description of Operations

CYBRA Corporation (the “Company”) was incorporated under the laws of the State of New York on September 6, 1985. The Company is a software developer, publisher and systems integrator specializing in Automatic Identification technology solutions. The Company’s flagship product, MarkMagicTM, is a barcode, radio frequency identification (“RFID”) and forms middleware solution relied upon daily by thousands of customers worldwide. It helps customers easily integrate bar code labels, RFID technology and electronic forms into their business systems. EdgeMagic®, first released in February 2008, is an integrated RFID control solution that 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, as well as for asset tracking applications and integration with popular ERP and Warehouse Management application packages. CYBRA software solutions run on all major computing platforms, including IBM Power Systems (System i, iSeries, AS/400, AIX) as well as Linux, Unix, and Microsoft Windows.

Basis of Presentation

The unaudited financial statements included in this Quarterly Report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All interim financial data is unaudited. However, in the opinion of management, the interim financial data as of ~~June~~September 30, 2012 and for the three and ~~six~~nine months ended ~~June~~ September 30, 2012 and 2011 includes all adjustments, consisting only of normal ~~recurring~~ recurring adjustments, necessary for a fair statement of the results for the ~~interim~~ interim periods. The results of operations for interim periods are not ~~necessarily~~ necessarily indicative of the results of operations to be expected for a full year. The December 31, 2011 balance sheet data was derived from audited ~~financial~~ financial statements included in the Company’s 2011 Annual Report on Form 10-K (“2011 Form 10-K”), but does not include all disclosures required by GAAP, which ~~are~~ are presented in the Company’s 2011 Form 10-K.

Financial Status of the Company

At ~~June~~September 30, 2012, the Company had cash of $3622,~~034~~249, a ~~working~~ working capital deficit of $2,~~506~~581,~~866~~247 and a stockholders’ deficit of $2,~~436~~511,~~109~~179. Management has taken several steps to improve sales and reduce costs ~~which helped~~in ~~the~~order ~~Company~~to ensure ~~achieve~~that ~~net~~its ~~income~~cash offlows ~~$9,693~~will ~~for~~meet ~~the~~its ~~six~~operating ~~months~~cash ~~ended~~requirements ~~June~~for the ~~30,~~next ~~2012~~year. These steps ~~include~~have included increasing sales of EdgeMagic, which ~~management~~ management believes has revenue potential far in excess of the current product mix, as well as the formation of a field level sales team.

The amended 8% Convertible Debentures with a principal balance of $1,420,000 became due on April 11, 2011. In March 2012, 10 holders of Amended Debentures having a total principal balance of $1,195,000 signed a Forbearance Agreement in which such holders agreed to forebear from taking any action to enforce collection of their Amended Debentures until the earlier of (i) December 31, 2012 or (ii) the occurrence of a Material Adverse Event (as defined in the Securities Purchase Agreement with respect to the Debentures). Management has continued negotiations with the holders of these Amended Debentures to extend their term, to exchange them for equity, or to otherwise provide for their payment. No assurance can be given that these negotiations will be successful and the effects of unsuccessful negotiations cannot be determined.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue ~~recognitionThe~~recognition ~~Company recognizes revenues in accordance with ASC 985-605, Software Revenue Recognition.~~

The Company recognizes revenues in accordance with ASC 985-605, Software Revenue Recognition.

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 collectability 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.

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.

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.

Software Costs

The Company accounts for software development costs in accordance with ASC 985.730, Software Research and Development, and ASC 985-20, Costs of Software to be Sold, Leased or Marketed. ASC 985-20 requires that costs related to the development of enhancements to MarkMagic^TMbe capitalized as an asset when incurred subsequent to the point at which technological feasibility of the enhancement is established. ASC 985-20 specifies that “technological feasibility” can only be established by the completion of a “detailed program design” or if no such design is prepared, upon the completion of a “working model” of the software. The Company’s development process does not include a detailed program design. Management believes that such a design could be produced in the early stages of development but would entail significant wasted expense and delay. Consequently, ASC 985-20 requires the development costs to be recorded as an expense until the completion of a “working model”. In the Company’s case, the completion of a working model does not occur until shortly before the time when the software is ready for sale.

Research and Development Costs

Research and development costs incurred after completion of development of a product are expensed as incurred. Total research and development expense for the ~~six~~nine months ended ~~June~~September 30, 2012 and 2011 was $188,909 and $~~118~~183,~~777~~502 respectively. Total research and development expense for the three months ended September 30, 2012 and 2011 was $~~117~~70,~~086~~133 and $66,416 respectively.

Accounting for Warrants Classified as Equity Issued to Purchase Company Common Stock

Warrants issued in conjunction with equity financings were accounted for under ASC 815-40, Contracts in Entity’s Own Stock. ASC 825-20, Accounting for Registration Payment Arrangements, establishes the standard that contingent obligations to make future payments under a registration rights arrangement shall be recognized and measured separately in accordance with the standard, Reasonable Estimation of the Amount of a Loss. The Company has evaluated how these standards affected these accompanying financial statements. The adoption of the accounting pronouncement on January 1, 2007 changed the classification of the warrant liability, which was $551,910 at January 1, 2007, to stockholders’ equity (additional paid in capital). In connection with the Debenture Amendment and Exchange Agreements (as discussed in Note 3, 8% Convertible Debentures and Derivative Financial Instruments), the registration rights and penalties under the original Securities Purchase Agreements were waived.

Derivative Financial Instruments

The Company accounts for its Warrants, which are Class B Warrants issued in a private placement of the 8% Convertible Debentures (the “Debentures”) with detachable Class A Warrants and Class B Warrants on April 10, 2006, and amended on June 8, 2010 to extend their ~~expirations~~expiration date to April 10, 2013, and reduce the exercise prices to amounts between $1.00 and $1.30 from $1.75 (see Note 3, 8% Convertible Debentures and Derivative Financial Instruments), as derivatives under the guidance of ASC 815-10, Accounting for Derivative Instruments and Hedging Activities, and ASC 815-40, Contracts in an Entity’s Own Stock. The Company considers these standards applicable by adopting “View A” of the Issue Summary–The Effect of a Liquidated Damages Clause on a Freestanding Financial Instrument in which the Warrants and the related registration rights agreement are viewed together as a combined instrument that is indexed to the Company's stock. The embedded conversion feature of the Debentures has not been classified as a derivative financial instrument because the Company believes that they are “conventional” as defined in ASC 470-20, Conventional Convertible Debt Instrument.

Accounting for Derivative Instruments and Hedging Activities, and ASC 815-40, Contracts in an Entity’s Own Stock. The Company considers these standards applicable by adopting “View A” of the Issue Summary–The Effect of a Liquidated Damages Clause on a Freestanding Financial Instrument in which the Warrants and the related registration rights agreement are viewed together as a combined instrument that is indexed to the Company's stock. The embedded conversion feature of the Debentures has not been classified as a derivative financial instrument because the Company believes that they are “conventional” as defined in ASC 470-20, Conventional Convertible Debt Instrument.

Depreciation and Amortization

Depreciation and amortization are provided by the straight-line and accelerated methods over the estimated useful lives indicated in Note 5, Property and Equipment.

Income Taxes

Income taxes are accounted for under the asset and liability method in accordance with ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that the recoverability of the asset is unlikely to be recognized.

The Company follows ASC 740 rules governing uncertain tax positions, which provides guidance for recognition and measurement. This prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. It also provides accounting guidance on derecognition, classification and disclosure of these uncertain tax positions.

Interest costs and penalties related to income taxes are classified as interest expense and selling, general and administrative costs, respectively, in the Company's financial statements. For the ~~six~~nine months ended September ~~June~~ 30, 2012 and 2011, the Company did not recognize any interest or penalty expense related to income taxes. The Company is currently subject to a three-year statute of limitations by major tax jurisdictions. The Company files income tax returns in the U.S. federal jurisdiction and New York State.

Advertising Costs

Advertising costs are charged to expense as incurred. Total advertising amounted to $1113,~~017~~011 and $35,~~098~~286 for the ~~six~~nine months ended ~~June~~September 30, 2012 and 2011, respectively. Total advertising amounted to $1,994 and $2,187 for the three months ended September 30, 2012 and 2011, respectively.

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 revenue and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates relate to valuation of warrants, stock grants and stock options, the net operating loss carry-forward, the valuation allowance for deferred taxes and various contingent liabilities. It is reasonably possible that these above-mentioned estimates and others may be adjusted as more current information becomes available, and any adjustment could be significant in future reporting periods. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of commercial accounts receivable and temporary cash investments, which could, from time-to-time, exceed the federal deposit insurance coverage. The Company has cash investment policies that restrict placement of these investments to financial institutions evaluated as highly creditworthy. As of ~~June~~September 30, 2012, the Company did not hold cash and cash equivalents with individual banks in excess of federally insured limits.

Concentrations of credit risk that arise from financial instruments exist for groups of customers when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. The Company operates in one segment, software development and systems integration of bar code and RFID to manufacturers and wholesale distributors in the United States of America. Management believes that the customer base is sufficiently diverse and therefore does not consider the aggregate of customer accounts receivable to be a concentration of credit risk.

Cash and Cash Equivalents

The Company classifies marketable securities that are highly liquid and have maturities of ~~six~~nine months or less at the date of purchase as cash equivalents. The Company manages its exposure to counterparty credit risk through specific minimum credit standards, diversification of counterparties and procedures to monitor its credit risk concentrations.

Accounts Receivable

The Company records trade accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the trade accounts receivable balances and charged to the provision for doubtful accounts. The Company calculates this allowance based on its history of write-offs, level of past-due accounts based on the contractual terms of the receivables, and its relationships with and the economic status of its customers. Uncollectible receivables are charged off against the allowance for doubtful accounts as management determines that they are clearly uncollectible after taking all reasonable steps to collect the balances.

Trade receivables are presented net of an allowance for doubtful accounts of $6,000 for ~~June~~September 30, 2012 and December 31, 2011.

Substantially all of the Company’s accounts receivable are from manufacturing companies and software vendors located throughout the United States.

Stock-Based Compensation

In addition to requiring supplemental disclosures, ASC 718, Compensation – Stock Compensation, and ASC 505-50, Equity-Based Payments to Non-Employees, address the accounting for share-based payment transactions in which a company receives goods or services in exchange for (a) equity instruments of the company or (b) liabilities that are based on the fair value of the company’s equity instruments or that may be settled by the issuance of such equity instruments. ASC 718 focuses primarily on accounting for transactions in which a company obtains employee services in share-based payment transactions.

The Company uses the modified prospective method. Stock issued to consultants for consulting services was valued as of the date of the agreements with the various consultants, which in all cases was earlier than the dates when the services were committed to be performed by the various consultants.

References to the issuances of restricted stock refer to stock of a public company issued in private placement transactions to individuals who are eligible to sell all or some of their shares of restricted Common Stock pursuant to Rule 144, promulgated under the Securities Act of 1933, as amended (“Rule 144”), subject to certain limitations. In general, pursuant to Rule 144, a stockholder who is not an affiliate and has satisfied a six-month holding period may sell all of his restricted stock without restriction, provided that the Company has current information publicly available. Rule 144 also permits the sale of restricted stock, without any limitations, by a non-affiliate of the Company that has satisfied a one-year holding period.

Following is a summary of the warrant activity:

			Weighed Average
			Weighted Average
		Avergage Exercise	Remaining
	Number of	Average Exercise	Remaining
Class A and B Warrants	~~Number of~~ Shares	Price per Share	Contractual Term ~~In Years~~
			In Years
Outstanding at December 31, 2011 – Class A	1,023,669	0.75	1.29
Outstanding at December 31, 2011 – Class B	7,876,735	1.29	1.19
Total Outstanding Warrants – December 31, 2011	8,900,404	1.23	1.21
Exercisable at December 31, 2011	8,900,404	1.23	1.21
Outstanding at June 30, 2012 – Class A	1,023,669	0.75	0.79
Outstanding at September 30, 2012 – Class A	1,023,669	0.75	0.54
Outstanding at June 30, 2012 – Class B	7,876,735	1.29	0.69
Outstanding at September 30, 2012 – Class B	7,876,735	1.29	0.44
Total Outstanding Warrants – June 30, 2012	8,900,404	1.23	0.71
Total Outstanding Warrants – September 30, 2012	8,900,404	1.23	0.46
Exercisable at September 30, 2012	8,900,404	1.23	0.46

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, Fair Value Measurements and Disclosures, approximates the carrying amounts represented in the balance sheet.

ASC 825-20, Accounting for Registration Payment Arrangements, addresses an issuer’s accounting for registration payment arrangements by specifying that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, should be separately recognized and measured in accordance with ASC 450, Contingencies. In connection with the Debenture Amendment and Exchange Agreements (as discussed in Note 3, 8% Convertible Debentures and Derivative Financial Instruments), the registration rights and penalties under the original Securities Purchase Agreements were waived.

Basic and Diluted Income (Loss) per Share

In accordance with ASC 260, Earnings Per Share, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed in a manner similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. At ~~June~~September 30, 2012, the ~~potential~~Company’s ~~conversions~~stock ofequivalents ~~the~~were ~~Convertible~~anti-dilutive ~~Preferred Stock~~ and excluded ~~the Convertible Debentures were included~~ in the diluted ~~earnings~~loss per share ~~computation,~~ ~~but the warrants were excluded as the effects of an exercise assumed under the Treasury Method would be anti-dilutive~~computation.

At June 30, 2012, the Company’s stock equivalents were anti-dilutive and excluded in the diluted loss per share computation.

Commitments and Contingencies

Liabilities for loss contingencies arising from various claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

Recently Issued Accounting Standards

~~The~~Accounting ~~Company~~standards ~~does~~that ~~not~~have ~~believe~~been ~~that~~issued ~~the~~or ~~adoption~~proposed ofby ~~any recently~~the ~~issued,~~FASB ~~but~~that do not ~~yet~~require ~~effective,~~adoption ~~accounting~~until ~~standards~~a ~~will~~future date are not expected to have a material ~~effect~~ impact on ~~its~~the financial ~~position~~statements ~~and~~upon ~~results of operations~~adoption.

Reclassifications

No reclassifications have been made to the financial statements.

3. 8% CONVERTIBLE DEBENTURES AND DERIVATIVE FINANCIAL INSTRUMENTS

Original financing:

On April 10, 2006, the Company issued 8% Convertible Debentures (the “Debentures”) with a principal (“face”) 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. Interest on the Debentures was due semiannually at 8% per annum beginning December 31, 2006. Interest was also due upon conversion, redemption and maturity. The total interest paid in cash to two Debenture holders prior to April 10, 2009 was $16,982. Another Debenture holder converted its accrued interest to shares of common stock in 2009. The original Debentures matured on April 10, 2009, but were not paid on that date. As a result, the Debentures were in default; however, the Company renegotiated the terms of the Debentures, as described below.

The investors also received 7,500,000 Warrants comprising 2,500,000 Class A Warrants and 5,000,000 Class B Warrants, as part of the original sale of the Debentures. Each Class A Warrant gave the holder the right to buy one share of the Company’s common stock, par value $0.001 per share (the “Common Stock”), for $0.75. Class A Warrants to purchase 2,123,800 shares of Common Stock remained outstanding and exercisable at any time through April 10, 2011. The Class A Warrants are no longer exercisable. The Class B Warrants were replaced with new Class B Warrants as described below.

Renegotiation and exchange of Debentures:

The Company renegotiated the terms of the Debentures, either by extending the maturity date of the Debentures or by exchanging the Debentures for a new series of preferred stock.

On June 8, 2010, the Company entered into Debenture Amendment and Exchange Agreements with two holders of its Debentures having an aggregate principal amount of $640,000 (the “Option A Holders”), and ten holders of its Debentures having an aggregate principal amount of $805,000 (the “Option B Holders”). Pursuant to the Debenture Amendment and Exchange Agreements, the Option A Holders and the Option B Holders exchanged their Debentures for an amended and restated Debenture due April 10, 2011.

principal amount of $805,000 (the “Option B Holders”). Pursuant to the Debenture Amendment and Exchange Agreements, the Option A Holders and the Option B Holders exchanged their Debentures for an amended and restated Debenture due April 10, 2011.

In addition, the Option A Holders and the Option B Holders received an aggregate of 499,099 shares of common stock in lieu of approximately $246,000 of accrued interest through April 10, 2009. The Company also issued (a) new Class B Warrants to the Option A Holders to purchase an aggregate of 1,560,000 shares of the Company’s Common Stock at an exercise price of $1.15 per share, in exchange for their outstanding Class B Warrants, and (b) new Class B Warrants to the Option B Holders to purchase an aggregate of 1,803,200 shares of the Company’s Common Stock at an exercise price of $1.30 per share, in exchange for their outstanding Class B Warrants.

On the same date, the Company entered into Securities Exchange Agreements with 16 holders of its Debentures having an aggregate principal amount of $1,045,000 (the “Option C Holders”) to exchange their Debentures for 2,090,000 shares of Series A 10% Convertible Preferred Stock (the “Series A Preferred Stock”). The Securities Exchange Agreements were signed on June 8, 2010, but the transactions contemplated by those agreements were subject to (i) approval by the Company’s shareholders of an amendment to the Company’s Certificate of Incorporation to authorize it to issue up to 10 million shares of preferred stock in one or more series or classes having such designations, relative rights, preferences, and limitations as may be designated by the Company’s Board of Directors (the “Amendment”), and (ii) subsequent authorization of the Series A Preferred Stock by the Company’s Board of Directors.

On August 3, 2010 the Company held a special meeting of shareholders in which its shareholders approved the Amendment. On the same day, the Company filed a Certificate of Designation setting forth the terms of the Series A Preferred Stock with the New York Secretary of State. The Company subsequently issued to the Option C Holders (a) 2,090,000 shares of Series A Preferred Stock in exchange for the Debentures, and (b) 487,704 shares of its Common Stock in payment of accrued and unpaid interest due under the Debentures through April 10, 2009. The Common Stock was issued at $0.50 per share compared to the fair market value on June 8, 2010 of $0.59 per share. As a result, the conversion generated a beneficial conversion cost. The Option C Holders also received new Class B Warrants to purchase an aggregate of 2,466,200 shares of the Company’s Common Stock at an exercise price of $1.00 per share, in exchange for their outstanding Class B Warrants. The new Class B Warrants vested immediately and expire on April 10, 2013.

The Debenture balance was $1,420,000 at ~~June~~September 30, 2012 and December 31, 2011.

Other transactions related to the amendments:

In July 2010, two holders of the Company’s 8% Convertible Debentures due April 10, 2011 (the “Amended Debentures”) converted an aggregate of $15,000 of the principal amount of Amended Debentures into 30,000 shares of Common Stock. Outstanding interest on the converted principal was paid in cash. The Company subsequently provided notice (the “Notice”) to all holders of the Amended Debentures specifying that, unless notified otherwise by the Company, the Company will pay interest due upon the conversion, redemption and maturity of the Amended Debentures with shares of its Common Stock. The Notice also clarified that the aforesaid election includes the accrued and unpaid interest due under the Amended Debentures on June 30, 2009, December 31, 2009, and June 30, 2010.

In October 2010 one holder converted $10,000 of the principal amount of Amended Debentures into 20,000 shares of Common Stock. Outstanding interest on the converted principal was paid in 2,442 shares of common stock. The Company recorded a charge of $620,788 in the year ended December 31, 2010 in connection with the exchange of certain Debentures for Series A Preferred Stock.

At ~~June~~September 30, 2012, there were Warrants to purchase 5,829,400 shares of Common Stock outstanding in connection with the sale and amendments of the Debentures. In previous years there were 2,047,335 Class B warrants issued in connection with a private placement.

The new Class B Warrants issued to the Option A Holders and the Option B Holders were determined to have a value of $1,956,000, as compared to the outstanding Class B Warrants, which were valued at $1,261,000. The new Class B Warrants issued to the Option C Holders were determined to have a value of $1,436,000, as compared to the outstanding Class B Warrants, which were valued at $906,000. As a result, the Company incurred a debt extinguishment charge in accordance with ASC 470-50, Debt Modification and Extinguishments, and recorded a loss of $1,225,748.

As part of the original sale of the Debentures, $250,000 principal amount of the Debentures 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 equal to 5% of any cash collected as on the exercise of any of the Warrants. To date, no Warrants have been exercised.

The shares of Common Stock that underlie the conversion feature of the original Debentures and those that underlie the Warrants were subject to a registration rights agreement. The registration rights agreement provided for liquidated damages if the Company failed to satisfy certain requirements, which were not satisfied. In connection with the Debenture Exchange and Amendment Agreements, the Debenture holders waived their right to receive liquidated damages and interest thereon due under the registration rights agreement.

The Warrants were classified as derivative financial instruments as a result of the registration rights agreement, which included a liquidated damages clause that was linked to an effective registration of such securities. Accordingly, the Company accounted for the Warrants as liabilities at estimated fair value. In accordance with the Company’s adoption of ASC 815-40, Contracts in Entity’s Own Stock, and ASC 825-20, Accounting for Registration Payment Arrangements, the classification of the warrant liability was changed to stockholders’ equity (additional paid in capital) as of January 1, 2007. The amended warrants do not carry a registration rights agreement.

The derivative financial instruments have not been designated as hedges. The purpose of their issuance was to raise additional capital in a more advantageous fashion than could be done without the use of such instruments. In addition to expecting the overall cost of capital to be less, the use of the derivative instruments reduces the cost to the common shareholders when the value of their shares declines in exchange for increasing the cost to the common shareholders when the value of their shares increases, all of which should tend to reduce the volatility of the value of the Company’s Common Stock.

Effects of the default prior to the amendment:

The Company’s failure to pay the full principal amount of the Debentures on their Maturity Date constituted an “Event of Default” under the Debentures. Upon an Event of Default, the full principal amount of the Debenture, together with interest and other amounts owing in respect thereof, to the maturity date becomes, at the Debenture holder’s election, immediately due and payable in cash. The aggregate amount payable upon an Event of Default is referred to in the Debentures as the “Mandatory Prepayment Amount”, as more fully explained below under Payment Default on Amended and Restated 8% Convertible Debentures.

Payment Default on Amended and Restated 8% Convertible Debentures:

On April 10, 2011, the Company did not pay outstanding Amended and Restated 8% Convertible Debentures (the “Debentures”), in the aggregate principal amount of $1,420,000, which became due on that date. These Debentures were issued on June 8, 2010, pursuant to a Debenture Amendment and Exchange Agreement, also dated June 8, 2010 (the “Exchange Agreement”).

The Company’s failure to pay the full principal amount of the Debentures on their Maturity Date constituted an “Event of Default” under the Debentures. Upon an Event of Default, the full principal amount of the Debenture, together with interest and other amounts owing in respect thereof, to the maturity date will become, at the Debenture holder’s election, immediately due and payable in cash. The aggregate amount payable upon an Event of Default is referred to in the Debentures as the “Mandatory Prepayment Amount.”

The Mandatory Prepayment Amount of a Debenture is equal to the sum of: (i) the greater of: (A) 120% of the principal amount of such Debenture, plus all accrued and unpaid interest thereon, or (B) the principal amount of such Debenture, plus all other accrued and unpaid interest thereon, divided by the Conversion Price on (x) the date the Mandatory Prepayment Amount is demanded or otherwise due or (y) the date the Mandatory Prepayment Amount is paid in full, whichever is less, multiplied by the VWAP on (x) the date the Mandatory Prepayment Amount is demanded or otherwise due or (y) the date the Mandatory Prepayment Amount is paid in full, whichever is greater, and (ii) all other amounts, costs, expenses and liquidated damages due in respect of such Debentures. The current Conversion Price of the Debentures is $0.50. VWAP is the volume-weighted average price of the Company’s common stock on the day in question.

"VWAP" means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg Financial L.P. (based on a Business Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b) if the Common Stock is not then listed or quoted on a Trading Market and if prices for the Common Stock are then reported in the "Pink Sheets" published by the Pink Sheets LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (c) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers and reasonably acceptable to the Company.

In March 2012, holders of Amended Debentures having a total principal balance of $1,195,000 signed a Forbearance Agreement in which such holders agreed to forebear from taking any action to enforce collection of their Amended Debentures until the earlier of (i) December 31, 2012 or (ii) the occurrence of a Material Adverse Event (as defined in the Securities Purchase Agreement with respect to the Debentures). Management has continued negotiations with the holders of these Amended Debentures to extend their term, exchange them for equity, or to otherwise provide for their payment. No assurance can be given that these negotiations will be successful and the effects of unsuccessful negotiations cannot be determined.

December 31, 2012 or (ii) the occurrence of a Material Adverse Event (as defined in the Securities Purchase Agreement with respect to the Debentures). Management has continued negotiations with the holders of these Amended Debentures to extend their term, exchange them for equity, or to otherwise provide for their payment. No assurance can be given that these negotiations will be successful and the effects of unsuccessful negotiations cannot be determined.

4. STOCK BASED COMPENSATION

During the ~~six~~nine months ended ~~June~~September 30, 2012 and 2011 the ~~Company~~ Company issued no restricted common stock in lieu of compensation.

The Company has adopted the CYBRA Corporation 2006 Incentive Stock Plan, a stock-based compensation plan to reward services rendered by officers, directors, employees and consultants. The Company has reserved 5,000,000 shares of Common Stock for issuance under the plan.

The Company recognizes share-based compensation expense for all service-based awards with graded vesting schedules on a straight-line basis over the requisite service period for the entire award. Initial accruals of compensation expense are based on the estimated number of shares for which requisite service is expected to be rendered. Estimates are revised if subsequent information indicates that forfeitures will differ from previous estimates, and the cumulative effect on compensation cost of a change in the estimated forfeitures is recognized in the period of the change.

No stock options were outstanding at ~~June~~September 30, 2012.

5. PROPERTY AND EQUIPMENT

~~June~~At September 30, 2012 and December 31, 2011, property and equipment consisted of the following:

					Estimate
					Useful Life
		June 30,		December 31,	In Years
		September 30,		December 31,	In Years
		2012		2011
Furniture and office equipment	$	~~221~~223,~~295~~336	$	217,235	5
Computer software		112,182		112,182	3
Leasehold Improvements		21,294		21,294	Life of Lease
		354,771		350,711
		356,836		350,711
Less: Accumulated
Depreciation		~~295~~298,~~971~~600		291,239
Net Property and Equipment	$	58,~~800~~236	$	59,472

Depreciation and amortization of property and equipment amounted to $47,~~732~~361 and $57,~~221~~717 for the ~~six~~nine months ended ~~June~~September 30, 2012 and 2011, respectively.

At ~~June~~September 30, 2012 and December 31, 2011, software ~~development~~ development costs consisted of the following:

					Estimate
					Useful Life
		March 31,		December 31,	In Years
		September 30,		December 31,	In Years
		2012		2011
Software Development Costs	$	678,700	$	678,700	3
Less: Accumulated Amortization		678,~~388~~513		678,136
Net Software Development Costs	$	~~312~~187	$	564

The Company’s policy is to capitalize software development costs in accordance with ASC 985.730. (See Note 2, Summary of Significant Accounting Policies). Amortization of Software Development Costs amounted to $~~252~~375 and $98101,~~867~~980 for the ~~six~~nine months ended ~~June~~September 30, 2012 and 2011, respectively, and is included within Selling, General and Administrative Expenses.

6. INCOME TAXES

The Company has the following deferred tax assets and liabilities at:

		June 30, 2012			December 31, 2011
		September 30, 2012			December 31, 2011
Current assets and liabilities:
Accounts receivable	$	(9766,000	)	$	(79,000	)
Accounts payable and accrued expenses		(3856,000	)		(44,000	)
Deferred Revenues		~~188~~186,000			172,000
		53,000			49,000
		64,000			49,000
Valuation Allowance		(5364,000	)		(49,000	)
Net current deferred tax asset	$	-		$	-
Noncurrent assets and liabilities				$
Net operating loss carryforwards	$	2,~~423~~473,000		$	2,427,000
Valuation allowance		(2,~~423~~473,000	)		(2,427,000	)
Net deferred tax asset	$	-		$	-

The valuation allowance for the deferred tax asset ~~was~~increased ~~unchanged~~$61,000 for the ~~six~~nine months ended ~~June~~September 30, 2012.

The Company has net operating losses amounting to approximately $6,000,000 that expire in various periods through 2031. The ultimate realization of the net operating losses is dependent upon future taxable income, if any, of the Company and may be limited in any one period by alternative minimum tax rules. Although management believes that the Company will have sufficient future taxable income to absorb the net operating loss carryovers before the expiration of the carryover period, the current global economic crisis imposes additional profitability risks that are beyond the Company’s control. Accordingly, management has determined that a full valuation allowance of the deferred tax asset is appropriate at this time.

Internal Revenue Code Section 382 imposes limitations on the use of net operating loss carryovers when the stock ownership of one or more 5% shareholders (shareholders owning 5% or more of the Company’s outstanding capital stock) has increased by more than 50 percentage points. Management intends to carefully monitor share ownership of 5% shareholders but cannot control the ownership changes occurring as a result of public trading of the Company’s Common Stock. Accordingly, there is a risk of an ownership change beyond the control of the Company that could trigger a limitation of the use of the loss carryover.

The Company has no uncertain income tax positions.

The tax years ended of December 31, 2008 through 2011 are within the statute of limitations and are subject to examination by federal and state taxing authorities.

7. PREFERRED STOCK

The Company is authorized to issue up to 10,000,000 shares of preferred stock in one or more series or classes having such designations, relative rights, preferences, and limitations as may be designated by the Board of Directors. There are 2,090,000 shares of Series A 10% Convertible Preferred shares currently outstanding which are convertible into 2,090,000 shares of common stock, all issued in connection with the renegotiation and exchange of Debentures as described in Note 3, 8% Convertible Debentures and Derivative Financial Instruments.

8. COMMITMENTS, CONTINGENCIES AND OTHER COMMENTS

a. Operating ~~leaseThe Company occupies office space in Yonkers, New York under a~~ lease ~~agreement that was amended effective December 30, 2009 and expires on January 31, 2014.~~

The Company occupies office space in Yonkers, New York under a lease agreement that was amended effective December 30, 2009 and expires on January 31, 2014.

The Company also rents space in West Seneca, New York, near Buffalo. This lease expires on May 31, 2014 as extended on May 5, 2012.

The minimum rental commitment for both properties is as follows:

2012	$	4321,~~658~~829
2013		87,316
2014		11,132
	$	~~142~~120,~~106~~277

Rent expense amounted to $5177,~~697~~781 and $4974,~~710~~612 for the ~~six months~~nine months ended ~~June~~September 30, 2012 and 2011, respectively. Rent expense amounted to $26,084 and $24,901 for the three months ended September 30, 2012 and 2011, respectively. This includes additional expense for storage.

b. Note Payable under Financial Institution Line of ~~CreditThe~~Credit Company has an $115,000 credit line available through its bank. There was no balance due at June 30, 2012. The repayment period is 36 months. The interest rate varies at the bank’s prime rate and was 3.25% at June 30, 2012. Borrowings under the line of credit are personally guaranteed by Harold Brand, Chairman and Chief Executive Officer and majority shareholder of the Company.

c.The ~~Loans~~Company ~~from~~has ~~shareholdersDuring~~a ~~the~~$115,000 ~~year~~credit ~~ended December~~line ~~31,~~available ~~2010,~~through ~~the~~its bank. ~~Company~~There ~~received~~was ~~$35,000~~a ~~from~~balance ~~its~~due ~~Chief~~at ~~Executive~~September ~~Officer and $12~~30,~~500~~ ~~from~~2012 ~~another~~of ~~stockholder (totaling~~ $4740,~~500)~~000. asThe ~~advance payment~~repayment ~~toward~~period ~~the~~is ~~planned~~36 ~~issuance~~months. ofThe ~~common~~interest ~~stock~~rate ~~and~~varies ~~other~~at ~~securities~~the inbank’s aprime ~~planned private~~rate ~~placement~~and was 3.25% ~~The~~at ~~Company~~September is30, ~~currently~~2012. ~~legally~~Borrowings ~~obligated~~under ~~to return~~ the ~~funds~~ ~~received~~line ~~on demand~~ of ~~the~~credit ~~investors~~are ifpersonally guaranteed ~~the~~by ~~contemplated~~Harold ~~private~~Brand, ~~placement is~~Chairman ~~not~~and ~~completed.~~Chief ~~The~~Executive ~~balances~~Officer ~~due~~and ~~bear~~majority shareholder noof ~~interest~~the Company.

c. Loans from shareholders

During the year ended December 31, 2010, the Company received an aggregate of $47,500, $35,000 from its Chief Executive Officer and $12,500 from another stockholder. On August 22, 2012 the Company issued 63,333 shares of restricted common stock in full satisfaction of these loans.

9. PROFIT SHARING PLAN

The Company has a qualified 401(k) profit sharing plan covering all eligible employees. The plan provides for contributions by the Company in such amounts as the Board of Directors may annually determine but subject to statutory limitations.

No contributions to the plan by the Company have been provided for the ~~six~~nine months ended ~~June~~September 30, 2012 or 2011.

10. RELATED PARTY TRANSACTIONS

a. Executive ~~CompensationStarting~~Compensation in 2008, the executive officers of the Company deferred part of their salaries and commissions. The balance of deferred compensation was $108,712 and $116,827 as of June 30, 2012 and December 31, 2011.

b.Starting ~~Profit~~in ~~Horizon~~2008, ~~Inc.Profit~~the ~~Horizon,~~executive ~~Inc.,~~officers ~~a company controlled by Robert J. Roskow, Executive Vice President and a Director~~ of the Company, deferred ~~provides~~part ~~sales~~of ~~consulting~~their ~~services.~~salaries ~~During~~and ~~the~~commissions. ~~six~~The ~~months~~balance ~~ended~~of deferred ~~June~~compensation 30was $108,712 ~~2012~~ and ~~2011~~$116,827 ~~the~~as ~~Company~~of ~~incurred~~September $330,~~000~~ 2012 and ~~$15,000,~~December ~~respectively~~31, ~~in commissions to Profit Horizon, Inc~~2011.

b. Profit Horizon, Inc.

Profit Horizon, Inc., a company controlled by Robert J. Roskow, Executive Vice President and a Director of the Company, provides sales consulting services. During the nine months ended September 30, 2012 and 2011, the Company incurred $4,500 and $22,500, respectively, in commissions to Profit Horizon, Inc. During the three months ended September 30, 2012 and 2011, the Company incurred $4,500 and $3,500, respectively.

11. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments consisted of the following:

		June 30, 2012		December 31, 2011
		September 30, 2012		December 31, 2011
8% Convertible Debentures	$	1,420,000	$	1,420,000

12. PROFIT AND LOSS PER SHARE

Net income per share for the ~~six~~nine and three months ended September ~~June~~ 30, 2012 does not include the effects of 8,900,404 Warrants, because the effects would be anti-dilutive under ASC 260 Earnings per Share, Treasury Stock Method.

Net loss per share for the nine and three months ended September ~~June~~ 30, 2012 and ~~2011~~ ~~and six months ended June 30,~~ 2011 does not include the effects of 8,900,404 Warrants, 2,090,000 shares of Series A 10% Convertible Preferred Stock, or the 2,860,000 shares into which the 8% Convertible Debentures are convertible because the effects would be anti-dilutive as applied against a net loss.

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 our Annual Report on Form 10-K ~~for the year ended December 31, 2011~~; 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 Securities and Exchange Commission. We assume no obligation and do not intend to update these forward-looking statements, except as required by law.

OVERVIEW

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.

We are a software developer, publisher and systems integrator specializing in Auto Identification and Data Collection (“ADIC”) technology solutions. Our flagship product, MarkMagic^TM, is a bar code, radio frequency identification (“RFID”) and forms middleware solution relied upon daily by thousands of customers worldwide. It helps customers easily integrate bar code labels, RFID technology and electronic forms into their business systems.

EdgeMagic^®, first released in February 2008, is an integrated RFID control solution that 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, as well as for asset tracking applications and integration with popular ERP and Warehouse Management application packages.

Our software solutions run on all major computing platforms including IBM Power Systems (System i, iSeries, AS/400, AIX) as well as Linux, Unix, and Microsoft Windows.

WeComparison ~~anticipate sales~~ of ~~MarkMagic~~the tothree ~~continue~~months toand ~~show~~nine ~~steady growth in the~~ months ~~ahead. This growth will be accelerated by the new product~~ended ~~release~~September ~~in June of MarkMagic Version 8~~30, ~~which~~2012 ~~contains significant new features~~ and ~~capabilities.~~2011: Other factors that are expected to contribute to sales growth for MarkMagic include price increases that went into effect with the release of MarkMagic Version 8, as well as the roll out by CYBRA OEM partner Manhattan Associates of MarkMagic PI (Platform Independent) to their installed customer base.

The positive trend for customer interest in RFID in general and in our EdgeMagic product in particular continues. JCPenney just announced that their stores will implement RFID technology this fall in order to roll out their RFID-based self-checkout. They also revealed aggressive plans to have RFID tags in all of their stores by February 2013. Their goal is to eliminate the cash registers by the end of 2013 and thereby save a half a billion dollars a year.

JCPenney’s plans should accelerate the positive trend in customer interest of RFID. Wal-Mart's implementation of RFID tracking throughout its stores for selected apparel goods sparked a game-changing trend towards industry-wide acceptance of item level RFID tagging. Wal-Mart is often a pioneer in new technology, with other retailers following suit. Dillard's, Macy's and Bloomingdale's, and now, JC Penney, have joined Wal-Mart in mandating that their suppliers - among them many CYBRA customers - tag their goods at the item level. We are already experiencing increased interest in EdgeMagic to meet anticipated retailer compliance requirements.

Comparison of the three months and six months ended June 30, 2012 and 2011: The following table summarizes certain aspects of our results of operations for the three and six months ended June 30, 2012 and 2011

		Three months ended										Six months ended
		June 30,										June 30,
		2012			2011			Change $		Change %		2012		2011			Change $		Change %
Revenues
Products	$	262,665		$	222,525		$	40,140		18%	$	490,075	$	553,148		$	(63,073	)	-11%
Services		221,725			257,195			(35,470	)	-14%		446,760		465,415			(18,655	)	-4%
Total Revenues		484,390			479,720			4,670		1%		936,835		1,018,563			(81,728	)	-8%
Direct Costs
Equipment Purchases	$	110,323		$	95,947		$	14,376		15%	$	180,856	$	225,778		$	(44,922	)	-20%
Royalties & Consulting		3,825			19,234			(15,409	)	-80%		7,574		46,858			(39,284	)	-84%
Total Direct Costs	$	114,148		$	115,181		$	(1,033	)	-1%	$	188,430	$	272,636		$	(84,206	)	-31%
% of total revenues		24%			24%							20%		27%
Gross margin	$	370,242		$	364,539		$	5,703		2%	$	748,405	$	745,927		$	2,478		0%
% of total revenues		76%			76%							80%		73%
Research and development costs	$	60,002		$	55,543		$	4,459		8%	$	118,777	$	117,086		$	1,691		1%
% of total revenues		12%			12%							13%		11%
Sales and marketing expenses	$	54,396		$	55,828		$	(1,432	)	-3%	$	83,223	$	95,247		$	(12,024	)	-13%
% of total revenues		11%			12%							9%		9%
General and administrative expenses	$	270,448		$	294,530		$	(24,082	)	-8%	$	530,719	$	617,454		$	(86,735	)	-14%
% of total revenues		56%			61%							57%		61%
Interest expense	$	28,386		$	28,481		$	(95	)	0%	$	57,474	$	56,659		$	815		1%
% of total revenues		6%			6%							6%		6%
Other Income (Expenses)	$	17,897		$	4		$	17,893		447325%	$	51,481	$	9		$	51,472		571911%
% of total revenues		4%			0%							5%		0%
Income (Loss) Before Taxes	$	(25,093	)	$	(69,839	)	$	44,746		-64%	$	9,693	$	(140,510	)	$	150,203		-107%
% of total revenues		-5%			-15%							1%		-14%

Revenues

Revenues were $~~484~~300,~~390~~256 and $~~479~~398,~~720~~269 for the three months ended ~~June~~September 30, 2012 and 2011 and $~~936~~1,~~835~~237,091 and $1,~~018~~416,~~563~~832 for the ~~six~~nine months ended ~~June~~ September 30, 2012 and 2011. ~~This~~There iswas ana ~~increase~~decrease of approximately 125% for the three-month period and a decrease of 813% for the ~~six~~nine-month period ended September ~~June~~ 30, 2012 compared to the ~~prior~~same periods. ~~The decrease for the six-month period was primarily due to a unique event~~ in the ~~prior~~preceding ~~period with respect to the sale of hardware to a specific customer for a special project, which we did not have in the current~~ year.

~~MarkMagic~~The ~~sales~~decrease for the ~~six~~three-month period was partially due to the early completion of orders in the quarter ended June 30, 2012 that were ~~compared~~originally scheduled for the quarter ended September 30, 2012. Combined with the acceleration to the ~~prior~~second ~~2011~~quarter ~~period~~of sales originally anticipated in the third quarter, other orders originally anticipated to be completed and delivered in the third quarter were updelayed ~~24%~~to fourth quarter and early 2013. We believe that the delays were primarily influenced by the general uncertainty in the business climate. The decline in the third quarter revenues was principally responsible for the overall decrease in revenues for the nine months ended September 30, 2012. Furthermore, a sale in the prior year of hardware to a specific customer for a special project which, by historical standards, was a unique event, did not occur again this year.

Direct Costs

The costs for equipment that was resold to customers ~~increased~~decreased by 15% for the three months ended ~~June~~September 30, 2012 as compared to the ~~June~~three months ended September 30, 2011 ~~three~~ ~~month~~primarily ~~period~~ due to ~~higher~~overall ~~hardware~~improvement ~~sales~~in hardware margins in the quarter. There was a decrease of 2019% for the ~~six~~nine months ended September ~~June~~ 30, 2012 compared to the ~~2011 six-month~~nine ~~period~~months ended September 30, 2011. This was primarily due to the equipment cost for a specific customer project in the prior year that we did not have in the current year.

Gross Margin

Gross Margin as a percentage of sales for the three months ended ~~June~~September 30, 2012 as compared to the same period in 2011 ~~remained approximately~~decreased ~~the same~~4%. Gross Margin as a percentage of sales for the ~~six~~nine months ended ~~June~~September 30, 2012 as compared to the same period in 2011 increased by ~~approximately~~ 739%. This ~~increase~~decrease was principally due to ~~an improvement in~~ the ~~sales~~third ~~mix~~quarter’s ~~with an~~decline ~~emphasis~~in ~~on higher margin software and services as compared to lower margin equipment sales~~revenues.

Research and Development Costs

~~Research~~Our spending on research and development remained relatively consistent with the preceding year. R&D costs increased 8by $3,717 or 6% to $70,133 for the three months ended ~~June~~September 30, 2012 asfrom ~~compared~~$66,416 tofor the same period in 2011. The R&D costs increased 1by $5,407 or 3% to $188,909 for the nine ~~six~~ months ended ~~June~~September 30, 2012 as compared to $183,502 for the same period in 2011. ~~These~~R&D costs consist primarily of compensation of ~~development~~ development personnel, related overhead incurred to develop EdgeMagic and upgrades and to enhance our current products, and fees paid to outside consultants. All of these expenses have been incurred by us in the United States. Software development costs are accounted for in accordance with ACS 985-20-25, Research and Development Costs of Computer Software, under which we are 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. Our EdgeMagic software product was available for general release on September 1, 2011, and all costs after that date have been expensed in accordance with ACS 985-20-25.

Research and development costs for the three months ended ~~June~~ September 30, 2012 and 2011 included charges for amortization of capitalized ~~software~~ software development costs of $125 and $563,~~558~~112, respectively. The ~~six~~nine months ended ~~June~~ September 30, 2012 and ~~June~~September 30, 2011 included charges for amortization of capitalized software development costs of $~~250~~375 and $98101,~~867~~980, respectively. Overall, we incurred additional software development costs in 2012 due to enhancements to our MarkMagic and EdgeMagic products.

Sales and Marketing Expenses

Sales and marketing expenses consisted primarily of commissions, trade shows, and advertising and promotional expenses. There was a decrease of 330% from $5522,~~828~~440 in the three months ended ~~June~~September 30, 2011 to $5415,~~396~~ 814 in the three months ended ~~June~~September 30, 2012. There was a decrease of 13 16% from $95117,~~247~~686 in the ~~six~~nine months ended ~~June~~September 30, 2011 to $8399,~~223~~037 in the nine ~~six~~ months ended ~~June~~ September 30, 2012. This reduction was due to lower sales commissions paid out in 2012 and a reduced reliance on ~~sales~~commissioned ~~consultants~~sales agents. Lower commissions were a result of changes in sales personnel.

General and Administrative Expense

General and administrative expenses consisted primarily of costs associated with our executive, financial, human resources and information services functions. General and administrative expenses decreased 87% ~~from $294,530~~ for the three months ended ~~June~~September 30, ~~2011~~2012 compared to ~~$270,448~~the ~~for~~ three months ended September ~~June~~ 30, ~~2012~~2011. There was a decrease of 1412% ~~from $617,454~~ for the ~~six~~ nine months ended September ~~June~~ 30, ~~2011~~2012 toas ~~$530,719~~compared ~~for~~to ~~six~~the nine months ended ~~June~~September 30, ~~2012~~2011. This is the result of management’s ongoing commitment to control costs as well as a substantial drop in amortization. Specific categories of cost reduction included legal fees and office expenses. ~~Legal~~as ~~fees were reduced by~~ a ~~change~~result ~~in compensation~~of ~~method.~~improved ~~Office~~efficiencies ~~expenses~~and ~~were reduced through instituting various~~ cost cutting ~~methods~~programs.

Interest Expense

Interest expense for the three months ended ~~June~~September 30, 2012 ~~had~~ had virtually no change at $28,~~386~~658 as compared to $28,~~481~~651 for the same period in 2011. The expense for the ~~six~~nine months ended ~~June~~September 30, 2012 was 5786,~~474~~132 as ~~compared~~ compared to $5685,~~659~~310 for the same period in 2011, an increase of 1%. Interest ~~expense~~ expense primarily consists of interest due on the 8% Convertible Debentures. ~~Such~~ Such amounts have been accrued but not paid during the periods.

Other Income

Other income ~~increased~~primarily ~~for~~consists ~~the~~of ~~three~~refundable ~~months~~state ~~ended~~tax credits, ~~June~~the ~~30,~~timing ~~2012~~of ~~compared~~which tois ~~2011,~~not ~~because~~fully inwithin ~~the~~our ~~three~~control ~~months~~making ~~ended~~quarterly comparisons ~~June~~less 30meaningful. However, ~~2012~~year-over-year, wethe ~~received~~amounts aof ~~refundable~~ state credits ~~tax~~received ~~credit~~were ofclose in amount: $1751,~~897.~~481 ~~It also increased substantially~~ for the ~~six~~nine months ended September ~~June~~ 30, 2012 as compared to ~~2011~~$49,120 ~~because~~for wethe ~~also~~nine ~~received~~months aended ~~refundable~~September 30, ~~state~~2011. ~~tax~~While ~~credit~~we ofmay ~~$33,584~~receive additional credits in the ~~first~~future, ~~quarter~~such ofcredits are ~~2012~~not assured and the consistency from year to year should not be viewed as a trend that will necessarily continue in future periods.

Provision for Income Taxes

The provision for income taxes consists primarily of ~~provisions for~~ state franchise taxes.

We recorded no income tax expense or benefit for three or ~~six~~nine months ended ~~June~~September 30, 2012 and 2011. The effective tax rate of 0% differs ~~from~~ from the statutory U.S. federal income tax rate of 35% primarily due to increases in valuation allowance for deferred tax asset, the ultimate realization of which is not assured.

Liquidity and Capital Resources

The following table summarizes our cash and cash equivalents, working capital, long-term debt and cash flows for ~~six~~nine months ended ~~June~~ September 30, 2012 and 2011.

		Six Months Ended
		Nine months Ended
		June 30,
		September 30,
		2012			2011			Change $		Change %
Cash and cash equivalents	$	3622,~~034~~249		$	377,~~591~~238		$	(115,~~557~~011	)	-4207%
Working capital deficit		(2,~~506~~581,~~866~~247	)		(2,~~460~~455,~~387~~079	)		~~(46~~126,~~479~~168	)	25%
Net cash provided by operating activities		72,382			26,555			45,827		173%
Net cash provided by (used in) operating activities		20,662			(80,525	)		101,187		126%
Net cash used in investing activities		(4,061	)		(13,297	)		9,236		-69%
Net cash (used in) investing activities		(6,126	)		(16,014	)		(9,888	)	-62%
Net cash used for financing activities		(86,822	)		-			(86,822	)	-100%
Net cash (used in) provided by financing activities		(46,822	)		79,442			(126,264	)	-159%

As of ~~June~~September 30, 2012 our principal source of liquidity was ~~cash~~ cash of approximately $3622,000. Our operations provided $7220,~~382~~662 in cash during the ~~six~~ nine months ended ~~June~~September 30, 2012 as compared to having used $2680,~~555~~525 ~~for~~ in the same period in 2011.

To sustain operations under our current structure, we need cash of approximately $120,000 per month to fund research and administrative expenses. Management is confident that wedespite the loss in the third quarter, we will be able to meet that continuing obligation at our current sales level.

Our working capital deficit was $2,~~506~~581,~~866~~247 at ~~June~~September 30, 2012. The deficit in working capital included approximately $1,420,000 in liabilities related to the Debentures. It also included $~~463~~459,~~086~~880 in deferred revenues that require settlement in future services rather than cash.

During the three and ~~six~~nine months ended ~~June~~September 30, 2012 ~~and 2011,~~ we issued no63,334 shares of common stock in repayment of shareholder loans. No common stock was issued in the three and nine months ended September 30, 2011.

As of the second quarter of 2012, we are operating above break-even on a cash flow basis.

The amended 8% Convertible Debentures with a principal balance of $1,420,000 became due on April 11, 2011. In March 2012, holders of Amended Debentures having a total principal balance of $1,195,000 signed a Forbearance Agreement in which such holders agreed to forebear from taking any action to enforce collection of their Amended Debentures until the earlier of (i) December 31, 2012 or (ii) the occurrence of a Material Adverse Event (as defined in the Securities Purchase Agreement with respect to the Debentures). Management is currently negotiating with the holders of these Amended Debentures to extend their term, exchange them for equity, or to otherwise provide for their payment. No assurance can be given that these negotiations will be successful and the effects of unsuccessful negotiations cannot be determined.

Critical Accounting Policies

Revenue ~~recognitionThe~~recognition The Company recognizes revenues in accordance with FASB ASC 985-605, Software Revenue Recognition.

Software ~~CostsThe~~Costs The Company accounts for software development costs in accordance with ASC 985.730, Software Research and Development, and ASC 985-20, Costs of Software to be Sold, Leased or Marketed. ASC 985-20 requires that costs related to the development of enhancements to MarkMagicTM be capitalized as an asset when incurred subsequent to the point at which technological feasibility of the enhancement is established. ASC 985-20 specifies that “technological feasibility” can only be established by the completion of a “detailed program design” or if no such design is prepared, upon the completion of a “working model” of the software. The Company’s development process does not include a detailed program design. Management believes that such a design could be produced in the early stages of development but would entail significant wasted expense and delay. Consequently, ASC 985-20 requires the development costs to be recorded as an expense until the completion of a “working model”. In the Company’s case, the completion of a working model does not occur until shortly before the time when the software is ready for sale.

Research and Development ~~CostsResearch~~Costs Research and development costs incurred after ~~completion~~a ofproduct ~~development~~is ofready afor ~~product~~general release are expensed as incurred.

Derivative financial ~~instrumentsThe~~instruments ~~Company~~The ~~accounts~~Company accounts for its Warrants as derivatives under the guidance of ASC 815-10, ~~Accounting~~ Accounting for Derivative Instruments and Hedging Activities, and ASC 815-40, Contracts in an Entity’s Own Stock. The Company considers these ~~standards~~ standards applicable by adopting “View A” of the Issue Summary–The Effect of a a Liquidated Damages Clause on a Freestanding Financial Instrument in which the Warrants and the related registration rights agreement are viewed together as a combined instrument that is indexed to the Company's stock. The embedded conversion feature of the Debentures has not been classified as a derivative financial instrument because the Company believes that they are “conventional” as defined in ASC 470-20, Conventional Convertible Debt Instrument.

Impact of Derivative ~~AccountingWarrants~~Accounting Warrants issued in conjunction with equity financings were accounted for under ASC 815-40, Contracts in Entity’s Own Stock. ASC 825-20, Accounting for Registration Payment Arrangements, establishes the standard that contingent obligations to make future payments under a registration rights arrangement shall be recognized and measured separately in accordance with the standard, Reasonable Estimation of the Amount of a Loss. The Company has evaluated how these standards affected these accompanying financial statements.

Property and ~~equipmentProperty~~equipment Property and equipment are recorded at cost less accumulated depreciation and any impairment losses. The cost of an asset is comprised of its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditures incurred after the fixed assets have been put into operation, such as repairs and maintenance and overhaul costs, are normally charged to the profit and loss account in the year in which they are incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of the asset beyond its originally assessed standard of performances, the expenditure is capitalized as an additional cost of the asset.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, less any estimated residual value. Estimated useful lives of our assets are as follows:

Furniture and Office Equipment	5 years
Computer Software	3 years
Leasehold Improvements	Life of Lease

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable to smaller reporting companies.

Item 4. Controls and Procedures

Disclosure Controls and Procedures.

As required by Rule 13a-15 under the Securities Exchange Act of 1934 (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 our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit 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 Securities and Exchange Commission.

Changes in Internal Control Over Financial Reporting.

During the ~~second~~third fiscal quarter of 2012, there were no changes in our internal control over financial reporting identified in connection with the evaluation performed that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

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

On August 22, 2012, the Company issued 63,333 shares of restricted common stock. These shares were issued to satisfy loans from the Company’s CEO and one other shareholder in an aggregate amount of $47, 500. The issuance was exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof as a transaction not involving any public offering.

Item 3. Defaults Upon Senior Securities

The amended 8% Convertible Debentures with a principal balance of $1,420,000 became due on April 11, 2011, and, as of the date of this report, the Company is in payment default on this obligation. Management has commenced negotiations with the holders of these debentures ~~to extend their term, exchange them for equity, or to otherwise provide for their payment~~. The effects of ~~unsuccessful~~ unsuccessful negotiations or the impact on the Company’s financial position and results of operations have not been determined.

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.

XBRL Exhibits

101. ins	XBRL Instance
101.ins	XBRL Instance
101. sch	XBRL Schema
101.sch	XBRL Schema
101. cal	XBRL Calculation
101.cal	XBRL Calculation
101. def	XBRL Definition
101.def	XBRL Definition
101. lab	XBRL Label
101.lab	XBRL Label
101. pre	XBRL Presentation
101.pre	XBRL Presentation

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 undersigned thereunto duly authorized.

Date: ~~August~~November 1420, 2012

CYBRA CORPORATION ~~By: /s/ Harold Brand Name: Harold Brand Title: Chief Executive Officer and Interim Chief Financial Officer~~

By:	/s/ Harold Brand
	Name:	Harold Brand
	Title:	Chief Executive Officer and
		Interim Chief Financial Officer

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