MYECO GROUP LTD — Interim / Quarterly Report 2014

Apr 29, 2014

TO: COMPANY ANNOUNCEMENTS OFFICE ASX LIMITED

DATE: 30 April 2014

March 2014 Quarterly Report

The Board of Cardia Bioplastics Limited (ASX: CNN) presents its Quarterly Activities Report and Appendix 4C Quarterly Cash Flow Statement for the consolidated entity consisting of Cardia Bioplastics Limited (“Cardia” or “the Company”) and the entities it controlled (“the Group”) for the quarter ended 31 March 2014.

Highlights of the March 2014 Quarter

• Consolidated cash position was $0.79 Million as at 31 March 2014. (excludes $2.7M raised from Non – renounceable Rights Issue completed in April 2014)

• Capital raised during the quarter - $0.36Million through Share Placement

• Successful completion of further $2.7Million capital raising through a fully subscribed Non-renounceable Rights Issue.

• Net Operating Cash (Out) Flow for the March 2014 quarter was $0.81M compared to $0.56M for the December 2013 quarter.

• Sales Revenues for the March 2014 quarter were $1.17M, an increase of 4% compared to sales revenues for the March 2013 quarter ($1.13M), and a decrease of 4% compared to sales revenues for the December 2013 quarter ($1.22M).

• Revenues (YTD) for the 9 months to March 2014 were $3.30M versus $3.24M for the same period in 2013.

• Several sales contracts were signed and announced via the ASX during the March Quarter with initial orders received for delivery in the June 2014 Quarter. Additional annual sales revenues of $3.00M are expected from these new sales contracts when customers ramp up their product lines to their full requirements.

• Cardia Bioplastics received IAIR Green Excellence Award for Leadership in Innovation & Sustainability in Packaging for Asia Pacific.

Sales Segment Summary

Carrier Bags

• Cardia won supply contracts for Biohybrid™bags with high profile Brazilian retailers Ricoy Supermercados and Drogaria Araujo. Annual orders are expected to reach $1,200,000 with the opportunity to grow the business across the larger retailing groups.

Films & Packaging

• Leading American manufacturer of personal hygiene and diaper products doubled orders of Cardia Biohybrid™ film to $1million per annum forecast. The manufacturer expands use of Cardia Biohybrid™film across different product lines with further potential to increase its use.

• Cardia Bioplastics developed innovative Biohybrid™films technology for bag-in-bag water packaging. Cardia delivered initial sales of $80K from BOS Water and Yukon Spring for Biohybrid™bag-in-bag packaging films.

1

• Cardia Bioplastics technology used to develop So Delicious® Dairy Free compostable ice cream sticks. So Delicious® Dairy Free purchased first commercial quantity of Cardia Compostable ice cream sticks for their market launch.

• Cardia executed supply agreement with EcNow Tech of USA. Cardia delivered initial orders with annual supply projections of $400,000 for its compostable resin used in EcNow Tech’s production of disposable compostable cutlery and ice cream sticks.

Waste Management Products

• Nanjing Jianye District selected Cardia Bioplastics as preferred supplier of waste management products, awarded first quarter orders of $250,000 with a forecast of $1 million annual supply requirement.

• Cardia Bioplastics organic waste diversion program extended to China’s Qixia District with annual orders for the program forecast to reach $400,000.

• Cardia partnered with LifeCycle Products to increase sales of compostable and Biohybrid™bag and waste management products in the UK market. Initial orders of $65,000 for Cardia Compostable products have been placed by LifeCycle Products for its mid-year launch.

Manufacturing and Technology Summary

• Cardia Bioplastics doubling film and bag making capacity to meet increased demand for its finished products business.

• Cardia secured patent protection for its Cardia Compostable resin family of products from the United States Patent and Trademark Office.

Cash at Bank on 31 March 2014

• Consolidated cash position was $0.79M as at 31 March 2014. This cash balance included funds of $0.36M raised from share issues during the quarter however excludes the $2.7M raised in the Non-renounceable rights issue completed in April 2014

• Net Operating Cash (Out) Flow for the March 2014 quarter was $0.81M compared to $0.56M for the December 2013 quarter.

The Group’s collections from sales [Item 1.1 of Appendix-4C] were largely as per the payment terms negotiated.

Cash outflows on other working capital [Item 1.2(e) of Appendix-4C] were commensurate with sales, manufacturing, trading and other operational activities during the quarter.

Capital Raising

Cardia was successful in raising $0.36M during the quarter via share placement and further completed $2.7M capital raising in April 2014 through Non-Renounceable Rights Issue Offer.

• On 6th March 2014, the Company lodged a Non-Renounceable Rights Issue Offer Prospectus with ASIC to raise up to $2.7Million. The Rights Issue Offer entitled shareholders to subscribe for one new share for every three shares held in Cardia at an issue price of $0.003 (0.3 cents) each with one free attaching option (exercise price of $0.006 each with an expiry date of 31 December 2014) for every three new shares subscribed for.

In April 2014, the Company successfully completed capital raising of $2.7M pursuant to the Rights Issue Offer Prospectus.

• At the same time in March 2014, the Company extended the same offer to professional and sophisticated investors and raised $355K (before costs) via share placement.

2

The Placement was completed under the Company’s 15% placement capacity pursuant to Listing Rule 7.1

• Funds raised are being used for general working capital requirements of the Company and other purposes as were disclosed in Rights Issue Offer Prospectus.

• During the quarter, the Company has issued 7,000 ordinary shares as a result of the exercise of a similar number of options expiring on 30 June 2015.

Revenues and Sales in March 2014 quarter

• Sales Revenues for the March 2014 quarter were $1.17M, an increase of 4% compared to sales revenues for the March 2013 quarter ($1.13M), and a decrease of 4% compared to sales revenues for the December 2013 quarter ($1.22M). Revenues were made up of sales from Cardia Bioplastics resins and finished products to its global carrier bag, films & packaging and waste management business market segments.

General review of sales and sales developments by business segment

Carrier Bags

• Several Brazilian States have implemented bans of standard plastic carrier bags and are currently formalising legislation. Carrier bag sales to retailers continued in Brazil during the quarter. In addition, Cardia won supply contracts for Biohybrid™bags with high profile Brazilian retailers Ricoy Supermercados and Drogaria Araujo. Annual orders are expected to reach $1,200,000 with the opportunity to grow the business across the larger retailing groups. Cardia Bioplastics Brazil is set up to supply bags to retailers. These bag sales are expected to accelerate.

• Compostable bag sales in Australia strengthened due to upcoming regulatory changes in Australia at State Government and Local Council level. During the quarter Cardia Bioplastics delivered sales of its compostable bags to customers across Australia and received additional bag orders that are currently being manufactured for sales in the next quarter.

• Cardia delivered compostable resin sales to a US bag manufacturer. Demand for certified compostable bags strengthened on the US West Coast. Cardia Compostable resins and carrier bags are fully certified to US ASTM6400 compostable packaging standard and are independently verified for their composting performance by US composting companies.

• Cardia received initial compostable carrier bag orders from LifeCycle Products for the UK market. European Parliament is currently reviewing its position on single use, disposable retail carry bags.

Films & Packaging

• Cardia delivered Biohybrid™film sales to its long-term hygiene products customer in USA. Customer doubled orders of Cardia Biohybrid™film to $1million per annum forecast as it expands use of Cardia products across different product lines with further potential to increase its use.

• Cardia Bioplastics developed innovative Biohybrid™films technology for bag-in-bag water packaging. Cardia delivered initial YTD sales of $50K from BOS Water in Australia and Yukon Spring in Canada for Biohybrid™ bag-in-bag packaging films. As Cardia’s water distribution customers have committed to installation of additional production lines, it is expected that this business will significantly grow.

• Cardia delivered sales of compostable films and packaging to US Protective Packaging Leader. They continued with their soft market launch and are currently testing their compostable protective packaging products with select international express logistics companies.

3

• Cardia Bioplastics technology was used to develop So Delicious® Dairy Free compostable ice cream sticks. So Delicious® Dairy Free purchased first commercial quantity of Cardia Compostable ice cream sticks for their market launch.

• Cardia executed supply agreement with EcNow Tech of USA. Cardia delivered initial orders with annual supply projections of $400,000 for its compostable resin used in EcNow Tech’s production of disposable compostable cutlery and ice cream sticks.

• Cardia supplied compostable films and packaging to Australian Ecoriginals to produce their environmentally friendly, high quality and affordable eco baby nappies that are chiefly made from plant-based and compostable materials. The Eco Baby Nappies were launched in the Australian market during the March Quarter.

Waste Management Products

• Cardia Bioplastics has established itself as a provider of organic waste management products and solutions to the government and council sector, commercial and industrial, as well as the retail market. Diversion of organic waste from landfill to composting is promoting the use of certified compostable waste bags. Reducing the carbon footprint of waste management products encourages the use of Biohybrid™technology.

• Sales of organic waste management products business in China is in line with expectations. Shanghai-Pudong is supplied under annual contract.

• In addition, Cardia signed following new annual sales contracts with initial orders received for delivery in the

• June 2014 Quarter.

Nanjing Jianye District selected Cardia Bioplastics as preferred supplier of waste management products, awarded first quarter orders of $250,000 with a forecast of $1 million annual supply requirement.

Cardia Bioplastics organic waste diversion program extended to China’s Qixia District with annual orders for the program forecast to reach $400,000.

• Select district Councils of Nanjing, Hangzhou and Yuhang continued to be supplied under their trial regime. Negotiation of annual supply agreement with various Nanjing District Councils at final stage.

• Cardia partnered with LifeCycle Products to increase sales of compostable and Biohybrid™bag and waste management products in the UK market. Initial orders of $65,000 for Cardia Compostable products have been placed by LifeCycle Products for its mid-year launch.

• New opportunities are being developed in Australia, USA, Asia and Europe with initial orders for both compostable and Biohybrid™waste management products received from new customers in Europe and Asia.

• Cardia Biohybrid™bags gain EPA approval in the Maldives with initial orders of $30,000 placed by Truly Green Maldives.

Wholesale materials trading business

• Cardia did not deliver any sales from its wholesale raw material trading business during the March 2014 quarter. Wholesale material trading is expected to continue however Cardia’s aim is to focus the sales mix on allocating resources for the expansion of its core business product lines and to fulfil recent customer contracts and orders.

Manufacturing and Technology Summary

• Cardia Bioplastics doubling film and bag making capacity to meet increased demand for its finished products business. Purchase of three new film extrusion and bag making machines with aim to order a further three by end of June quarter. Each production line capable of producing an additional 1.5 million bags per month. Cardia Bioplastics’ strategy to expand finished products division having early impact on global sales. Increased finished products capacity will enhance sales margins, as Cardia products will be made in-house. Existing capacity for resin production meets business requirements.

4

• Cardia secured patent protection for its Cardia Compostable resin family of products from the United States Patent and Trademark Office. US patents expand Cardia Bioplastics growing intellectual property portfolio of 11 patent families, with 12 patents so far granted in USA, Australia, China, Japan, New Zealand and South Africa. The patents protect the composition formulation and manufacturing process invented by Cardia’s R&D team.

Appendix 4C follows.

Richard Tegoni Chairman

Please direct any enquires to

Richard Tegoni Chairman M: +61 411 110 901 E: r.tegoni@cardiabioplastics.com

Frank Glatz Managing Director M: +61 400 930 530 E: f.glatz@cardiabioplastics.com

About Cardia Bioplastics

Cardia Bioplastics Limited (ASX CODE: CNN) develops, manufactures and markets its patented renewable resource based materials and finished products derived from Cardia’s proprietary technology for the global packaging and plastic products industries. The company holds a strong patent portfolio and its growth is fuelled by the global trend towards sustainable packaging. Established in Australia in 2002 as Biograde, the company Headquarters and Global Applications Development Centre is in Melbourne, Australia. The Product Development Centre and manufacturing plant for resins and finished goods is in Nanjing, China. There are Cardia Bioplastics offices in Australia, China, USA, Brazil and Malaysia, and a network of leading distributors across the Americas, Asia and Europe. Visit www.cardiabioplastics.com

5

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		31 March 2014

Consolidated statement of cash flows

Consolidated statement of cash flows
Cash flows related to operating activities 1.1 Receipts from customers 1.2 Payments for (a) staff costs (b) advertising and marketing (c) research and development (d) leased assets (e) other working capital 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other (provide details if material) Net operating cash flows	Current quarter $A’000	Year to date (9 months) $A’000
	1,287 (276) (40) (98) (132) (1,550) - 1 - - -	3,560 (857) (58) (338) (177) (4,199) - 4 (8) - -
	(808)	(2,073)
1.8 Net operating cash flows (carried forward)	(808)	(2,073)
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 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 1.14 Total operating and investing cash flows	- - - (60) - - - - - - - -	- - - (61) - - 35 - - - - - - -
	(60)	(26)
	(868)	(2,099)

6

Cash flows related to financing activities 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	277 - - - - -	1,706 - 110 (107) - -
	277	1,709
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	(591) 1391 (12)	(390) 1,231 (53)
	788	788

Notes:

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
			$76
			-
1.26		Explanation necessaryfor an understandingof the transactions
		Item 1.24 Dr F Glatz was paid a salary of $44,350 inclusive of superannuation for the quarter Mr Chen Yi was paid a salary of $21,437 inclusive of society insurance premium for the quarter. Directors’ fees totalling $10,000 were paid during the quarter as detailed below:  COB Pty Ltd (a company controlled by Mr. Richard Tegoni)- $3,750 (Ex GST)  Bendel Partners Pty Ltd (a company controlled by Mr. Steve Bendel)-$3,125 (Ex GST)  GM Legal & Corporate Advisory (a company controlled by Mr. Gideon Meltzer-$3,125 (Ex GST)

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

N/A

7

• 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

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
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 4.6 Funds in Transit	788	1,168
	-	-
	-	-
	-	-
	-	-
	-	223
Total: cash at end of quarter(item 1.23)	788	1,391

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))
	-	-
	-	-
	-	-
	-	-
	-	-

8

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: ...................................................... (Company Secretary) Print name: Rekha Bhambhani

Date: 30 April 2014.

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

5. 9.4 - itemised disclosure relating to disposals

6. 12.1(a) - policy for classification of cash items

7. 12.3 - disclosure of restrictions on use of cash

8. 13.1 - comparative information

9. 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.

9