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 nine month period ended October 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

Bio to pay Clyvia GmbH EUR 14,250,000 (approximately $22,203,210) for the ordered plants, and was subject to Oeko Bio's ability to obtain financing for the project. We had previously been informed by Oeko Bio that it had received approval to begin the financing process; however, we have now received notice that they did not receive final regulatory approval. As a result, the contract with Oeko Bio has been cancelled.

3. On October 2, 2008, we completed a private placement offering to BTec Holding AG ("BTec") of 8,000,000 shares of our common stock at a price of EUR 0.08125 per share or EUR 650,000 in the aggregate. The private placement was completed pursuant to the provisions of Regulation S promulgated under the Securities Act of 1933. BTec represented that it is not a US person as defined in Regulation S and that it was not acquiring the shares for the account or benefit of a US person. We did not make an offering to any person in the United States.

In addition to the shares of the Company acquired in the above private placement, BTec owns a 40% interest in Inventa Holding GmbH ("Inventa"), our majority stockholder, with the power to direct the voting of an aggregate of 52% of Inventa's shareholder voting power. BTec also has agreements to acquire an additional 23% interest in Inventa from Inventa's other shareholders.

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. We hope to have TÜV's certification in the first half of 2009.

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. In 2009, a team of ten students, headed by Professor Manfred Geilhaupt, will study our Fuel Technology process with the goal of reducing the waste heat output, thereby reducing the overall energy demands of the process.

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.

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 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 oil companies and other potential buyers. The pilot plant contains two bulk storage tanks that can be used to store used oil or other input materials that we may use. In November 2008 we hired additional staff to operate the pilot plant with the objective of operating the plan on a 24/7 basis. Used oil is supplied from local oil collectors and from a major waste collection company. In 2009 we expect to begin processing plastics through the pilot plant, with plastics supplied form local farmers and waste treatment companies.

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 $2,610,625) 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 Nine Months Summary

                  Three Months Ended          Percentage          Nine Months Ended          Percentage
              October 31,     October 31,     Increase /     October 31,     October 31,     Increase /
                 2008            2007         (Decrease)        2008            2007         (Decrease)
Revenue     $           -   $           -            n/a   $           -   $           -            n/a
Expenses         (285,932 )      (337,051 )       (15.2% )      (966,385 )    (1,661,236 )       (41.8% )
Other Items        17,930         (13,222 )       235.6%         (39,435 )          (461 )     8,454.2%
Net Loss    $    (268,002 ) $    (350,273 )        23.5%   $  (1,005,820 ) $  (1,661,697 )       (39.3% )

Revenue and Other Income

We are presently still in the development stage of our business. To date, we have failed to earn significant revenues 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 and 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 nine month periods ended October 31,
2008 and 2007 consisted of the following:

                   Three Months Ended          Percentage          Nine Months Ended          Percentage
               October 31,     October 31,     Increase /     October 31,     October 31,     Increase /
                  2008            2007         (Decrease)        2008            2007         (Decrease)
Amortization $      75,433   $      70,819           6.5%   $     233,121   $     151,917          53.5%
Management          29,600          70,725         (58.1% )       147,633         207,846         (29.0% )
Fees
Professional        56,900          49,852          14.1%         238,571         281,873         (15.4% )
Fees
Other              160,159         140,824          13.7%         385,126         436,663         (11.8% )
Operating
Expenses
Stock Based              -               -            n/a               -         577,156          (100% )
Compensation
Foreign            (36,160 )         4,831         848.5%         (38,066 )         5,781        (758.5% )
Exchange
Loss
(Recovery)
Total        $     285,932   $     337,051         (15.2% ) $     966,385   $   1,661,236         (41.8% )
Operating
Expenses

Additional amortization expenses for the nine months ended October 31, 2008 relate 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 nine months ended October 31, 2008 is primarily 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.

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

LIQUIDITY AND CAPITAL RESOURCES

Working Capital

                                                                             Percentage
                                                 At                   At     Increase /
                                   October 31, 2008     January 31, 2008     (Decrease)
Current Assets                   $          212,781   $           69,051         208.2%
Current Liabilities                      (1,847,907 )         (1,957,782 )        (5.6% )
Working Capital Surplus          $       (1,635,126 ) $       (1,888,731 )       (13.4% )
(Deficiency)


Cash Flows

                                                  Nine Months Ended October 31
                                                     2008                2007
Cash Flows used in Operating Activities       $     (1,310,067 )  $      (403,920 )
Cash Flows used in Investing Activities                (74,723 )         (268,961 )
Cash Flows from Financing Activities                 1,539,915            391,740
Effect of Foreign Currency Translation                 (11,777 )            9,281
Net Increase (Decrease) in Cash During Period $        143,348    $      (271,860 )

Included in current liabilities at October 31, 2008 are approximately $222,266 due to related parties primarily on account of amounts owed for the purchase of plant and equipment and unpaid management fees and reimbursable expenses. Also included in current liabilities are $1,230,064 in loans received from Inventa Holding GmbH ("Inventa"), our majority shareholder, and from BTec Holding AG ("BTec"), the controlling shareholder of Inventa, and from a company owned by Dieter Wagels, a managing director of Clyvia GmbH and a significant shareholder of Inventa.

During the three months ended October 31, 2008, we received an aggregate of EUR 70,000 ($91,372) in loans from BTec as follows:

(a) EUR 30,000 ($39,159) with interest payable at a rate of 10% per annum, payable after November 10, 2008 upon one month's advance written notice;

(b) EUR 15,000 ($19,580) with interest payable at a rate of 10% per annum, payable after November 25, 2008 upon one month's advance written notice; and

(c) EUR 25,000 ($32,633) with interest payable at a rate of 10% per annum, payable after December 30, 2008 upon one month's advance written notice.

As collateral for these loans, Inventa has agreed to assign to BTec an aggregate of 525,000 shares of our common stock owned by Inventa.

BTec currently owns a 40% interest in Inventa. BTec currently has an agreement with TriCon to acquire an additional 12% interest in Inventa owned by TriCon. Under the terms of its agreement with TriCon, BTec may direct the voting of the Inventa shares owned by TriCon until such time as it has completed the purchase of those shares from TriCon or the agreement is cancelled.

Financing Requirements

We anticipate that we will continue to incur losses for the foreseeable future, as we expect to incur substantial product development, marketing and/or operating expenses in implementing our plan of operation. Our future financial results are uncertain due to a number of factors, many of which are outside of our control. These factors include, but are not limited to:

(a) our ability to develop commercially marketable products based on the Fuel Technology;

(b) our ability to raise additional capital necessary to implement our business strategy and plan of operation;

(c) our ability to compete with other existing technologies; and

(d) the success of any marketing and promotional campaign which we conduct for our products once development is complete.

The financial statements accompanying this Quarterly Report contemplate our continuation as a going concern. However, we have sustained substantial losses, have a limited operating history and are still in the development stage of our business.

Despite the financings received during the period ended October 31, 2008, we currently do not have sufficient working capital to meet our anticipated needs. We have not earned 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.

During the next twelve months, we anticipate that we will continue to seek financing through private placement sales of our equity securities as we do not expect to be able to meet all of our financial needs through other methods of financing. Additional sales of our equity securities, if needed, will dilute the interests of existing shareholders.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires our management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.

Our significant accounting policies are disclosed in Note 3 to the financial statements included in this Quarterly Report.