MYECO GROUP LTD — Interim / Quarterly Report 2013

Oct 24, 2012

ACN 064 755 237

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TO : COMPANY ANNOUNCEMENTS OFFICE ASX LIMITED

DATE : 25 October 2012

30 September 2012 QUARTERLY REPORT (4C) Activities and Cash flow Report

Cardia Bioplastics Limited (ASX: CNN) hereby lodges its Quarterly Report for the period 1 July 2012 to 30 September 2012. This document contains the Activities Report and Quarterly Cash flow Statement (Appendix 4C).

Cash at Bank at 30 September 2012

• Consolidated cash of $1.138M .

• Cardia Bioplastics Limited recorded a “Net Operating Cash (Out) Flow” for the September quarter of approximately $208K compared to approximately $511K for the June 2012 quarter.

Collections from customers were as per the payment terms negotiated and cash outflows on other working capital were commensurate with sales and manufacturing activities during the quarter.

Other than the above, reduction in Net Operating Cash Outflow for the quarter was attributed to:

• Receipt of R&D tax rebate of $378K.

• Decrease in company overheads resulting from restructuring measures put in place in the June 2012 quarter.

Sales revenue

Sales revenue for the September quarter was $803K, representing an 11% decrease over the June 2012 quarter ($911K).

Sales revenue for the quarter was derived from the sales made to the American, European and Australian market segments as well as sales of kitchen waste bags in China, supplied under the trial contracts with four city districts of Shanghai – Pudong, Hangzhou West Lake, Yuhang and Nanjing City.

Future Cash requirements

The Board has received interest from several parties to participate in a capital raising to be used by Cardia for its working capital needs. At this stage, the Board is reviewing its options. It is expected that the company will be required to raise additional cash in the December 2012 quarter, to support its working capital requirements. Once the Board has decided on any such capital raising strategy, the market will be advised. Currently Cardia’s annualised cash burn is circa $3M per annum (before gross margins on sales).

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Sales Contracts

The financial year 2012 has seen Cardia transition from product development phase to global product commercialisation. Cardia has now executed several long-term contracts with major international customers and market-leading brand owners. The product development process within these companies is a lengthy and rigorous multi-step event. Successful progression to in-market validation and ultimately commercialisation is absolute confirmation that the products meet the highest standards for technical and environmental performance, are cost-competitive and have passed specific product trials. Securing the product supply to these market leaders and large packaging users offers Cardia the opportunity to significantly grow with these organizations as they increase the use of Cardia products over time across different product lines and geographical regions.

Cardia has started to deliver such growth with the USA Hygiene Products Company that it signed a supply contract with for a minimum of $500K p.a. in March 2012. Cardia commenced supply in April and delivered $107K sales in June quarter and $130K sales in September quarter. Based on Cardia delivering 6 months supply of quality product, that company is now increasing its off take of Cardia products across its first hygiene product line and has already placed purchase orders of $317K for shipment during the December quarter. This company is a large hygiene product manufacturer and delivers several product lines to the vast USA hygiene market. The Hygiene Products leader offers Cardia significant growth potential as it extends the use of Cardia products across its several product lines.

In May 2012 Cardia announced that it started the supply of its Biohybrid™sustainable resin to Sealed Air Corporation, an international and leading packaging company, to produce Sealed Air’s innovative Fill-Air R5® inflatable packaging. Cardia has so far sold $27K worth of Biohybrid™resin under this contract for the initial launch phase of the Fill-Air R5® product and has progressed with its other product developments with Sealed Air.

The following additional sales contract has been delivered and communicated to the market during the September quarter:

Cardia Bioplastics secures supply contract with global Consumer Products Company

Cardia Bioplastics secured a $500K per annum supply contract with a global Consumer Products Company, to provide Cardia Compostable bags as part of its consumer product offering.The contract win is an important achievement for Cardia and adds another leading global brand to the Company’s customer portfolio. The supply contract provides Cardia with a strong revenue stream and exposure to that company’s extensive retail channels. The new consumer product will go to market in December 2012 with shipments of Cardia products worth $70K commencing in November.

Advances in Commercialisation

During the September 2012 quarter, Cardia made solid headway in its path to global commercialisation. A number of projects with global consumer goods companies and packaging producers progressed forward, with several products edging closer to commercialisation phase. Initial sales have already been achieved with the large packaging companies, brand owners and Councils who are currently either at ‘in-market’ validation stage or conducting pilot studies with Cardia technology products. As these targeted business development activities progress to market launch and ramp-up stage, it is expected that they will drive Cardia’s near-future business success and deliver significant resin supply contracts to the Company over the next 12 months.

The following ‘in-market validation’ activities with a global consumer goods company have been communicated to the market during the September quarter:

Key milestone achieved in commercialisation of Biohybrid™technology

A leading multi-national consumer goods company has commenced in-market validation of their personal care products packaging that is made from Cardia’s renewable Biohybrid™resin technology. This is a major milestone event for Cardia – it validates the performance and commercial viability of the renewable resin technology and pushes the Company further along its path to global commercialisation.

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The undisclosed multi-national brand owner is a global leader in the hygiene and personal care markets. The Company is collaborating with Cardia in order to improve the environmental profile of their product packaging, via the integration of Cardia’s renewable Biohybrid™resin technology.

Commercial endorsement from a major global brand owner is expected to translate into an accelerated uptake of the Biohybrid™resins among other companies who are also looking to reduce their carbon footprint through sustainable packaging and plastic technologies.

Waste management trial contracts with Chinese City Councils

Cardia sold kitchen waste bags in China, supplied under the trial contracts with four city districts of Shanghai – Pudong, Hangzhou West Lake, Yuhang and Nanjing City. These trial contracts have come to completion. Cardia is currently negotiating with these Councils the supply of kitchen waste bags for the larger stage roll out of their organic waste diversion programmes expected to commence in the December quarter.

Alliances

The following partnerships and product launches with leading packaging companies and first mover start-up companies have been communicated to the market during the September quarter. It is expected that these developments will lead to regular, long-term supply contracts as product sales eventuate. Further details are as follows:

Major alliance formed with Alto Packaging a leading Australasian plastic packaging company

Cardia Bioplastics has formed an alliance with major Australasian rigid packaging company, Alto Packaging, to innovate and deliver high performance fresh food packaging solutions with an improved environmental profile into Alto’s packaging and product channels. The alliance aims to open another potential sales channel for Cardia in the area of rigid packaging such a food trays and other related applications. If the new product range is successfully adopted, sales will be received within the next 6 months.

World first for skin care industry

Cardia Bioplastics and emerging organic skincare company, ECOCARE™launched the world’s first ecofriendly facial wipes enclosed in eco-friendly packaging - into the skin care industry. The resulting ‘green’ combination has a significantly lower carbon footprint than its competitors. Cardia expects to receive sales this year and again opens up a new industry and application for potential future sales.

Global pipeline of development projects

During the September quarter, Cardia Bioplastics remained active with its portfolio of development projects. The Company continues to work with several national and international brands and packaging companies on integrating Cardia’s bioplastic resins into their existing packaging solutions. Ultimately, these companies are looking for ways to reduce their carbon footprint.

Individually these projects are at various stages of development – ranging from initial production trials to market validation, and some are more advanced and moving towards commercial launch.

Advances in Cardia Bioplastics Technology

During September 2012 quarter, Cardia Bioplastics made further developments with its bioplastics technology, strengthening its Intellectual Property position. Cardia expands its intellectual property portfolio to 10 patent families, including 100 submitted and/or registered patents for Bioplastics formulations, processes and applications for global packaging products.

Furthermore Cardia developed and launched a new range of food contact packaging resin products, made from the patented Biohybrid™technology. These new products are fully recyclable, comply with both US FDA standards and EU regulations and meet Islamic Halal laws regarding food safety and quality. These product certifications not only validate Cardia’s patented technologies, but also open up a large number of potential market opportunities for the Company, in both food packaging and the large worldwide Muslim community. Further details are as follows:

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Halal certification opens up global opportunity within the 1.6 billion-strong Muslim community

Cardia’s range of sustainable Biohybrid™resins received Halal certification which opens up significant new market share opportunities in a previously untapped market – the 1.6 billion-strong Muslim community worldwide. Issued by the Chinese Islamic Association, an appointed Halal Certification Body by Halal Malaysia, Department of Islamic Development Malaysia (JAKIM), and the certification is formal acknowledgement of compliance with Islamic laws regarding safety and quality.

The Board believes that these achievements open up the potential for the company to generate sales in diversified industries within various market applications.

Manufacturing update

Cardia Bioplastics Manufacturing Malaysia – (CBMM, Kuala Lumpur, Malaysia)

Cardia Bioplastics and RNZ Green Bio Sdn Bhd dissolved the CBMM joint venture agreement during the September quarter after RNZ Green Bio could not continue to fund operations. 100% of the manufacturing rights for finished goods and the Cardia brand in Malaysia were re-assigned to Cardia Bioplastics.

The termination of the joint venture has no financial impact on Cardia Bioplastics Limited’s Balance Sheet as Cardia was not required to make any cash contribution to the joint venture.

Principal Business and Investments

During the quarter, no funds were applied to any of the Company’s other business ventures or investments. The monetary value of Cardia’s investment portfolio is not considered to be material (less than 5% of the Company’s net assets) as of 30 September 2012.

Whilst the company’s four principal activities were monitored and reviewed during the quarter with the view of assessing any business opportunities that can add value to shareholders, the majority of activities continued to be focused on the bioplastics business during the quarter.

PAT VOLPE Chairman

About Cardia Bioplastics

Cardia Bioplastics Limited (“Cardia”) develops, manufactures and markets sustainable resins and finished products derived from renewable resources for the global packaging and plastic products industries. The Company holds a strong provisional patent portfolio that drives its mission to be an international supplier of technically advanced sustainable resins derived from renewable resources. Cardia has its Headquarters and Global Applications Development Centre in Melbourne, Australia. The Product Development Centre and manufacturing plant is in Nanjing, China. Cardia offices are located in Europe, Malaysia, China and the Americas. These offices complement a network of leading distributors across Australia, the Americas, Asia and Europe. The Company’s growth is fuelled by the global trend towards sustainable packaging. Cardia gives customers the choice of using sustainable Cardia Biohybrid™resins or Compostable resins for their packaging or plastic product applications. As a service to customers, the Cardia team offers design, development and production of ready-to-use finished goods, such as film and bag products. The Company’s materials are suitable for film, injection moulding, blow moulding, foam, extrusion and coating applications.

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Appendix 4C

Quarterly report for entities admitted on the basis of commitments

Introduced 31/3/2000. Amended 30/9/2001

Name of entity Cardia Bioplastics Ltd ABN Quarter ended (“current quarter”) 89 064 755 237 30 September 2012

Consolidated statement of cash flows

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Current quarter Year to date (3 months)
Cash flows related to operating activities $A’000 $A’000
1.1 Receipts from customers 753 753
1.2 Payments for (a) staff costs (350) (350)
- -
(b) advertising and marketing
(c) research and development (152) (152)
(d) leased assets (19) (19)
(e) other working capital (821) (821)
1.3 Dividends received - -
1.4 Interest and other items of a similar nature received 2 2
1.5 Interest and other costs of finance paid - -
1.6 Income taxes paid - -
1.7 Other (provide details if material) 378 378
Net operating cash flows (209) (209)
1.8 Net operating cash flows (carried forward) (209) (209)
Cash flows related to investing activities
1.9 Payment for acquisition of:
- -
(a)businesses (item 5)
- -
(b) equity investments
- -
(c) intellectual property
(d) physical non-current (7) (7)
assets
(e) other non-current - -
assets
1.10 Proceeds from disposal of:
- -
(a) businesses (item 5)
- -
(b) equity investments
- -
(c) intellectual property
(d) physical non-current
assets - -
(e) other non-current
assets - -
1.11 Loans to other entities - -
1.12 Loans repaid by other entities - -
1.13 Other investing activities - -
Net investing cash flows (7) (7)
1.14 Total operating and investing cash flows (216) (216)
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Cash flows related to financing activities

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1.15 Proceeds from issues of shares, options, etc. 1.16 Proceeds from sale of forfeited shares 1.17 Proceeds from borrowings 1.18 Repayment of borrowings 1.19 Dividends paid 1.20 Other (provide details if material) Net financing cash flows	- - - - - -	- - - - - -
	-	-
Net increase (decrease) in cash held 1.21 Cash at beginning of quarter/year to date 1.22 Exchange rate adjustments to item 1.21 1.23 Cash at end ofquarter	(216) 1,362 (8)	(216) 1,362 (8)
	1,138	1,138

Note:

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.24 1.25		Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.11	Current quarter $A'000
			$95
			-
1.26		Explanation necessaryfor an understandingof the transactions
		Item 1.24 Mr F Glatz was paid a salary of $50,000 inclusive of superannuation for the quarter Mr Chen Yi was paid a salary of $ 23,300 inclusive of society insurance premium for the quarter. Directors’ fees totalling $21,800 were paid during the quarter as detailed below:  Trayburn Pty Ltd (a company controlled by Pat Volpe) - $13,625 (Ex GST)  Mr John Scheirs-$8,175 (incl super)

Non-cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

• 2.2 Details of outlays made by other entities to establish or increase their share in businesses in which the reporting entity has an interest

n/a

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Financing facilities available

Add notes as necessary for an understanding of the position. (See AASB 1026 paragraph 12.2).

3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000	Amount used $A’000
	n/a	n/a
	n/a	n/a

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
4.1 Cash on hand and at bank * 4.2 Deposits at call 4.3 Bank overdraft 4.4 Term Deposits 4.5 Deposits against Letter of Credits	1,138	1,362
	-	-
	-	-
	-	-
	-	-
Total: cash at end of quarter(item 1.23)	1,138	1,362

Acquisitions and disposals of business entities

5.1 Name of entity 5.2 Place of incorporation or registration 5.3 Consideration for acquisition or disposal 5.4 Total net assets 5.5 Nature of business	Acquisitions (Item 1.9(a))	Disposals (Item 1.10(a))
	-	-
	-	-
	-	-
	-	-
	-	-

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act (except to the extent that information is not required because of note 2) or other standards acceptable to ASX.

• 2 This statement does give a true and fair view of the matters disclosed.

Sign here: Sd-....................................................... Date: 25 October 2012. (Company Secretary) Print name: Rekha Bhambhani

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Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2. The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this report except for the paragraphs of the Standard set out below.

3. 6.2 - reconciliation of cash flows arising from operating activities to operating profit or loss

4. 9.2 - itemised disclosure relating to acquisitions  9.4 - itemised disclosure relating to disposals  12.1(a) - policy for classification of cash items  12.3 - disclosure of restrictions on use of cash  13.1 - comparative information

5. Accounting Standards. ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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