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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
  o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
  Commission file number 333-131853
 CEREPLAST, INC.
  Nevada
(State or other Jurisdiction of Incorporation or Organization)
    
    91-2154289
(IRS Employer Identification No.)
 
 
 þ o
 o þ
  o þ




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TABLE OF CONTENTS
 PART 1  FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSBALANCE SHEETSTATEMENTS OF OPERATIONSSTATEMENTS OF CASH FLOWSNOTES TO THE FINANCIAL STATEMENTSITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONITEM 3. CONTROLS AND PROCEDURESPART 2  OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 2. ISSUANCE OF UNREGISTERED SECURITIES AND USE OF PROCEEDSITEM 3. DEFAULTS UPON SENIOR SECURITIES:ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 5. OTHER INFORMATIONITEM 6. EXHIBITSSIGNATURESEXHIBIT 31.1EXHIBIT 32.1




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PART 1  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 
 ASSETSCurrent AssetsCash
    
    $
    1,569,057Accounts Receivable, Net
    
    
    204,126Inventory
    
    
    1,360,876Prepaid Expenses
    
    
    29,146Total Current Assets
    
    
    3,163,205Property and EquipmentProperty and Equipment
    
    
    1,595,418Accumulated Depreciation and Amortization
    
    
    (286,914
    )Net Property and Equipment
    
    
    1,308,504Other AssetsInvestments
    
    
    500Intangibles, Net
    
    
    22,561Deposits
    
    
    26,344Total Other Assets
    
    
    49,405Total Assets
    
    $
    4,521,114LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts Payable
    
    $
    546,780Other Payable
    
    
    241Accrued Expenses
    
    
    53,874Credit Lines
    
    
    47,468Shareholders Loan
    
    
    162,705Affiliate Loan
    
    
    205,902Capital Leases, Current Portion
    
    
    43,126Loan Payable, Current Portion
    
    
    7,875Total Current Liabilities
    
    
    1,067,971Long-Term LiabilitiesCaptial Leases
    
    
    110,212Loan Payable
    
    
    15,016Total Long-Term Liabilities
    
    
    125,228Total Liabilities
    
    
    1,193,199Shareholders EquityCommon Stock, $0.001 par value;
495,000,000 authorized shares;
214,669,385 shares issued and outstanding
    
    
    214,670Additional Paid in Capital
    
    
    12,430,032Deferred Equity Offering Cost
    
    
    (2,594,575
    )Retained Earnings/(Deficit)
    
    
    (6,722,212
    )Total Shareholders Equity
    
    
    3,327,915Total Liabilities and Shareholders Equity
    
    $
    4,521,114




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Three Months Ended3/31/2007
    
    
    3/31/2006GROSS SALES
    
    $
    389,762
    
    
    $
    123,067Sales Discounts, Returns & Allowances
    
    
    (63,649
    )
    
    
    (3,175
    )NET SALES
    
    
    326,113
    
    
    
    119,892COST OF SALES
    
    
    270,544
    
    
    
    74,393GROSS PROFIT
    
    
    55,569
    
    
    
    45,499OPERATING EXPENSESDepreciation and Amortization
    
    
    60,400
    
    
    
    8,253Financing Costs
    
    
    494,000
    
    
    
    Financing Discount Costs
    
    
    593,329
    
    
    
    Marketing Expense
    
    
    14,848
    
    
    
    28,607Professional Fees
    
    
    52,923
    
    
    
    139,662Rent Expense
    
    
    47,521
    
    
    
    39,332Research and Development
    
    
    63,951
    
    
    
    9,732Salaries & Wages
    
    
    222,254
    
    
    
    103,661Other Operating Expenses
    
    
    273,113
    
    
    
    126,301TOTAL OPERATING EXPENSES
    
    
    1,822,339
    
    
    
    455,548LOSS FROM OPERATIONS BEFORE OTHER
INCOME(EXPENSES)
    
    
    (1,766,770
    )
    
    
    (410,049
    )OTHER INCOME (EXPENSES)Interest Income
    
    
    30
    
    
    
    3,159Interest Expense
    
    
    (10,387
    )
    
    
    (13,471
    )(10,357
    )
    
    
    (10,312
    )LOSS BEFORE PROVISIONS FOR TAXES
    
    
    (1,777,127
    )
    
    
    (420,361
    )Provision for Taxes
    
    
    
    
    
    
    1,800NET LOSS
    
    $
    (1,777,127
    )
    
    $
    (422,161
    )BASIC AND DILUTED LOSS PER SHARE
    
    $
    (0.01
    )
    
    $
    (0.00
    )WEIGHTED-AVERAGE COMMON SHARES OUTSTANDINGBASIC AND DILUTED
    
    
    206,543,813
    
    
    
    162,330,262




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Three Months Ended3/31/2007
    
    
    3/31/2006CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (1,777,127
    )
    
    $
    (422,161
    )Adjustment to reconcile net loss to net cash
used in operating activitiesDepreciation and amortization
    
    
    60,400
    
    
    
    8,253Financing Discount Costs
    
    
    593,329
    
    
    
    (Increase) Decrease in:Accounts Receivable
    
    
    (71,655
    )
    
    
    (32,416
    )Inventory
    
    
    (384,796
    )
    
    
    (282,057
    )Employee advances
    
    
    
    
    
    
    (2,546
    )Deposits
    
    
    
    
    
    
    (2,295
    )Prepaid Expenses
    
    
    18,913
    
    
    
    160,409Increase (Decrease) in:Accounts Payable
    
    
    (220,170
    )
    
    
    (113,882
    )Other Payables
    
    
    (661
    )
    
    
    1,396Accrued Expenses
    
    
    2,497
    
    
    
    (56,700
    )NET CASH USED IN OPERATING ACTIVITIES
    
    
    (1,779,270
    )
    
    
    (741,999
    )NET CASH USED IN INVESTING ACTIVITIES:Purchase of property and equipment, and intangibles
    
    
    (166,142
    )
    
    
    (159,683
    )NET CASH USED IN INVESTING ACTIVITIES
    
    
    (166,142
    )
    
    
    (159,683
    )CASH FLOWS FROM FINANCING ACTIVITIES:Advances/(Payments) on Shareholder Loans
    
    
    
    
    
    
    (3,206
    )Advances/(Payments) on Credit Lines
    
    
    
    
    
    
    (20,346
    )Advances/(Payments) on Capital Leases
    
    
    (13,515
    )
    
    
    (9,793
    )Advances/(Payments) on Notes Payable
    
    
    (250,000
    )
    
    
    Advances/(Payments) on Term Loan Payable
    
    
    (2,538
    )
    
    
    (2,370
    )Proceeds from issuance of common stock and subscription receivable
    
    
    3,575,500
    
    
    
    1,431,250NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    3,309,447
    
    
    
    1,395,535NET INCREASE IN CASH
    
    
    1,364,035
    
    
    
    493,853CASH, BEGINNING OF PERIOD
    
    
    205,022
    
    
    
    506,487CASH, END OF PERIOD
    
    $
    1,569,057
    
    
    $
    1,000,340




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Organization
 th
  Line of Business
 th
   
    
    Through an initial private placement, which was made in reliance upon an exemption from
registration under rule 506 of Regulation D promulgated under Section 4(2) of the
Securities Act of 1933, the Company issued 7,485,000 restricted shares of common stock for
cash of $2,245,500.
    
    The Company received funds of $1,330,000 under its Equity Line of Financing for
3,918,785 common stock shares issued
     
    
    A loan from a shareholder in the amount of $162,705, which bears a PIK interest at the
rate of 6% per year. The principal is due in June 2007. On April 4, 2007 the Company
repaid all fully outstanding principal and interest under this loan.
    
    A loan from an affiliate in the amount of $200,000, which bears PIK interest at the rate
of 7.00% per annum, and matures in October 2008.
    
    A loan from an affiliate in the amount of $250,000, which bears PIK interest at the rate
of 6.00% per annum, and matures in 2007. As of March 31, 2007 the Company had repaid all
fully outstanding principal and interest under this loan.




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 Cautionary Statements
  
    
    statements concerning the potential benefits that Cereplast, Inc. (the Company, we,
or Cereplast) may experience from its business activities and certain transactions it
contemplates or has completed; and
    
    statements of Cereplasts expectations, beliefs, future plans and strategies,
anticipated developments and other matters that are not historical facts. These statements
may be made expressly in this Form 10-QSB. You can find many of these statements by
looking for words such as believes, expects, anticipates, estimates, opines, or
similar expressions used in this Form 10-QSB. These forward-looking statements are subject
to numerous assumptions, risks and uncertainties that may cause Cereplasts actual results
to be materially different from any future results expressed or implied by Cereplast in
those statements. The most important facts that could prevent Cereplast from achieving its
stated goals include, but are not limited to, the following:
 (a)
    
    volatility or decline of Cereplasts stock price;(b)
    
    potential fluctuation in quarterly results;(c)
    
    failure of Cereplast to earn revenues or profits;(d)
    
    inadequate capital to continue or expand its business, inability to
raise additional capital or financing to implement its business plans;(e)
    
    changes in demand for Cereplasts products and services;(f)
    
    rapid and significant changes in markets;(g)
    
    litigation with or legal claims and allegations by outside parties;(h)
    
    insufficient revenues to cover operating costs.
   Current Overview
  th




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Critical Accounting Policies
   Revenue Recognition
 Results of Operations for the Three Months Ended March 31, 2007 compared to the Three Months Ended
March 31, 2006.
 Sales
 Cost of Sales
 Gross Profit




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Operating Expenses
 Research and Development
 Net Loss
 Liquidity and Capital Resources
       
 Item 3. Controls and Procedures




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PART 2  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 2. ISSUANCE OF UNREGISTERED SECURITIES AND USE OF PROCEEDS
  
    
    The Company sold 7,485,000 restricted shares of common stock at $0.30 per share to
accredited investors for aggregate consideration of $2,245,500 during the first quarter.
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES:
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
 31.1
    
    Certification by the Chief Executive Officer and Principal
Accounting/Financing Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Certification by the Chief Executive Officer and Principal
Accounting/Financing Officer Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.




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SIGNATURES
  CEREPLAST, INC.
 By:
    
    /s/ Frederic Scheer

Frederic ScheerPresident, Chief Executive Officer, PrincipalFinancial/Accounting Officer and ChairmanDated: May 8, 2007




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EXHIBIT INDEX
 ExhibitNo.
    
    Description31.1
    
    Certification by the Chief Executive Officer and Principal
Accounting/Financing Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Certification by the Chief Executive Officer and Principal
Accounting/Financing Officer Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.