CNN CARDIA Trading Halt, page-4

Here is the full announcement for those who have not read it. Joint venture company to put a further 1.2 mil in seed money for chinese market. This is on top of their 2 mil placement. That sure is confidence in their technology.


Raises $2m & enters Chinese mkt for water treatment plants
14-05 1049


Cardia Technologies Limited (ASX-code CNN) has signed a share
subscription agreement with Tony Technology Company Limited ('Tony
Technology') of Hong Kong for the issue of $2 million worth of shares
with options in Cardia. Cardia also plans to set up a $2.5 million
joint venture with Tony Technology to manufacture and sell its water
technology in the People's Republic of China.

The chairman of Cardia, Mr Pat Volpe, said today that the partnership
with Tony Technology to enter the Chinese market together is a
significant development for Cardia and for Australia.

"When technology that is designed, developed, manufactured and
field-tested in Australia finds a niche in global markets it
underpins the enormous potential that can come from developing
products for the world's high volume effluent markets," he said.

Cardia's Waterpower Systems subsidiary has obtained more than 100
International Patent Pending filings over its water purification
system that uses electricity to remove harmful contaminants to meet
increasingly stringent environmental legislation.

China is attempting to make great strides with its environmental
performance before the 2008 Olympics.

Tony Technology is controlled by Mr Fu Yuesheng who is also the major
shareholder of Tongli Enterprises Company Limited (Hong Kong), a
company that has manufacturing operations in China.

Tony Technology will contribute $1.2 million in initial working
capital to the new Hong Kong-based JV company as well as
manufacturing and marketing infrastructure. Cardia will issue this
company with a manufacturing and marketing licence and supply initial
Waterpower equipment as part of its equity interest.

The $2 million placement of Cardia shares to Tony Technology will see
Tony Technology emerge with 13.2 per cent of Cardia's total issued
capital. The Board of Cardia has invited Tony Technology to nominate
a suitable person to join the Board of Cardia.

SUMMARY

Cardia is pleased to announce:

FUND RAISING.
* Cardia has entered into a share subscription agreement to raise AUD
$2 million with Tony Technology.

BOARD REPRESENTATION.
* Cardia has invited Tony Technology to nominate one member to the
Cardia Board under the share subscription agreement.

APPLICATION OF FUNDS.
* Funds raised will be used to fund Waterpower Systems Pty Ltd and
the IDI diabetes type 2 project and Cardia's corporate overheads.

MOU TO MANUFACTURE AND MARKET IN THE PEOPLE'S REPUBLIC OF CHINA
* Cardia and Tony have entered into a MOU where Tony will contribute
AUD$1.2 million approximately in cash for initial working capital as
well as manufacturing facilities and marketing expertise into a joint
venture company to be set up in Hong Kong with Cardia to develop the
Waterpower business in the People's Republic of China. The MOU is
subject to a formal agreement.

DETAILS:

1. SHARE ISSUE.
Number of shares: 16.6 million ordinary shares
Issue Price: 12 cents per share
Number of Options: 8.4 million free attaching listed options
exercisable at 20 cents on or before 30 June
2004.

The issue will be completed as follows:

TRANCHE 1
13.3 million shares to be issued under ASX listing rule 7.1 with a
settlement date of 22 May 2002.

TRANCHE 2
3.3 million shares and 8.4 million options will be subject to a
general meeting to obtain shareholders approval (date to be advised).

On successful approval and completion of these issues, Tony
Technology will hold 13.2% of the total issued capital in Cardia.

2. MEMORANDUM OF UNDERSTANDING.
Cardia and Tony have entered into a preliminary MOU to form a
joint-venture that will manufacture and market Cardia's waterpower
systems into the People's Republic of China. It is proposed that
Cardia will issue a manufacturing and marketing licence to a new Hong
Kong company where Cardia will also supply initial waterpower
equipment as part of its equity interest. It is proposed that Tony
will contribute HK$5.1 million (approx A$1.2 million) in cash as
initial working capital as well as manufacturing and marketing
infrastructure.

The share subscription agreement is not conditional or subject to the
formalisation of the MOU and the funds raised under the joint venture
are additional to the funds raised under the share subscription
agreement. It is the party's intention to proceed to formalise the
MOU.

3. APPLICATION OF FUNDS.
Funds raised in this issue will be applied to providing additional
working capital for Cardia to expand Waterpower Systems Pty Ltd in
Australia and overseas (approximately $500,000), to progress the
applications for patents worldwide ($250,000), contribute to Cardia
overheads for the next 12 months ($650,000), additional funding to
the ISF402 diabetes type 2 project (estimated at $150,000) and
maintain mining tenements ($30,000). The balance of funds will be
held for future working capital or for any other opportunity that may
arise.

The funds raised in this issue will allow Cardia to implement its
corporate and business plans over the next 12 months with the
objective of generating cash flow from Waterpower Systems and
releasing capital value from its other investments for shareholders.

P Volpe
CHAIRMAN
0412 088 858