CYBRA Corporation (CYRP-OTC: BB)

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October 22, 2010 Issue

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Auto Identification Company CYBRA Corporation Is Well Positioned To Take Advantage Of The Demand Major Retailers Have Placed On Their Suppliers For Item Level RFID Tagging

Company Profile:

CYBRA Corporation is a leader in bar code and RFID technology for IBM Power Systems and other major computing platforms. An Avery Dennison, IBM, and Motorola/Symbol Partner, CYBRA is represented by a network of value added resellers throughout the United States and is represented internationally by sales and support offices.


MarkMagic™ Bar Code Labels, RFID Tags and Forms Software is used by thousands of customers worldwide, and has been selected as the bar code print engine of such leading software developers as Manhattan Associates™, Infor™ and VAI™. MarkMagic helps customers easily integrate barcode, RFID technology and electronic forms into their business systems.  EdgeMagic® is an integrated RFID control solution. EdgeMagic helps customers build any type of RFID system, from complying with the full range of RFID mandates to closed loop asset management RFID applications.  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.

Harold L. Brand
Co-Founder, Chairman, President and CEO

Harold Brand is a founder of CYBRA and has been its President, Chairman of the Board and Chief Financial Officer since 1985. He is responsible for managing the operation, monitoring its performance, and planning and overseeing R&D projects. Mr. Brand developed much of CYBRA's proprietary technology. Prior to founding CYBRA, Mr. Brand was the Vice President of Personnel Systems at Manufacturers Hanover Trust Company (currently JP Morgan Chase Bank), a New York City money center bank, where he managed a multimillion dollar annual budget and a staff of 25 professionals. A highly-rated speaker at IBM technical conferences, Mr. Brand holds a Masters of Science degree in Computer Science from Rutgers University in New Brunswick, New Jersey.


Technical & System Software

CYBRA Corporation
One Executive Boulevard
Yonkers, NY 10701
Phone: 914-963-6600


Interview conducted by: Lynn Fosse, Senior Editor,, Published – October 22, 2010

Mr. Brand, what was your vision when you started CYBRA Corporation?

Mr. Brand: The company has been around for 25 years. Initially when we founded it in 1985 we were a company that saw a lot of potential in small developers of software, particularly a focus on Israel and a high tech market that looked like it was going to explode, which it ultimately did. We figured that we would help bring those products to market in North America, give them the marketing expertise and the polish, as well as the support that is required for a software product that the original developers didn’t have the know-how and wherewithal to do. So, that is how it started, products from Israel that we represented, marketed, and did quite well. That is how the first five years unfolded.


CEOCFO: How about today?

Mr. Brand: What happened was that in 1990, we were asked by one of our customers to take a look at how they could implement this whole new area of bar coding into their production line for shipping apparel goods. It was an area that was starting to be required by companies such as Walmart and Sears, and in particular clothing manufacturers needed to comply with those new technology requirements. It was a completely foreign area for us, so we studied it. We developed an initial prototype technology. We did a market study and realized that there was really a market for good software tools to help manufacturing and distribution companies comply with the need for bar coding. So we developed a suite of products and we ultimately ended up with thousands of customers worldwide depending on our products daily to produce bar coded labels and documents. Five years ago, we began supplementing our bar code offerings with the new and exciting technology of Radio Frequency Identification (RFID) technology. The combination of those two technologies – bar code and RFID – comprises the area of Auto-Id or automatic identification of all types of objects, and that is our vision today.


CEOCFO: Who is a typical customer?

Mr. Brand: Of the thousands of customers we have, our largest market segment is apparel, which is no big surprise because the apparel industry has been a very big adopter of bar coding and now Radio Frequency Identification. For RFID, the spotlight is currently on manufacturers that produce men’s undergarments and jeans, and footwear. They need to place bar code and RFID tickets on their items. They are also tagging cartons, pallets, shelves -- all kinds of places that bar codes and Radio Frequency Identification can be effective. A typical customer would be a mid to large size apparel manufacturer, supplying all the popular retailers like a Walmart, a Dillard’s or a JCPenney.


CEOCFO: What exactly are you selling to them?

Mr. Brand: Our unique selling proposition is our award winning auto-id software, which lets customers get the job done quickly, with minimal effort on their part. Over the years, CYBRA has established itself as experts in this area, which is why many of our customers come to us for all their auto-id needs. Therefore, in addition to software, we often will sell the specialized printers that do the printing of bar codes and RFID tags, the labels and ribbons that go on those printers, the scanners for scanning barcodes and now the whole new area of Radio Frequency Identification and the equipment associated with it such as readers, antennas, sensors and wiring. Where a customer needs a single-source supplier for all their bar code and RFID needs, CYBRA is well-qualified to do that.


CEOCFO: Are they licensing the software, is there ongoing service and support from you?

Mr. Brand: There is an initial licensing of software where the customer invests in the product. Beyond that, there is an annual ongoing support license that is over and above the initial purchase license that gives customers unlimited support for any problems they may run into. It also provides them with new versions of the software as they are released. Over 90% of our customers opt to renew their annual support year-to-year to make sure they are getting the latest updates, so that if they have any kind of a problem they can depend on us.


CEOCFO: Are most of your customers upgrading from an old type of system that they have, and are there many people still not using these tools today that need to be introduced to them like the RFID?

Mr. Brand: Yes! To most customers, RFID is brand new and is poised to take the industry by storm. Many of our customers are looking at it, but not a lot of them have implemented it yet.  RFID is still in a very early adoption stage. That is because the whole RFID industry was really kicked off back in 2003 by Walmart when it announced that they expected to require their suppliers to start shipping their goods with RFID tags within the next few years. At the same time, the FDA said the same thing and the Department of Defense said the same thing, so back in 2003 the whole industry began to march forward. Then when they actually got to what was supposed to be the starting line in 2005, the FDA balked and Walmart balked. It certainly did not take off as everyone had anticipated. In Walmart’s case, in particular, it really went to sleep for a number of years and it only woke up quite frankly about two months ago when it finally came out in the open and revealed that they had begun what they said they were going to do five years earlier. It actually has just begun in earnest starting with suppliers of men’s accessories. Jeans, underwear, socks, are the first product categories. Walmart’s current mandate for item tagging is a major departure from what was originally planned. While the initial requirement was for RFID tagging of pallets and later cartons, Walmart has gone way beyond that. They are now requiring that each item contain an RFID tag on it. We are even talking about socks, which only cost a few dollars. And yet, customers are now complying with the cost and effort burdens of RFID tagging because Walmart has demonstrated how this benefits the supplier as well as Walmart. So, over a very short period, a period of just a few months, RFID has become a very dynamic market. Fortunately, CYBRA has invested over the past few years exactly for the demands of this market. CYBRA went public and raised $4 million through private investors to build the R&D, anticipating that Walmart would eventually wake up. We made a substantial bet on RFID ultimately really taking off and we are in an excellent position today because it has taken off in a way that exceeded our expectations. Right behind Walmart are all the other major retailers such as JCPenney and Dillard’s who have been watching from the sidelines. These retailers are now starting to tell their suppliers they want item level RFID tagging, just like Walmart. So, we are at a very exciting time right now. They call it the “hockey stick” curve. After proceeding along the down side of the “hockey stick” the industry is now at the point on the curve at which you start accelerating quickly. That is where we are right now. Many of CYBRA’s customers and prospects that have expressed interest in RFID technology over past few years have been waiting for the signal from Walmart to make their move. Nevertheless, they have made it clear that when that signal comes that CYBRA’s products are ideally suited to meet their needs. This is because our product suite is uniquely designed to allow customers to do what they need to do for Walmart, as well as for their own asset management applications, at a very competitive price, with a lot less pain than other offerings. We are fortunate to be able to do that because of our pedigree of twenty years of helping thousands of customers implement bar code technology. With RFID, we applied the same philosophy of providing the user with a simple interface, while masking the complexity of the technology under the covers.


CEOCFO: CYBRA is ready with the technology; are you ready to ramp up your staff for the anticipated upswing?
Mr. Brand: Absolutely! We will be ramping up our R&D; in fact, we just hired new programmers this past week. We are also boosting our marketing and sales resources. That is where we are going to be looking to focus on acquiring new customers, getting out in front of the message and making sure that the market understands what we have to offer and why we are the logical choice.


CEOCFO: What is the competitive landscape for you?

Mr. Brand: The competitive landscape is actually very good. There aren’t that many offerings because back in 2003 software companies developed products that were rushed to market too quickly. Many of those offerings were mothballed during the long wait for the market to catch up. In a way, we were somewhat fortunate that we did not jump in right away and waited until 2006 to start developing our technology. There are a handful of competitors and some are pretty formidable companies, but we believe that we have a very competitive product and we welcome the competition.


CEOCFO: What is the financial picture for CYBRA today?

Mr. Brand: On a cash, non-GAAP, basis we are doing well. Our balance sheet reflects a restructuring of the debt we incurred during 2006 and 2007. That debt fueled the major R&D efforts that resulted in the building of our strategic RFID product suite. We had a very good 2nd Quarter where we made money and we expect to be profitable for the year. We believe that we are poised for significant growth and that 2011 will be a banner year for CYBRA.


CEOCFO: Do you do much investor outreach?

Mr. Brand: We engaged an investor relations company and they have done quite a bit of good work. We now have more investor prospects following the Company than ever before. We are keenly aware that investor outreach is a process that you have to work at consistently and that it takes time to pick up steam.


CEOCFO: In closing, why should potential investors pay attention to CYBRA Corporation?
Mr. Brand: Clearly, the big exciting news is the Walmart RFID item level initiative. Walmart has opened up a wealth of opportunity for us and we are in excellent position to help customers meet their Walmart mandates, while simultaneously benefitting from RFID technology in their own companies. Therefore, I believe that we are on the cusp of significant growth. With the current RFID action in apparel, we have our pedigree in apparel; we have as customers some of the top apparel companies in the United States. Beyond that, we are at the final stage of a two-year planning process to apply CYBRA technology to the tracking and monitoring of shipping containers in a joint venture with the Chinese government. China trade is a hot sector and we have established an excellent relationship with the China government’s Ministry of Transportation.


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Over a very short period, a period of just a few months, RFID has become a very dynamic market. Fortunately, CYBRA has invested over the past few years exactly for the demands of this market. CYBRA went public and raised $4 million through private investors to build the R&D, anticipating that Walmart would eventually wake up. We made a substantial bet on RFID ultimately really taking off and we are in an excellent position today because it has taken off in a way that exceeded our expectations. - Harold L. Brand

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