##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 333-126378
 CEREPLAST, INC.
 (Exact name of registrant as specified in its charter)
 Nevada
(State or Other Jurisdiction of Incorporation or Organization)
    
    91-2154289
(I.R.S. Employer Identification No.)3411-3433 West El Segundo Boulevard 
Hawthorne, California
(Address of Principal Executive Office)
    
    90250
(Zip Code)
 (310) 676-5000
(Registrants Telephone Number, Including Area Code)
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 o þ




---



##### 



CEREPLAST, INC.
FORM 10-Q
TABLE OF CONTENTS
 PagePART IFINANCIAL INFORMATIONItem 1. FINANCIAL STATEMENTS
    
    
    3Consolidated Balance Sheets at September 30, 2008 and December 31, 2007
    
    
    3Consolidated Statements of Operations for the three and Nine months ended
September 30, 2008 and 2007
    
    
    4Consolidated Statements of Cash Flows for the Nine months ended September 30,
2008 and 2007
    
    
    5Notes to the Consolidated Financial Statements
    
    
    6Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    14Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    20Item 4. CONTROLS AND PROCEDURES
    
    
    20Item 4T. CONTROLS AND PROCEDURES
    
    
    21PART IIOTHER INFORMATIONItem 1. LEGAL PROCEEDINGS
    
    
    21Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    22Item 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    22Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    22Item 5. OTHER INFORMATION
    
    
    22Item 6. EXHIBITS
    
    
    23SIGNATURES
    
    
    24Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
  Unless otherwise indicated or unless the context requires otherwise, all references in this report
to we, us, our or the Company mean Cereplast, Inc.




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
  
  September 30, 2008
    
    
    December 31, 2007(Unaudited)
    
    
    (Audited)ASSETSCurrent AssetsCash
    
    $
    955,315
    
    
    $
    8,593,714Accounts Receivable, Net
    
    
    749,220
    
    
    
    431,020Inventory, Net
    
    
    2,917,884
    
    
    
    1,827,667Prepaid Expenses
    
    
    214,581
    
    
    
    67,590Total Current Assets
    
    
    4,837,000
    
    
    
    10,919,991Property and EquipmentProperty and Equipment
    
    
    5,681,158
    
    
    
    2,847,956Accumulated Depreciation and Amortization
    
    
    (996,881
    )
    
    
    (596,361
    )Net Property and Equipment
    
    
    4,684,277
    
    
    
    2,251,595Other AssetsRestricted Cash
    
    
    72,417
    
    
    
    72,892Investments
    
    
    500
    
    
    
    500Intangibles, Net
    
    
    127,705
    
    
    
    18,721Deposits
    
    
    40,527
    
    
    
    30,478Total Other Assets
    
    
    241,149
    
    
    
    122,591Total Assets
    
    $
    9,762,426
    
    
    $
    13,294,177LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts Payable
    
    $
    1,968,938
    
    
    $
    600,289Other Payables
    
    
    39,122
    
    
    
    146Accrued Expenses
    
    
    573,598
    
    
    
    152,947Capital Leases, Current Portion
    
    
    58,578
    
    
    
    71,812Loan Payable, Current Portion
    
    
    6,730
    
    
    
    11,139Total Current Liabilities
    
    
    2,646,966
    
    
    
    836,333Long-Term LiabilitiesCapital Leases
    
    
    47,149
    
    
    
    87,440Loan Payable
    
    
    
    
    
    
    3,874Total Long-Term Liabilities
    
    
    47,149
    
    
    
    91,314Total Liabilities
    
    
    2,694,115
    
    
    
    927,647Shareholders EquityPreferred Stock, $0.001 par value;
5,000,0000 authorized preferred shares
    
    
    
    
    
    
    Common Stock, $0.001 par value;
495,000,000 authorized shares; 275,499,948 shares &
259,302,409 shares issued and outstanding, respectively
    
    
    275,500
    
    
    
    259,302Additional Paid in Capital
    
    
    33,522,934
    
    
    
    28,730,547Retained Earnings/(Deficit)
    
    
    (26,724,322
    )
    
    
    (16,623,319
    )Other Comprehensive Income (Loss)
    
    
    (5,801
    )
    
    
    Total Shareholders Equity
    
    
    7,068,311
    
    
    
    12,366,530Total Liabilities and Shareholders Equity
    
    $
    9,762,426
    
    
    $
    13,294,177
   3




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##### Table of Contents



Three Months Ended
    
    
    Nine Months Ended9/30/2008
    
    
    9/30/2007
    
    
    9/30/2008
    
    
    9/30/2007GROSS SALES
    
    $
    1,427,902
    
    
    $
    661,742
    
    
    $
    3,401,011
    
    
    $
    1,609,020Sales Discounts, Returns & Allowances
    
    
    (18,035
    )
    
    
    (29,499
    )
    
    
    (45,516
    )
    
    
    (165,852
    )NET SALES
    
    
    1,409,867
    
    
    
    632,243
    
    
    
    3,355,495
    
    
    
    1,443,168COST OF SALES
    
    
    1,470,045
    
    
    
    514,697
    
    
    
    3,376,455
    
    
    
    1,329,176GROSS PROFIT
    
    
    (60,178
    )
    
    
    117,546
    
    
    
    (20,960
    )
    
    
    113,992OPERATING EXPENSESDepreciation and Amortization
    
    
    141,879
    
    
    
    108,162
    
    
    
    407,626
    
    
    
    256,374Financing Discount Costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    816,385Marketing Expense
    
    
    314,765
    
    
    
    47,699
    
    
    
    995,125
    
    
    
    88,529Professional Fees
    
    
    239,257
    
    
    
    310,466
    
    
    
    795,571
    
    
    
    541,544Rent Expense
    
    
    194,330
    
    
    
    111,392
    
    
    
    722,315
    
    
    
    215,550Research and Development
    
    
    267,589
    
    
    
    148,627
    
    
    
    813,889
    
    
    
    343,606Salaries & Wages
    
    
    926,643
    
    
    
    837,320
    
    
    
    2,490,129
    
    
    
    1,948,766Salaries & Wages  Stock Based Compensation
    
    
    352,762
    
    
    
    
    
    
    
    2,229,733
    
    
    
    Other Operating Expenses
    
    
    576,528
    
    
    
    281,596
    
    
    
    1,727,772
    
    
    
    928,696TOTAL OPERATING EXPENSES
    
    
    3,013,753
    
    
    
    1,845,262
    
    
    
    10,182,160
    
    
    
    5,139,450LOSS FROM OPERATIONS BEFORE OTHER
INCOME(EXPENSES)
    
    
    (3,073,931
    )
    
    
    (1,727,716
    )
    
    
    (10,203,120
    )
    
    
    (5,025,458
    )OTHER INCOME (EXPENSES)Interest Income
    
    
    5,885
    
    
    
    133,624
    
    
    
    120,934
    
    
    
    153,439Interest Expense
    
    
    (7,182
    )
    
    
    (7,963
    )
    
    
    (18,817
    )
    
    
    (32,598
    )(1,297
    )
    
    
    125,661
    
    
    
    102,117
    
    
    
    120,841LOSS BEFORE PROVISIONS FOR TAXES
    
    
    (3,075,228
    )
    
    
    (1,602,055
    )
    
    
    (10,101,003
    )
    
    
    (4,904,617
    )Provision for Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NET LOSS
    
    
    (3,075,228
    )
    
    
    (1,602,055
    )
    
    
    (10,101,003
    )
    
    
    (4,904,617
    )OTHER
COMPREHENSIVE LOSSLoss on Foreign Currency Translation
    
    
    (5,260
    )
    
    
    
    
    
    
    (5,801
    )
    
    
    TOTAL
COMPREHENSIVE LOSS
    
    $
    (3,080,488
    )
    
    $
    (1,602,055
    )
    
    $
    (10,106,804
    )
    
    $
    (4,904,617
    )BASIC AND DILUTED LOSS PER SHARE
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.04
    )
    
    $
    (0.02
    )WEIGHTED-AVERAGE COMMON SHARES OUTSTANDINGBASIC AND DILUTED
    
    
    265,144,443
    
    
    
    258,179,019
    
    
    
    262,154,367
    
    
    
    231,570,067
   4




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##### Table of Contents



NineMonths Ended9/30/2008
    
    
    9/30/2007CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (10,101,003
    )
    
    $
    (4,904,617
    )Adjustment to reconcile net loss to net cash
used in operating activitiesDepreciation and amortization
    
    
    407,626
    
    
    
    256,374Bad debt expense
    
    
    40,728
    
    
    
    Financing Discount Costs
    
    
    
    
    
    
    816,385Common Stock Issued for Services, Salaries & Wages
    
    
    2,287,525
    
    
    
    863,232(Increase) Decrease in:Accounts Receivable
    
    
    (358,928
    )
    
    
    (162,318
    )Inventory
    
    
    (1,090,217
    )
    
    
    (936,695
    )Deposits
    
    
    (10,049
    )
    
    
    (13,031
    )Prepaid Expenses
    
    
    (146,991
    )
    
    
    (5,952
    )Restricted Cash
    
    
    475
    
    
    
    Intangibles
    
    
    (116,090
    )
    
    
    Increase (Decrease) in:Accounts Payable
    
    
    1,368,649
    
    
    
    (85,086
    )Other Payables
    
    
    38,976
    
    
    
    (186
    )Accrued Expenses
    
    
    420,651
    
    
    
    151,331NET CASH USED IN OPERATING ACTIVITIES
    
    
    (7,258,648
    )
    
    
    (4,020,563
    )NET CASH USED IN INVESTING ACTIVITIES:Purchase of property and equipment, and intangibles
    
    
    (2,833,202
    )
    
    
    (1,286,827
    )NET CASH USED IN INVESTING ACTIVITIES
    
    
    (2,833,202
    )
    
    
    (1,286,827
    )CASH FLOWS FROM FINANCING ACTIVITIES:Payments on Shareholder Loans
    
    
    
    
    
    
    (372,074
    )Payments on Credit Lines
    
    
    
    
    
    
    (47,468
    )Payments on Capital Leases
    
    
    (53,524
    )
    
    
    14,381Payments on Notes Payable
    
    
    
    
    
    
    (250,000
    )Payments on Term Loan Payable
    
    
    (8,283
    )
    
    
    (7,748
    )Proceeds from issuance of common stock and subscription receivable
    
    
    2,521,059
    
    
    
    16,738,115NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    2,459,252
    
    
    
    16,075,206FOREIGN CURRENCY TRANSLATION
    
    
    (5,801
    )
    
    
    NET (DECREASE)/ INCREASE IN CASH
    
    
    (7,638,399
    )
    
    
    10,767,816CASH, BEGINNING OF PERIOD
    
    
    8,593,714
    
    
    
    205,022CASH, END OF PERIOD
    
    $
    955,315
    
    
    $
    10,972,838
       5




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##### Table of Contents



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 (Unaudited)
  Organization
  Line of Business
 ® ®
    
    
    Cereplast Compostables Resins are renewable, ecologically-sound substitutes for
petroleum-based plastics targeting primarily single-use disposables and packaging
applications. We offer 11 commercial grades of Compostables Resins in this product line.
These resins are compatible with existing manufacturing processes and equipment making them
a substitute for traditional petroleum-based resins. We commercially introduced our
Compostables line in November 2006.
 
    
    Cereplast Hybrid Resins potentially replace up to 50% of the petroleum content in
traditional plastics with bio-based materials such as industrial starches sourced from
plants. The Hybrid Resin line is designed to offer similar properties to traditional
polyolefins such as impact strength and heat deflection temperature. Hybrid Resins provide
a viable alternative for brand owners and converters looking to partially replace
petroleum-based resins in durable goods applications. Hybrid Resins address this need in a
wide range of markets, including automotive, consumer goods, consumer electronics, medical,
packaging, and construction. These resins are also compatible with existing manufacturing
processes and equipment making them a substitute for traditional petroleum-based resins.
We commercially introduced our first family of Hybrid Resins, Biopropylene, in October
2007.
   6




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##### Table of Contents



Basis of Presentation
 Form 10-KSB,
  Use of Estimates
  Recently Issued Accounting Pronouncements
     7




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##### Table of Contents



Cash and Cash Equivalents
  Concentration of Credit Risk
  Other Concentration
  Restricted Cash
  Fair Value of Financial Instruments
  Accounts Receivable
   8




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##### Table of Contents



Inventories
  9/30/08
    
    
    12/31/07Raw Materials
    
    $
    921,516
    
    
    $
    1,214,519Bioplastic Resins
    
    
    1,733,431
    
    
    
    472,195Finished Goods
    
    
    338,679
    
    
    
    126,039Packaging Materials
    
    
    39,258
    
    
    
    14,264Promo & Misc.
    
    
    
    
    
    
    650Reserve for Obsolescence
    
    
    (115,000
    )
    
    
    Inventories, Net
    
    $
    2,917,884
    
    
    $
    1,827,667
 Property and Equipment
  9/30/08
    
    
    12/31/07Equipment
    
    $
    2,550,972
    
    
    $
    2,371,194Construction in Progress
    
    
    2,582,029
    
    
    
    Furniture & Fixtures
    
    
    325,738
    
    
    
    284,613Leasehold Improvements
    
    
    222,419
    
    
    
    192,1495,681,158
    
    
    
    2,847,956Less Accumulated Depreciation
    
    
    (996,881
    )
    
    
    (596,361
    )Net Property and Equipment
    
    $
    4,684,277
    
    
    $
    2,251,595
 Intangibles
  9/30/08
    
    
    12/31/07Intangibles
    
    $
    143,457
    
    
    $
    27,805Less Accumulated Amortization
    
    
    (15,752
    )
    
    
    (9,084
    )Net Intangibles
    
    $
    127,705
    
    
    $
    18,721
 Deferred Income Taxes
   9




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##### Table of Contents



Revenue Recognition
  Marketing and Advertising
  Research and Development Costs
  Stock-Based Compensation
   Loss per Share Calculations
   10




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##### Table of Contents



Legal Proceedings
    California Facilities
 
    
    a lease for office, industrial and warehouse space with monthly rents of $4,687 expiring
in January 2010;
 
    
    a lease for office, industrial and warehouse space with monthly rents of $7,523 expiring
in January 2010;
 
    
    a lease for office and warehouse space with monthly rents of $16,043 expiring in April
2012; and
 
    
    a lease for office and warehouse space with monthly rents of $18,805 expiring in January
2010.
 Indiana Facility 
   Year ending December 31,2008
    
    $
    2,8562009
    
    
    3,8746,730Less Current Portion of Loan Payable
    
    
    (6,730
    )Long Term Portion of Loan Payable
    
    $
    
  11




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##### Table of Contents



Nine months endedSeptember 30, 2008WeightedAverageExerciseShares
    
    
    PriceOutstandingbeginning of year
    
    
    11,625
    
    
    $
    0.56Granted at fair value
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Canceled/forfeited
    
    
    1,126
    
    
    
    Outstandingend of quarter
    
    
    10,499
    
    
    
    0.56Options exercisable at quarter-end
    
    
    5,847
    
    
    $
    0.56
  Options Outstanding
    
    
    Options ExercisableWeighted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    WeightedWeighted
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    Weighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    Aggregate
    
    
    
    
    
    
    Average
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contract
    
    
    Intrinsic
    
    
    
    
    
    
    Exercise
    
    
    Contract
    
    
    IntrinsicRange of Exercise Prices
    
    Shares
    
    
    Price
    
    
    Life
    
    
    Value
    
    
    Shares
    
    
    Price
    
    
    Life
    
    
    Value$0.0-$0.56
    
    
    10,499
    
    
    $
    0.56
    
    
    
    5.27
    
    
    $
    
    
    
    
    5,847
    
    
    $
    0.56
    
    
    
    4.72
    
    
    $
    
   12




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13




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   
    
    potential fluctuation in quarterly results;
 
    
    our failure to earn profits;
 
    
    inadequate capital to expand our business, inability to raise additional capital or
financing to implement our business plans;
 
    
    changes in demand for our products and services;
 
    
    rapid and significant changes in markets;
 
    
    successful commencement of operations at our new Seymour facility and relocation of
manufacturing activities from California to Indiana
 
    
    failure to commercialize new grades of resin being pursued in our technical / market
development pipeline;
 
    
    litigation with or legal claims and allegations by outside parties; and
 
    
    insufficient revenues to cover operating costs.
    14




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##### Table of Contents



General
  
    
    Cereplast Compostables Resins® are renewable, ecologically-sound substitutes for
petroleum-based plastics targeting primarily single-use disposables and packaging
applications. We offer 11 commercial grades of Compostables Resins in this product line.
These resins are compatible with existing manufacturing processes and equipment making them
a substitute for traditional petroleum-based resins. We commercially introduced our
Compostables line in November 2006.
 
    
    Cereplast Hybrid Resins® potentially replace up to 50% of the petroleum content in
traditional plastics with bio-based materials such as industrial starches sourced from
plants. The Hybrid Resin line is designed to offer similar properties to traditional
polyolefins such as impact strength and heat deflection temperature. Hybrid Resins provide
a viable alternative for brand owners and converters looking to partially replace
petroleum-based resins in durable goods applications. Hybrid Resins address this need in a
wide range of markets, including automotive, consumer goods, consumer electronics, medical,
packaging, and construction. These resins are also compatible with existing manufacturing
processes and equipment making them a substitute for traditional petroleum-based resins.
We commercially introduced our first family of Hybrid Resins, Biopropylene®, in
October 2007.
  Trends and Uncertainties that May Impact Future Results of Operations
 Global Market and Economic Conditions.
   15




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##### Table of Contents



Sales.
 Operating Expenses.
 Expansion of Operations.
    Sales
   16




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##### Table of Contents



Gross Profit
 ®
 Operating Expenses
 
    
    Overall, total operating expenses increased by $1,168,491, including non-cash-related
expense of $410,556, or 63.3%, to $3,013,753 for the three months ended September 30,
2008 compared to the three months ended September 30, 2007. The increase for the period
is attributable to increased spending to support the commercial development and
introduction of new products in our two resin families and the growth of our business.
 
    
    Salaries and wages increased by $89,323 for the three months ended September 30, 2008
compared to the three months ended September 30, 2007, and is attributable to head count
increases across all departments to support the commercial introduction of our resins
and upgrading of our business processes. Non-cash compensation increased by $352,762
for the three months ended September 30, 2008 compared to the three months ended
September 30, 2007 as a result of our issuance of 964,908 restricted common shares
valued at $207,455, together with the expense of $145,307 relating to employee stock
options for the three months ended September 30, 2008.
 
    
    Marketing expense increased by $267,066 for the three months ended September 30, 2008
compared to the three months ended September 30, 2007. The increase for the period is
attributable to increased spending to support the commercial expansion of the two
families of resins and the development of a direct sales team.
 
    
    Rent expense increased by $82,938 for the three months ended September 30, 2008
compared to the three months ended September 30, 2007. The increase for the period was
the result of manufacturing and logistics expansions both at our Hawthorne facility and
also at our new Seymour facility. We currently have our primary resin manufacturing
operations in California and are in the process of completing a second manufacturing
facility to join our present distribution facility in Indiana to support sales and
production growth. Commissioning of the Seymour facility is underway and continuous
commercial production is presently expected in the first quarter of 2009.
 
    
    Research and development increased by $118,962, for the three months ended September
30, 2008 compared to the three months ended September 30, 2007. Increase for each of the
periods was the result
of our expanding effort to develop both specific new grades of resins for current and
targeted customer applications as well as additional standard grades of resins within the
Hybrid family.
  17




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##### Table of Contents



Net Loss
   Sales
  Gross Profit
 ®
 Operating Expenses
 
    
    Overall, total operating expenses increased by $5,042,710, including non-cash-related
expenses of $2,287,526, or 98.1% to $10,182,160 for the nine months ended September 30,
2008 compared to the nine months ended September 30, 2007. The increase for the period
is attributable to increased spending to support the commercial development and
introduction of new products in our two resin families and the growth of our business.
 
    
    Salaries and wages increased by $541,363 for the nine months ended September 30, 2008
compared to the nine months ended September 30, 2007, and is attributable to head count
increases across all departments to support the commercial introduction of our resins
and upgrading of our business processes. Non-cash compensation increased by $2,229,733
for the nine months ended September 30, 2008 compared to the nine months ended September
30, 2007 as a result of our issuance of 4,208,902
restricted common shares valued at $1,796,975, together with the expense of $432,761
relating to employee stock options for the nine months ended September 30, 2008.
  18




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##### Table of Contents




    
    Marketing expense increased by $906,596 for the nine months ended September 30, 2008
compared to the nine months ended September 30, 2007. The increase for the period is
attributable to increased spending to support the commercial expansion of the two
families of resins and the development of a direct sales team.
 
    
    Rent expense increased by $506,765 for the nine months ended September 30, 2008
compared to the nine months ended September 30, 2007. The increase for the period was
the result of manufacturing and logistics expansions both at our Hawthorne facility and
also at our new Seymour facility. We currently have our primary resin manufacturing
operations in California and are in the process of completing a second manufacturing
facility to join our present distribution facility in Indiana to support sales and
production growth. Commissioning of the Seymour facility is underway and we expect
continuous commercial production in the first quarter of 2009.
 
    
    Research and development increased by $470,283 for the nine months ended September
30, 2008 compared to the nine months ended September 30, 2007. The increase for the
period was the result of our expanding effort to develop both specific new grades of
resins for current and targeted customer applications as well as additional standard
grades of resins within the Hybrid family.
 Net Loss
         19




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##### Table of Contents



Payments Due by PeriodLess Than
    
    
    2-3
    
    
    4-5
    
    
    More ThanTotal
    
    
    1 year
    
    
    Years
    
    
    Years
    
    
    5 yearsCapitalized lease obligations
    
    $
    113,757
    
    
    $
    76,764
    
    
    $
    35,718
    
    
    $
    1,275
    
    
    $
    Purchase obligations
    
    
    345,530
    
    
    
    345,530
    
    
    
    
    
    
    
    
    
    
    
    Indebtedness
    
    
    6,730
    
    
    
    6,730
    
    
    
    
    
    
    
    
    
    
    
    $
    466,017
    
    
    $
    429,024
    
    
    $
    35,718
    
    
    $
    1,275
    
    
    $
    
   
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4. CONTROLS AND PROCEDURES
   20




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##### Table of Contents



ITEM 4T. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Internal Control Over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
   21




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##### Table of Contents



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
    
    964,908 shares of our common stock valued at $207,455 to our directors and employees
as part of their compensation.
 
    
    268,809 shares of our common stock valued at $57,794 to third parties for services
rendered in the period.
 
    
    11,988,636 shares of our common stock to accredited investors for gross proceeds of
$2,637,500.
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
   22




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##### Table of Contents



ITEM 6. EXHIBITS
 ExhibitNumber
    
    Description3.1
    
    
    Articles of Incorporation(1)3.2
    
    
    Certificate of Amendment to the Articles of Incorporation dated February 26, 2003(1)3.3
    
    
    Certificate of Amendment to the Articles of Incorporation dated July 19, 2004(1)3.4
    
    
    Certificate of Amendment to the Articles of Incorporation dated March 18, 2005(1)3.5
    
    
    Bylaws(1)31.1
    
    
    Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.31.2
    
    
    Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.32.1
    
    
    Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. ***32.2
    
    
    Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. ***
 
 (1)
    
    Filed as an exhibit to the Form SB-2 Registration Statement declared effective on July 5,
2005 and incorporated herein by reference.***
    
    In accordance with Item 601(b)(32)(ii) of Regulation S-K, this exhibit shall not be deemed
filed for the purposes of Section 18 of the Exchange Act or otherwise subject to the
liability of that section, nor shall it be deemed incorporated by reference in any filing
under the Securities Act of 1933, as amended, or the Exchange Act.  23




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##### Table of Contents



SIGNATURES
  Date: November 14, 2008
    CEREPLAST, INC.By:
    /s/ Frederic ScheerFrederic ScheerChairman, Chief Executive OfficerBy:
    /s/ Stephan GardenStephan GardenPrincipal Financial Officer  24




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description3.1
    
    
    Articles of Incorporation(1)3.2
    
    
    Certificate of Amendment to the Articles of Incorporation dated February 26, 2003(1)3.3
    
    
    Certificate of Amendment to the Articles of Incorporation dated July 19, 2004(1)3.4
    
    
    Certificate of Amendment to the Articles of Incorporation dated March 18, 2005(1)3.5
    
    
    Bylaws(1)31.1
    
    
    Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.31.2
    
    
    Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.32.1
    
    
    Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. ***32.2
    
    
    Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. ***
 
 (1)
    
    Filed as an exhibit to the Form SB-2 Registration Statement declared effective on July 5,
2005 and incorporated herein by reference.***
    
    In accordance with Item 601(b)(32)(ii) of Regulation S-K, this exhibit shall not be deemed
filed for the purposes of Section 18 of the Exchange Act or otherwise subject to the
liability of that section, nor shall it be deemed incorporated by reference in any filing
under the Securities Act of 1933, as amended, or the Exchange Act.  25