Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this Quarterly Report constitute "forward-looking statements." These statements, identified by words such as "plan," "anticipate," "believe," "estimate," "should," "expect" and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties include those set forth under the caption "Part II - Item 1A. Risk Factors" and elsewhere in this Quarterly Report. We do not intend to update the forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information. We advise you to carefully review the reports and documents, particularly our Annual Reports, Quarterly Reports and Current Reports, that we file from time to time with the United States Securities and Exchange Commission (the "SEC").

As used in this Quarterly Report, the terms "we," "us," "our," and "Clyvia" mean Clyvia Inc. and its subsidiaries unless otherwise indicated. The term "Clyvia GmbH" means our wholly owned subsidiary, Clyvia Technology GmbH. All dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise stated.

INTRODUCTION

The following discussion and analysis summarizes our plan of operation for the next twelve months, our results of operations for the six month period ended July 31, 2008 and changes in our financial condition from our fiscal year ended January 31, 2008. This discussion should be read in conjunction with the Management's Discussion and Analysis of Financial Condition and Results of Operation included in our Annual Report on Form 10-K for the year ended January 31, 2008 filed with the SEC on June 16, 2008.

Through Clyvia GmbH, we are developing and marketing a proprietary technology that utilizes a process known as fractional depolymerization to produce diesel fuel and heating oil from various types of recyclable waste materials (the "Fuel Technology"). We plan to earn revenues from the sale and construction of recycling/processing plants and from the sale of diesel fuel and heating oil produced at Clyvia GmbH's pilot plant located in Wegberg-Wildenrath, Germany.

RECENT CORPORATE DEVELOPMENTS

1. Effective August 7, 2008, Walter P.W. Notter resigned as our Chief Executive Officer, Chief Financial Officer, President, Treasurer and as a member of the Board of Directors. Mr. Notter resigned to pursue other business interests. There was no disagreement between Mr. Notter and the Company regarding any matter relating to the Company's operations, policies or practices. In accordance with their terms, stock options to purchase 1,500,000 shares of our common stock granted to Mr. Notter while acting as one of our officers and directors expired on September 6, 2008, thirty days after his resignation.

Mr. John Boschert, our Secretary, was appointed in Mr. Notter's place. Mr. Boschert has acted as our Secretary since June 28, 2005. We currently pay Mr. Boschert a management fee of $5,000 per month in accordance with the terms of a management consulting agreement that we entered into with Mr. Boschert on September 3, 2008.

2. In August 2007, Clyvia GmbH had entered into a contract with Oeko + Bio Technologies AG ("Oeko Bio") for the sale of 5 CL 500 fractional depolymerization plants. The contract had called for Oeko

PLAN OF OPERATION

Product Development and Improvement Objectives

We have completed the construction, principal testing and commissioning of our fractional depolymerization pilot plant. In addition, we have completed large scale test runs of the pilot plant and have made minor technical adjustments to optimize the pilot plant's fractional depolymerization process. We have obtained a report from TÜV Rheinland Group ("TÜV"), an independent testing service, confirming that our pilot plant functions as claimed when waste oil is used as the input substance. We are currently working to obtain TÜV certification of our pilot plant's functionality when using plastics as the input product.

During the next twelve months, we also intend to work on modifying the system to enable it to capture chlorine gas byproducts given off when input materials containing chlorine (such as PVC's) are processed. In order to solve the problem of toxic gas outputs, Clyvia GmbH is exploring the use of reagent materials to bind the chlorine as a common salt within the reactor system, allowing it to be disposed of in an environmentally friendly manner.

In addition, if we are able to obtain sufficient financing, of which there is no assurance, Clyvia GmbH will work on modifying the system so that it is able to produce diesel fuel or heating oil from bituminous substances, rubber and organic materials such as garden cuttings and wood. To date, no depolymerization process has been able to process these materials into usable oil. Clyvia GmbH has not yet been able to successfully depolymerize these materials; however, it believes that it should be chemically possible to process these materials into diesel fuel or heating oil. In order to do this, Clyvia GmbH intends to use a pyrolysis process to breakdown the input materials and then feed the resulting oils through its fractional depolymerization system.

In addition, we expect to work on making minor improvements and modifications to the Fuel Technology on an ongoing basis in order to increase its marketability.

Our ability to complete the above product development and improvement objectives is dependent on our ability to obtain substantial financing in the near term. In addition, if we obtain firm orders for the purchase of fractional depolymerization plants, of which there are no assurances, we may scale back our product development and improvement activities to focus our resources on constructing any ordered plants.

Marketing and Sales Plans

We have also begun focusing on marketing and selling the Fuel Technology. Our marketing and sales program involves the following:

(a) We will conduct tests/demonstrations for potential purchasers of recycling/processing systems based on our Fuel Technology. It is expected that potential customers will provide us with samples of the input materials that they intend to use in systems purchased from us. We will then use these sample materials in our pilot plant to conduct a test run to determine the quality and amount of diesel fuel produced. The results of these tests will be used to formulate modifications/specifications for potential recycling/processing systems to be sold to the potential customer. We intend to charge potential customers for conducting the test runs.

(b) When not using the pilot plant to conduct test runs, we may use the pilot plant to process used oil, bilge oil and/or other materials to produce diesel fuel or heating oil that we will sell directly to small

In addition, throughout the next twelve months, we will invite representatives from the waste management and energy production industries to our facilities in order to conduct demonstrations of the Fuel Technology and our recycling/processing plants.

Clyvia GmbH has entered into an agreement with Biotherm Technologie AG ("Biotherm") under which Biotherm has agreed to act as Clyvia GmbH's worldwide sales agent. Biotherm will seek to generate sales for Clyvia GmbH's products, will assist potential purchasers in arranging financing, and will provide after sales servicing. In exchange, Clyvia GmbH has agreed to pay Biotherm a commission of 20% of the base price for any Clyvia GmbH products sold.

We anticipate spending approximately EUR 2,000,000 (approximately $3,116,240) in pursuing the above plan of operation over the next twelve months. We currently do not have sufficient working capital to meet our anticipated needs for the next twelve months. We have not earned any significant revenues to date and there are no assurances that we will be able to do so in the future. In addition, we can not provide any assurances that our actual working capital needs for the next twelve months will not exceed the amounts that we have estimated. If we require additional financing, it is anticipated that such additional financing will likely be in the form of equity financing, as we do not expect there to be substantial debt financing available to us at this stage of our business.

Currently, we do not have any additional financing arrangements in place and there are no assurances that we will be able to obtain sufficient additional financing if needed. If we are not able to obtain sufficient financing, we may scale down our proposed plan of operation as necessary.

RESULTS OF OPERATIONS

Three Months and Six Months Summary

                     Three Months            Percentage             Six Months             Percentage
              Ended July     Ended July      Increase /     Ended July     Ended July      Increase /
               31, 2008       31, 2007       (Decrease)      31, 2008       31, 2007       (Decrease)
Revenue     $        Nil   $         Nil        n/a       $        Nil   $         Nil        n/a
Expenses        (365,617 )    (1,010,114 )    (63.8%)         (680,453 )    (1,324,185 )    (48.6%)
Other Items      (57,854 )        (8,020 )     621.4%          (57,365 )        12,761      (549.5%)
Net Loss    $   (423,471 ) $  (1,018,134 )    (58.4%)     $   (737,818 ) $  (1,311,424 )    (43.7%)

Revenue and Other Income

During the six months ended July 31, 2008, we earned income from processing waste of $48,151.

We are presently still in the development stage of our business. To date, we have failed to earn significant income from our operations. Classified under Other Items are nominal amounts that we have earned from the processing of waste materials at our pilot plant located in Wegberg-Wildenwrath, Germany. Also classified under Other Items as miscellaneous income are nominal amounts earned by us for test runs conducted through our pilot plant and for preparing quotes for potential purchasers. Although we have entered into a number of distribution and sales agreements for recycling/processing plants based on our Fuel Technology, we have not yet completed the sale of any such plants, and there are no assurances that we will be able to complete the sale of any of our products or earn significant revenues in the future.

Operating Expenses

Our operating expenses for the three and six month periods ended July 31, 2008
and 2007 consisted of the following:

                     Three Months            Percentage             Six Months             Percentage
               Ended July     Ended July     Increase /      Ended July     Ended July     Increase /
                31, 2008       31, 2007      (Decrease)       31, 2008       31, 2007      (Decrease)
Amortization $     81,678   $     67,174        21.6%      $    157,688   $     81,098       94.4%
Management         56,109         69,646       (19.4%)          118,033        137,121      (13.9%)
Fees
Professional      126,008        165,645       (23.9%)          181,671        232,021      (21.7)%
Fees
Other             111,506        130,437       (14.5%)          224,967        295,839      (24.0%)
Operating
Expenses
Stock Based             -        577,156      (100.0%)                -        577,156      (100.0%)
Compensation
Foreign            (9,684 )           56     (17,392.9%)         (1,906 )          950      (300.6%)
Exchange
Loss
(Recovery)
Total        $    365,617   $  1,010,114       (63.8%)     $    680,453   $  1,324,185      (48.6%)
Operating
Expenses

Amortization expenses increased during the six months ended July 31, 2008 due to the depreciation and amortization of our pilot plant.

Management fees represent amounts paid as compensation to our executive officers and the executive officers of Clyvia GmbH during the respective year-end periods. The decrease in management fees for the three and six months ended July 31, 2008 is a result of the reclassification of amounts paid to Dr. Manfred Sappok, a former managing director of Clyvia GmbH, to professional fees. Dr. Sappok resigned as a managing director of Clyvia GmbH in February 2008, but continues to act as a consultant to Clyvia GmbH. Clyvia GmbH has agreed to pay Dr. Sappok a consulting fee equal to the management fees previously paid to him.

Professional fees consist primarily of amounts incurred in respect of consulting services related to the operation and development of our business, investor relations services and legal and accounting services.

Other operating expenses consist primarily of amounts spent on salaries and wages, advertising, and travel, as well as other miscellaneous office expenses. During the six months ended July 31, 2008, other operating expenses decreased due to reduced operating activities during the period.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital
                                At                  At                 Percentage
                           July 31, 2008     January 31, 2008     Increase / (Decrease)
Current Assets           $        43,800   $           69,051            (36.6%)
Current Liabilities           (2,609,496 )         (1,957,782 )           33.3%
Working Capital Surplus  $    (2,565,696 ) $       (1,888,731 )           35.8%
(Deficiency)