MYECO GROUP LTD — Capital/Financing Update 2012

Aug 1, 2012

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TO: COMPANY ANNOUNCEMENTS OFFICE ASX LIMITED DATE: 2 August 2012

DESPATCH OF PROSPECTUS

Further to earlier announcement on 26[th] July 2012 regarding the personalized offer of Piggy Back Options to the holders of Primary options who exercised the options before the expiry date (“Offerees”) , we advise that the Prospectus have been dispatched today to those Offerees.

A copy of the Prospectus is attached.

REKHA BHAMBHANI Company Secretary

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CARDIA BIOPLASTICS LIMITED

ABN 89 064 755 237

PROSPECTUS

For the personalised offer of 366,296 Piggy Back Options following the exercise of 366,296 Primary Options issued pursuant to the 2011 renounceable rights issue.

IMPORTANT NOTICE

The Securities offered by this Prospectus should be considered a speculative investment and potential investors should refer to Section 5 for further details concerning the risk factors.

This document is important. It should be read in its entirety. If you do not understand its contents or are in doubt as to the course you should follow, you should consult your stockbroker or professional adviser. Neither Cardia Bioplastics Limited nor any other person guarantees the performance of the Securities offered pursuant to this Prospectus, or the performance of Cardia Bioplastics Limited, or the return of any investment.

Corporate Directory

Directors:	Mr Pat Volpe (Chairman)
	Mr Frank Glatz (Managing Director)
	Mr John Scheirs (Non Exec. Director)
	Mr Chen Yi (Non Exec. Director)
Company Secretary:	Miss Rekha Bhambhani
Contact Details:	Unit 18/35 Dunlop Road
	Mulgrave VIC 3170
	Telephone (03) 9562 0122
	Facsimile (03) 9562 0422
Share Registry:	Advanced Share Registry Services Limited *
	Unit 2
	150 Stirling Highway
	NEDLANDS WA 6009
	Telephone (08) 9389 8033
	Facsimile (08) 9389 7871
Auditor:	William Buck Audit (Vic) Pty Ltd *
	Level 20, 181 William Street,
	MELBOURNE VIC 3000
	Telephone (03) 9824 8555
	Fax (03) 9824 8580
Lawyers:	Mills Oakley Lawyers
	Level 6, 530 Collins Street
	MELBOURNE VIC 3000
	Telephone (03) 9670 9111
	Fax (03) 9605 0933
Stock Exchange:	ASX Limited *
	20 Bridge Street,
	Sydney NSW 2000
Company Code:	CNN

*These entities have not been involved in the preparation of this Prospectus and have not consented to being named in this Prospectus. They are named for information purposes only.

TABLE OF CONTENTS

Corporate Directory	Corporate Directory	2
1	Important Dates and Important Information	4
2	Purpose and details of the Offer	5
3	Effect of the Offer	7
4	Rights and Liabilities attaching to securities	8
5	Risk Factors	11
6	Continuous Disclosure Obligations	15
7	Additional Information	18
8	Directors’ authorisation	20
9	Glossary	22

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1 Important Dates and Important Information

1.1 Important Dates

Event	Date
Lodge Prospectus with ASIC and ASX	26 July 2012
Dispatch Prospectus (Opening Date)	2 August 2012
Closing Date	17 August 2012
Despatch of holding statements	21 August 2012

*The dates are indicative only. Subject to the Listing Rules, the Directors may vary the dates without prior notice.

1.2 Important Information

Offerees should read this document in its entirety and, if in doubt, should consult their professional advisors.

This Prospectus is dated 26 July 2012 and a copy of this Prospectus was lodged with ASIC on that date. ASIC and ASX take no responsibility for the content of this Prospectus.

The expiry date of the Prospectus is 13 months after the date the Prospectus was lodged with ASIC; no Piggy Back Options will be issued after this date.

This Prospectus will be issued in printed form only to 22 Offerees. The offer of Piggy Back Options pursuant to this Prospectus is available to each Offeree only. Entitlement to this Offer arose because the Offeree exercised that number of Primary Options equal to the number of Piggy Back Options being offered to the Offeree specified in the Entitlement and Acceptance Form attached to this Prospectus.

No person is authorised to give information or to make any representation in connection with this Prospectus which is not contained in the Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with this Prospectus.

Certain terms and abbreviations used in this Prospectus have defined meanings, which are explained in Section 9 of this Prospectus.

The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and therefore persons into whose possession this document comes should seek advice on and observe any such restrictions. Any failure to comply with these restrictions constitutes a violation of those laws. No action has been taken to register or qualify the Securities the subject of this Prospectus or otherwise permit a public offering of the Securities the subject of this Prospectus in any jurisdiction outside Australia.

Offerees may not send or otherwise distribute this Prospectus or the Application and Acceptance Form to any person.

Offerees should consider that the investment in the Company is speculative and should consult their professional advisers before deciding whether to take up their entitlement to Piggy Back Options pursuant to this Prospectus. For further information in relation to the risk factors of the Company please refer to Section 5 of this Prospectus.

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2 Purpose and details of the Offer

2.1 Purpose of the Offer

The purpose of the Offer is to honour the obligations of Cardia contained in the May 2011 Prospectus in which Cardia agreed that it would offer 1 Piggy Back Option for every 1 Primary Option that was exercised by an Optionholder on or before 30 June 2012.

No funds will be raised by the grant of Piggy Back Options the subject of this prospectus as they are being granted for no consideration.

2.2 Details of the Offer

The Company offers each Offeree the right to acquire one Piggy Back Option for each Primary Option exercised. The Piggy Back Option will entitle the option holder to acquire 1 Share at an exercise price of 2 cents per option and may be exercised up until 30 June 2013.

Neither the issue of Piggy Back Options nor the exercise of the Piggy Back Options is being underwritten.

All Shares issued by the Company as a result of the exercise of the Piggy Back Options under this Prospectus will have the same rights and liabilities as existing Shares. For further information on the rights and liabilities of Shares issued as a result of the exercise of the Piggy Back Options see section 5.

See Section 5 for the full terms and conditions of the Piggy Back Options

2.3 How to accept the Offer

The Entitlement of each Offeree to participate in the offer has been determined by that Offeree exercising an equivalent number of Primary Options in accordance with the May 2011 Prospectus. Your Entitlement is shown on the personalised Entitlement and Acceptance Form accompanying this Prospectus.

You may participate in the Offer as follows:

• (a) if you wish to accept your Entitlement in full complete the Entitlement and Acceptance Form, fill in the details provided;

• (b) if you only wish to accept part of your Entitlement, fill in the number of Piggy Back Options you wish to accept in the space provided on the Entitlement and Acceptance Form; or

• (c) if you do not wish to accept all or part of your Entitlement, you are not obliged to do anything.

Your completed Entitlement and Acceptance Form must be forwarded to the Share Registry so that they are received no later 4.00pm (AEST) on the Closing Date being 17 August 2012 . Entitlement and Acceptance Forms can be delivered as follows:

By Mail: In Person: Advanced Share Registry Ltd Advanced Share Registry Ltd P O Box 1156 150 Stirling Highway Nedlands WA 6009 Nedlands WA 6009

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2.4 No rights Trading

The rights to the Piggy Back Options under the Offer are personal to the Offeree and are non-renounceable. Accordingly, there will be no trading of rights to those Piggy Back Options on the ASX and you may not dispose of your rights to subscribe for Piggy Back Options to any other person. If you do not take up your Entitlement under the Offer by the Closing Date, the Offer to you will lapse.

2.5 ASX Listing

The Company will make application to ASX within 7 days following the date of this Prospectus for official quotation of the Securities offered pursuant to this Prospectus. If approval is not granted by ASX within 3 months after the date of this Prospectus, the Company will not allot the Securities and will repay all application moneys (where applicable) as soon as practicable, without interest.

A decision by ASX to grant official quotation of the Securities is not to be taken in any way as an indication of ASX’s view as to the merits of the Company, or the Securities.

2.6 CHESS and Cardia Sponsorship

The Company participates in CHESS. ASTC, a wholly owned subsidiary of ASX, operates CHESS in accordance with the ASX Listing Rules, the ASTC Settlement Rules and the ACH Clearing Rules. Holders of Securities will not be issued a certificate but will be issued and sent a confirmation of their allotment of their holding of Securities.

If you are a sponsored holder in CHESS, you will be sent a confirmation notice by the Share Registry which will set out the number of Piggy Back Options issued to you under this Prospectus and provide details of your HIN (holder identification number).

If you are registered on the issuer sponsored sub-register, your holding statement will contain the number of Securities issued to you under this Prospectus and your SRN (security holder reference number).

Further monthly statements will be provided to holders of Securities if there have been any changes in their security holding in the Company during the proceeding months.

2.7 Privacy Act

Shareholders provide personal information to the Company (directly or indirectly to the Company’s share registry). The Company collects, holds and will use that information to service your needs as a Shareholder, facilitate distribution payments and corporate communications to you as a Shareholder and carry out administration.

The information may also be used from time to time and disclosed to persons inspecting the register, bidders for your securities in the context of takeovers, regulatory bodies, including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the Company’s share registry.

You can access, correct and update the personal information that we hold about you. Please contact the Company or its share registry if you wish to do so at the relevant contact numbers set out in this Prospectus.

Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act, the Corporations Act and

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certain rules such as the ASTC Settlement Rules. You should note that if you do not provide the information required on the application for Piggy Back Options, the Company may not be able to accept or process your application.

2.8 Taxation

It is the responsibility of all persons to satisfy themselves of the particular taxation treatment that applies to them by consulting their own professional tax advisers. Taxation consequences will depend on particular circumstances. Neither the Company nor any of its officers accept any liability or responsibility in respect of the taxation consequences connected with an investment in the Securities in the Company.

2.9 Enquiries

Any questions concerning the Offer should be directed to the Company Secretary, Miss Rekha Bhambhani on +61 3 9562 0122.

3 Effect of the Offer

3.1 Effect on capital structure

The effect of the Offer under this Prospectus on the capital structure of the Company is set out below.

	Shares	Options June 2015 (CNNOB)*	Piggyback Options June 2013**
Securities currently on issue	1,567,057,896	221,285,642	-
Securities offered pursuant to the Offer	-	-	366,296
Total	-	221,285,642	366,296

* Each CNNOB option entitles the holder to subscribe for one Share in the Company at the exercise price of 1.5 cents on or before the expiry date of 30 June 2015

** Terms set out in section 4.1 of this Prospectus.

3.2 Effect on financial position

Set out below is the un-audited pro forma statement of financial position of the Company as at 31 December 2011 which presents the audited financial position as at 30 June 2011 as audited by William Buck Audit (Vic) Pty Ltd,the audit reviewed financial position as at 31 December 2011 as reviewed by William Buck Audit (Vic) Pty Ltd and the unaudited statement of financial position which has been adjusted for the impact of the proposed Offer.

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	Audited	Audit Reviewed	Proforma
	30/06/2011	31/12/2011	31/12/2011
	$	$	$
ASSETS
CURRENT ASSETS
Cash and cash equivalents	4,154,064	1,493,739	1,489,562
Trade and other receivables	690,209	963,347	963,347
Inventories	1,064,645	1,933,153	1,933,153
TOTAL CURRENT ASSETS	5,908,918	4,390,239	4,386,062
NON-CURRENT ASSETS
Plant and equipment	689,988	658,631	658,631
Financial assets	3,027,000	454,140	454,140
Intangible assets	6,565,950	6,565,950	6,565,950
TOTAL NON-CURRENT ASSETS	10,282,938	7,678,721	7,678,721
TOTAL ASSETS	16,191,856	12,068,960	12,064,783
CURRENT LIABILITIES
Trade and other payables	893,239	774,414	774,414
Short-term provisions	180,100	245,551	245,551
TOTAL CURRENT LIABILITIES	1,073,339	1,019,965	1,019,965
TOTAL LIABILITIES	1,073,339	1,019,965	1,019,965
NET ASSETS	15,118,517	11,048,995	11,044,818
EQUITY
Issued capital	40,091,115	40,132,365	40,128,188
Reserves	1,376,349	(553,052)	(553,052)
Accumulated losses	(26,406,631)	(28,588,255)	(28,588,255)
Parent entity interest	15,060,833	10,991,058	10,986,881
Non controlling interest	57,684	57,937	57,937
TOTAL EQUITY	15,118,517	11,048,995	11,044,818

Notes:

In preparing the pro forma accounts no assumptions have been made other than that the Company will incur net costs of $ 4,177 after the amount of $5,494 which has been raised through the exercise of Primary Options. This will result in a decrease in cash and cash equivalents (current asset) and a corresponding decrease in issued capital (equity) by the same amount. The Company will incur the expenses disclosed in section 7.5 of the Prospectus in respect of the Offer.

4 Rights and Liabilities attaching to securities

4.1 Terms and Conditions of Piggy Back Options

The terms and conditions of the Piggy Back Options are as follows:

• (a) Each Piggy Back Option entitles the holder to, subject to any Shareholder approval under item 7 of section 611 of the Corporations Act (if required), subscribe for one Share in the Company at the exercise price of 2 cents.

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• (b) The Piggy Back Options are exercisable on and from the date of issue and expire at 5.00pm on 30 June 2013 ( Piggy Back Option Expiry Date ). Any Piggy Back Options not exercised on or before that date will automatically lapse.

• (c) Each Share allotted as a result of the exercise of a Piggy Back Option will rank in all respects pari passu with the existing Shares in the Company on issue at the date of allotment.

• (d) Piggy Back Options do not have any voting rights at general meetings of the Company.

• (e) Subject to the Constitution of the Company and the Corporations Act, the Piggy Back Options will be freely transferable and it is intended that application will be made to ASX for quotation of the Piggy Back Options.

• (f) An Optionholder may exercise the Piggy Back Options at any time prior to the Piggy Back Option Expiry Date by submitting an exercise form to the Company’s Share Registry. Forms for exercising Piggy Back Options are available from the Company’s share registry, the Company’s website or by contacting the Company directly.

• (g) Piggy Back Options issued by the Company do not entitle the Optionholder to participate in new issues by the Company.

• (h) In the event of any reconstruction (including a consolidation, subdivision, reduction or return) of the issued capital of the Company, all rights of holders of Options will be changed to the extent necessary to comply with the Listing Rules at the time of the reorganisation.

4.2 Rights attached to new Shares resulting from the exercise of Piggy Back Options

New Shares will, once issued as result of the exercise of a Piggy Back Option, rank pari passu with existing Shares. The rights attached to Shares are:

• (a) set out in the Company’s Constitution which may be examined free of charge by appointment between 9.00am and 5.00pm on normal business days at the registered office of the Company; and

• (b) in certain circumstances, regulated by the Corporations Act, the ASX Listing Rules and the general law.

Set out below is a summary of the principal rights attaching to Shares:

• (a) General meetings

Shareholders are entitled to be present in person, or by proxy, attorney or representative to speak and vote at general meetings of the Company. Shareholders may requisition general meetings in accordance with the Corporations Act and the Constitution of the Company.

• (b) Reports and Notices

Shareholders are entitled to receive all notices, reports, accounts and other documents required to be furnished to Shareholders under the Constitution of the Company and the Corporations Act.

• (c) Voting rights

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At a general meeting of the Company every ordinary member present in person, or by proxy, attorney or representative shall on a show of hands, have one vote and upon a poll every member present in person or by proxy, attorney or representative has one vote for every Share held. A qualification to the above is that where a person is present at a meeting as proxy or representative for more than one member then on a show of hands that person shall have only one vote and not one vote for each person represented by him.

(d) Issue of further Shares

The allotment and issue of Shares is under the control of the Directors of the Company. Subject to restrictions on the allotment of Shares to Directors or their associates contained in the Constitution, the Corporations Act, and the ASX Listing Rules, the Directors may allot or otherwise dispose of Shares on such terms and conditions as they see fit.

• (e) Variation of rights

The rights, privileges and restrictions attaching to Shares can be altered with the approval of a resolution passed at a separate general meeting of the holders of Shares by a three-quarters majority of those holders who, being entitled to do so, vote at that meeting or with the written consent of the holders of at least threequarters of the Shares on issue.

(f) Winding up

Subject to any special or preferential rights attaching to any class or classes of shares, Shareholders will be entitled in a winding up to share in any surplus assets of the Company in proportion to the Shares held by them respectively, less any amount which remains unpaid on their Shares at the time of distribution.

(g) Dividends

The Directors may declare and authorise the distribution of dividends to be distributed to Shareholders according to their rights and interests subject to the Corporations Act.

• (h) Transfer of Shares

Subject to the Constitution of the Company and the Corporations Act the New Shares will be freely transferable.

• (i) Reduction of Capital

The Company may only reduce its capital in such manner as may be permitted by the provisions of the Corporations Act from time to time.

• (j) Directors

The Constitution of the Company contains provisions relating to the rotation of Directors (other than the managing director.

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5 Risk Factors

5.1 General

There are a number of factors, both specific to Cardia and of a general nature, which may affect the future operating and financial performance of Cardia and the value of an investment in Cardia.

Some of these factors can be mitigated by the use of safeguards and appropriate commercial action. However, many are outside the control of Cardia and cannot be mitigated.

This section describes certain risks associated with an investment in Cardia. Prior to making an investment decision, Offeree’s should carefully consider the following risk factors, as well as the other information contained in this Prospectus.

5.2 Securities Investment

Offerees should be aware that there are risks associated with investment in securities of companies listed on a stock exchange. The value of securities can be expected to fluctuate depending on various factors including general worldwide economic conditions, changes in government policies, investor perceptions, movements in interest rates and stock markets, variations in the operating costs and costs of capital replacement which Cardia may in the future require. Accordingly, assuming that the Piggy Back Options are granted official quotation by ASX, they may trade on ASX at higher or lower prices than the issue price.

Each Applicant should consider whether Securities are a suitable investment for them before deciding to invest in the Securities. Any Offeree in doubt about investing in securities should consult their stockbroker, accountant, lawyer or other professional adviser immediately.

5.3 Economic risks

• (a) Economic risks and external market factors

Factors, such as, but not limited to, political movements, stock market trends, changing customer preferences, interest rates, inflation levels, commodity prices, exchange rates, industrial disruption, environmental impacts, international competition, taxation changes and legislative or regulatory changes, may all have an adverse impact on Cardia's operating costs, profit margins and share price. These factors are beyond the control of Cardia and Cardia cannot, to any degree of certainty, predict how they will impact Cardia.

(b) War and terrorist attacks

War or terrorist attacks anywhere in the world could result in a decline in economic conditions worldwide or in a particular region. There could also be a resultant material adverse effect on the business, financial condition and financial performance of Cardia.

(c) Foreign exchange risk

Revenue and expenditure in overseas jurisdictions are subject to the risk of fluctuations of international currency exchange markets. Foreign taxes, limitation on repatriation of earnings, compliance with foreign accounting and business laws, and cultural differences, carry a certain amount of risk. Fluctuations in exchange rates may

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adversely affect the Company and the price of its Shares. The Company does not at present have any currency hedging in place.

5.4 Specific risks

• (a) Profitability

The Company is not presently profitable and may never be so. The ability of the Company to pay dividends will depend on it generating revenue and the overall financial position of the Company.

(b) On-going capital requirements for Cardia

If Cardia requires access to further funding at any stage in the future, Cardia may be adversely affected in a material way if, for any reason, access to that capital is not available. There can be no assurance that additional funds will be available. If additional funds should be raised by issuing equity securities, this might result in dilution to the then existing Shareholders.

(c) Ability to retain and attract personnel

Cardia’s success depends, in part, on its ability to identify, attract, motivate and retain suitably qualified management personnel. Competition for qualified staff is strong. The inability to access and retain the services of a sufficient number of qualified staff could be disruptive to Cardia's development efforts or business development and could materially adversely affect its operating results.

(d) Litigation

Neither the Company nor any of its subsidiaries are presently involved in litigation and the Directors are not aware of any basis on which any litigation against the Company or any of its subsidiaries may arise.

(e) Regulatory Risks

Operations by the Company may require approvals from regulatory authorities which may not be forthcoming or which may not be able to be obtained on terms acceptable to the Company. While the Company has no reason to believe that all requisite approvals will not be forthcoming Offerees should be aware that the Company cannot guarantee that any requisite approvals will be obtained. A failure to obtain any approvals would mean that the ability of the Company to develop or operate any project may be limited or restricted either in part or absolutely.

• (f) Risks Related to Investment in Technology Generally

Investment in areas involving technology are generally subject to high levels of risk. Risks involve those associated with maintenance and development of intellectual property, competition, product obsolescence, the risk that research and development outcomes generally, although successful in laboratory conditions, may not be able to be replicated on a commercial basis either at all or profitably, the time frame for product development and market penetration and other risks such as relying on research personnel which may be contracted, the financial and marketing competence and ability of licensees and other persons.

• (g) Intellectual Property Rights

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Obtaining, securing and maintaining rights to technology and patents are an integral part of the Company’s business. Competition in retaining and sustaining protection of technology and the complex nature of technologies can lead to patent disputes.

Cardia’s success depends, in part, on its ability to obtain patents, maintain trade secret protection and operate without infringing the proprietary rights of third parties. Additionally, success may depend on the Company enforcing and defending its intellectual property against third-party challengers. Because the patent position of companies such as Cardia can be highly uncertain and frequently involve complex legal and factual questions, neither the breadth of claims allowed nor their enforceability can be predicted. There can be no assurance that any patents which Cardia may own, access or control will afford Cardia commercially significant protection of its technology or its products or have commercial application.

• (h) No Valuation

No formal or informal valuations have been completed of any of the intellectual property or other assets of the Company. The Company makes no representation as to the value of its intellectual property or any other such assets. All impending investors and their advisers should make their own assessments as to these matters after having regard to all of the matters contained in this Prospectus.

• (i) Impairment of Assets

The assets of the Company such as goodwill may be subject to impairment. Such impairment would affect the underlying net assets of the Company.

• (j) Limited operating history

Cardia has only commenced sales of its products within the past three years, and continues to develop and launch new product lines. Therefore, the Company is subject to all of the risks inherent in a new business enterprise. Additionally, with a limited operating history, it makes it difficult to evaluate Cardia’s financial performance and prospects. As such, period to period comparisons of results from operations may not be meaningful.

(k) Commercial success depends on widespread market acceptance of bioplastics

The market for bioplastics is a relatively young industry and is still developing. Cardia’s success is dependent on consumers’ acceptance of these plastic products as well as the successful commercialisation of its plastics produced with Cardia resins by third parties.

• (l) Ability to recycle existing plastics improves

Established product manufacturers could improve their ability to recycle their existing products or develop new environmentally friendly products which could render Cardia’s technology less competitive. Any improvements or increased recycling of plastic products could lessen its harmful environmental impact, and have an adverse affect on Cardia business.

• (m) Regulatory changes

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Cardia and many of its product applications that are sold into end markets are regulated by various national and local regulations. Changes in those regulations could result in additional costs, seizures, confiscations, recall or fines, any of which could prevent the Company from development and distribution of it’s products.

(n) Volatility of petroleum prices

The traditional plastics market is subject to fluctuations in petroleum prices. This hydrocarbon is a critical raw material in the development and manufacturing of plastics. Recently, these prices have been volatile and moved increasingly toward conditions that are supportive of the bioplastics market. With the bioplastic market currently commanding a premium price, any fall in petroleum prices could render bioplastics less competitive as the gap between bioplastic and traditional plastic pricing narrows.

(o) Intellectual property protection

Commercial success may depend on Cardia’s ability to obtain and/or maintain patents, trade secrets and trademark protection of its technology. Additionally, success may depend on the Company enforcing and defending its intellectual property against third-party challengers.

(p) External Suppliers

Cardia relies on a number of external suppliers for the provision of services and feedstocks. There can be no assurance given that the failure of an external supplier(s) will not adversely affect the business of Cardia.

(q) Contract Risks Generally

The Company operates through a series of contractual relationships with various parties. All contracts carry risks associated with the performance by the parties thereto of their obligations both as to financial performance and technical capacity and as to the time frames in which operations are carried out and in relation to the quality of work performed. There will be contract risks including relating to the purchase of capital equipment and feedstocks, the maintenance and operation of facilities in China and in respect of all other aspects of its operations.

(r) Operational Risks

These include the possibility of the risk of unexpected mechanical failure or equipment breakdown resulting in loss of production and additional expense generally, unexpected interruption to or imposition of onerous conditions on access, industrial disputes and resultant increases in costs of operation. The availability and pricing of transport and freight may also lead to a cessation of business either temporarily or permanently.

(s) Other Business Risks

Cardia is exposed to a number of other business risks which include higher than projected operating costs, higher interest rates on credit funds and an increase in competition, all of which may have a material adverse effect on the business and financial performance of Cardia.

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5.5 Speculative Nature of Investment

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of its Securities.

Therefore, the Securities carry no guarantee with respect to the payment of dividends, returns of capital or their market value. Offerees should consider that the investment in the Company is speculative and should consult their professional advisers before deciding whether to invest.

6 Continuous Disclosure Obligations

6.1 Nature of this Prospectus

This Prospectus is issued under the special prospectus content rules for continuously quoted securities in section 713 of the Corporations Act. This enables listed disclosing entities to issue a prospectus with less rigorous disclosure requirements if:

• (a) the securities offered by the prospectus are in a class of securities that have been quoted securities at all times in the 3 months before the date of the prospectus; and

• (b) the company is not subject to certain exemptions or declarations prescribed by the Corporations Act.

Securities are quoted securities if:

• (a) the company is included in the official list of ASX; and

• (b) the ASX Listing Rules apply to those securities.

The information in this Prospectus principally concerns the terms and conditions of the Offer and the information necessary to make an informed assessment of:

• (a) the effect of the Offer on Cardia; and

• (b) the rights and liabilities attaching to the Piggy Back Offers offered by this Prospectus.

As Cardia has been listed on ASX since 21 November 1996, a substantial amount of information concerning Cardia has previously been notified to ASX and is therefore publicly available.

This Prospectus is intended to be read in conjunction with the publicly available information in relation to Cardia which has been notified to ASX and does not include all of the information that would be included in a prospectus for an initial public offering of securities in an entity that is not already listed on a stock exchange.Offerees should therefore also have regard to the other publicly available information in relation to Cardia before making a decision whether or not to invest in the Piggy Back Options. Information can be accessed from ASX or via Cardia’s website at http://www.cardiabioplastics.com.

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6.2 Regular reporting and disclosure obligations

Cardia is a disclosing entity under the Corporations Act.It is subject to regular reporting and disclosure obligations under the Corporations Act and the ASX Listing Rules.

These obligations require Cardia to notify ASX of information about specified events and matters as they arise for the purposes of ASX making that information available to the stock market conducted by ASX. In particular, Cardia has an obligation under the ASX Listing Rules (subject to certain limited exceptions) to notify ASX immediately of any information of which it becomes aware concerning Cardia which a reasonable person would expect to have a material effect on the price or value of securities in Cardia.

Cardia is also required to prepare and lodge with ASIC both yearly and half yearly financial statements accompanied by a Directors’ statement and report and an auditor’s report.

All announcements made by Cardia are available from ASX.

Having taken such precautions and having made such enquiries as are reasonable, Cardia believes that it has complied with the general and specific requirements of the ASX (as applicable from time to time throughout the 12 months before the issue of this Prospectus) which require Cardia to notify ASX of information about specified events or matters as they arise, for the purpose of the ASX making that information available to the market.

Cardia believes there is no other information that Shareholders or investors would reasonably require for the purposes of making an informed assessment of the assets and liabilities, financial position and performance, profits and losses and prospects of Cardia and the rights and obligations attaching to the New Shares under this Prospectus, which has been excluded from a continuous disclosure notice in accordance with the ASX Listing Rules.

6.3 Your right to obtain copies of Cardia’s documents

Copies of any documents in relation to Cardia which are lodged with ASIC may be obtained from, or inspected at, an ASIC office.

During the period that the Offer remains open, Cardia will provide copies of the following to any person on request, free of charge:

• (a) Cardia’s annual financial report for the year ended 30 June 2011 (being the last annual financial report that has been lodged with ASIC before lodgement of this Prospectus);

• (b) Cardia’s financial report for the half-year ended 31 December 2011; and

• (c) any continuous disclosure notices used to notify ASX of information relating to Cardia between 30 September 2011 (being the date of lodgement of the financial report referred to in paragraph (a) with ASIC) and the date of lodgement of this Prospectus, being the following:

following:
Date	Title of notice as lodged with ASX
25/7/2012	Sales Update FY2012
23/7/2012	Cardia consolidates anotherpartnership
19/7/2012	Exercise of Options

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Date	Title of notice as lodged with ASX
13/7/2012	Change of Director’s Interest Notice – App3Y
9/07/2012	Major alliance formed with leading plastic packaging company
2/07/2012	Cardia receives Halal Certification
29/06/2012	Exercise of Options
19/06/2012	Appointment of M&A Partners
18/06/2012	Exercise of Options
14/06/2012	Rights Issue Shortfall
07/06/2012	Exercise of Options
29/05/2012	Director Change
25/05/2012	Notice of Change of Interest of Substantial Holder
23/05/2012	Option ExpiryNotice
22/05/2012	Sealed Air Selects Cardia for Fill-Air R5packaging
17/05/2012	Cardia Launches Compostable Bubble WrapProduct
16/05/2012	Issue of Shares under Shortfall
30/04/2012	Appendix 4C -quarterly
23/04/2012	Placement of Shortfall Shares
16/04/2012	Worlds first Bio-container
10/04/2012	Cardia Bioplastics wins $500K Hygiene Products Contract
04/04/2012	Cardia complies to FDA and EU regulations
26/03/2012	Change in substantial holding
23/03/2012	Change of Director`s Interest Notice
21/03/2012	Despatch of HoldingStatements and Appendix 3B
20/03/2012	Exercise of Options and Appendix 3B
19/03/2012	Renounceable Rights Issue
16/03/2012	Results of Rights Issue
01/03/2012	Exercise of Options
29/02/2012	Half YearlyReport and Accounts
27/02/2012	Half Year Results- Material Differences
27/02/2012	Despatch of Prospectus
23/02/2012	Exercise of Options
16/02/2012	Letter to Overseas Shareholders
16/02/2012	Letter to Shareholders
15/02/2012	Letter to Optionholders
13/02/2012	Appointment of nominee under sec 615 of the Corporations Act
10/02/2012	Letter to Optionholders
10/02/2012	Lodgement of Renounceable Rights Issue Prospectus
09/02/2012	Reinstatement to Official Quotation
09/02/2012	Cardia to raise -$2.35Million
08/02/2012	Investors Presentation
02/02/2012	Suspension from Official Quotation
31/01/2012	QuarterlyCash Flow Report -App4C
31/01/2012	TradingHalt

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Date	Title of notice as lodged with ASX
23/01/2012	Cardia supplies three more citydistricts in China
23/12/2011	Investments in Bioglobal Limited
22/12/2011	Issue of Shares to Employees
19/12/2011	Polyden to launch Biopackaging films using Cardia Technology
15/12/2011	Cardia wins contract to supplycityof Nanjing
29/11/2011	Results of Annual General Meeting
29/11/2011	AGM Presentation
28/10/2011	Appendix 4C -quarterly
28/10/2011	Notice of Annual General Meeting
17/10/2011	Malaysian Govt Biotechnology Grant- BIONEXUS STATUS

6.4 Documents available for inspection

The following documents are available for inspection during normal business hours at the registered office of Cardia:

• (a) this Prospectus;

• (b) the Constitution of Cardia; and

• (c) the consents referred to in section 7.4 of this Prospectus.

7 Additional Information

7.1 Directors’ interests and benefits

Other than as set out below or elsewhere in this Prospectus, no Director or proposed Director of Cardia, and no firm in which a Director or proposed Director of Cardia is a partner, holds, or held at any time during the last 2 years before the date of this Prospectus, any interest in:

• (a) the formation or promotion of Cardia;

• (b) any property acquired or proposed to be acquired by Cardia in connection with its formation or promotion or in connection with the Offer, or

• (c) the Offer,

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any Director or proposed director of Cardia:

• (a) to induce them to become, or to qualify them as, a Director; or

• (b) for services rendered by them in connection with the formation or promotion of Cardia or in connection with the Offer.

Directors are not required under Cardia’s constitution to hold any shares in Cardia.

The table below shows the interest of each Director (whether held directly or indirectly) in securities of Cardia as at the date of this Prospectus:

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Director	Shares	Options June 2015
Mr Pat Volpe	150,416,649	30,083,315
Dr Frank Glatz	16,452,917	1,490,583
DrJohnScheirs	6,592,224	-
MrChen Yi	18,500,000	-

Directors may hold the relevant interests in Shares and Options shown above directly, or through holdings by companies, trusts or other persons with whom they are associated.

7.2 Related party transactions

There are no related party transactions entered into that have not otherwise been previously disclosed by the Company.

7.3 Interests of other persons

Other than as set out below or elsewhere in this Prospectus, no person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus, and no promoter of Cardia holds, or held at any time during the last 2 years before the date of this Prospectus, any interest in:

• (a) the formation or promotion of Cardia;

• (b) any property acquired or proposed to be acquired by Cardia in connection with its formation or promotion or in connection with the Offer; or

• (c) the Offer,

and no amounts have been paid or agreed to be paid and no benefit has been given or agreed to be given to any of these persons for services rendered by them in connection with the formation or promotion of Cardia or in connection with the Offer.

7.4 Consents

Each of the parties referred to in this section:

• (a) has not authorised or caused the issue of this Prospectus;

• (b) does not make, or purport to make, any statement in this Prospectus other than as specified in this section;

• (c) has not made any statement on which a statement in this Prospectus is based, other than as specified in this section; and

• (d) to the maximum extent permitted by law, expressly disclaims all liability in respect of, makes no representation regarding, and takes no responsibility for, any part of this Prospectus other than the reference to its name and the statement (if any) included in this Prospectus with the consent of that party as specified in this section.

Mills Oakley Lawyers have given and, at the time of lodgement of this Prospectus, have not withdrawn their written consent to being named in this Prospectus as legal advisers to Cardia in respect of the Offer in the form and context in which they are named.

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William Buck Audit (Vic) Pty Ltd have given and, at the time of lodgement of this Prospectus, have not withdrawn their written consent to being named in this Prospectus as auditors to the Company in respect of the Offer in the form and context in which they are named.

7.5 Expenses of the Offer

The total expenses of the Offer payable by the Company are estimated at approximately $9,671.These expenses are expected to be applied towards the following:

Item	$
ASIC fees	2,171
ASX fees	1,500
Legal fees	3,000
Printing and other expenses	3,000
Total	9,671

7.6 Market Price of Shares

The Company is a disclosing entity for the purposes of the Corporations Act and its Shares are enhanced disclosure securities quoted on ASX.

The highest and lowest market sale prices of the Company’s Shares on ASX during the 3 months immediately preceding the date of lodgement of this Prospectus with the ASIC and the respective dates of those sales were:

Highest:	0.7 cents	23rd ,26th, 27th of April 2012 & 1st, 3rd, 15th , 22nd of May2012
Lowest:	0.3 cents	29th June 2012 & 3rd July 2012

The latest available closing sale price of the Company’s Shares on ASX prior to the lodgement of this Prospectus with the ASIC was 0.4 cents.

8 Directors’ authorisation

This Prospectus is issued by the Company and its issue has been authorised by a resolution of the Directors.

The Directors state that they have made all reasonable enquiries and on that basis have reasonable grounds to believe that any statements made by the Directors in this Prospectus are not misleading or deceptive and that, in respect to any other statements made in this Prospectus by persons other than Directors, the Directors have made reasonable enquiries and, on that basis, have reasonable grounds to believe that persons making the statement or statements were competent to make such statements.

Those persons have given their consent to the statements being included in this Prospectus, in the form and context in which they are included and have not withdrawn that consent before lodgement of this Prospectus with the

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ASIC or, to the Directors’ knowledge, before any issue of Piggy Back Options pursuan t to this Prospectus.

Each of the Dir e ctors of the Company has consented to th e lodgement of this Prospectus in accordance with section 720 of the Corp o rations Act and has not withdrawn that consent. This Prospectus is signed for and on behalf of the Compan y pursuant to a resolution of the B oard.

Dated: 26 July 2 0 12

==> picture [89 x 28] intentionally omitted <==

==> picture [21 x 28] intentionally omitted <==

==> picture [89 x 28] intentionally omitted <==

==> picture [21 x 28] intentionally omitted <==

Frank Glatz Director

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9 Glossary

9 Glossary
ACH Clearing Rules	means the official clearing rules of the Australian Clearing House Pty Ltd ABN 48 001 314 503.
AEST	meansAustralian EasternStandardTime.
ASTC	means ASX Settlement and Transfer Corporation PtyLtdABN 49 008 504532.
ASTC Settlement Rules	means the official settlement rules of ASTC.
ASX	meansASX LimitedABN98 008 624691.
ASX Listing Rules	means the official listing rules of the ASX.
Company or Cardia	means Cardia Bioplastics Limited ABN 89 064 755 237
Board or Board of Directors	means the board of directors of the Company.
Business Day	means a day (other than a Saturday, Sunday or public holiday) on which banks are open for general banking business in Melbourne, Australia.
CHESS	means Clearing House Electronic Subregister Systemoperated byASTC
Closing Date	means the closing date for receipt of an Entitlement and Acceptance Forms under this Prospectus as set out in Section 1.1 (Important Dates) (unless extended).
Constitution	means the Company’s constitution as at the date ofthisProspectus.
Corporations Act	means_Corporations Act 2001_(Cth).
Directors	means the directors of the Company as at the date of this Prospectus.
Entitlement	means the entitlement of an Offeree to participate in the Offer.
Entitlement and Acceptance Form	means the application form entitled “Entitlement and Acceptance Form” either attached to or accompanying this Prospectus.
Listing Rules	means the listing rules of the ASX.
Offer	means the personalised offer to each Offeree of that number of Piggy Back Options as set out in the Entitlement and Acceptance Form
Offeree	means the person or entity named in the Entitlement and Acceptance Form .
Opening Date	means the opening date for receipt of Entitlement and Acceptance Forms under this Prospectus as set out in Section 1.1 (Importance Dates)..
Option	means anoptionto acquire a Share.

5200023_003.doc

Optionholder	means the holder of a Piggy Back Option.
Piggy Back Option	means the Option to acquire a Share under this Prospectus, on the terms set out in Section 4.1 of this Prospectus.
Piggy Back Option Expiry Date	means has the meaning given to that term in Section 4.1ofthisProspectus.
Primary Option	means the free attaching Option that was issued with each share that was issued to certain Shareholders pursuant to the prospectus lodged on5May2011.
Privacy Act	means_Privacy Act 1988_(Cth).
Prospectus	means this prospectus.
Quotation and Official Quotation	means the official quotation on ASX.
Securities	means a Share orOption.
Share	means a fully paid ordinary shares in the capital ofthe Company.
Shareholder	means the holder of a Share as recorded in the registerofthe Company.
Share Registry	means Advanced Share Registry Services Limited.

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