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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
 For the quarterly period ended
June 30, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                      to
 Commission file number 333-_________
 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 I  FINANCIAL INFORMATION
    
    
    3ITEM 1. FINANCIAL STATEMENTS
    
    
    3BALANCE SHEET
    
    
    3STATEMENTS OF OPERATION
    
    
    4STATEMENTS OF CASH FLOWS
    
    
    5NOTES TO THE FINANCIAL STATEMENTS
    
    
    6ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
    
    
    8ITEM 3. CONTROLS AND PROCEDURES
    
    
    10PART 2  OTHER INFORMATION
    
    
    11ITEM 1. LEGAL PROCEEDINGS
    
    
    11ITEM 2. ISSUANCE OF UNREGISTERED SECURITIES AND USE OF PROCEEDS
    
    
    11ITEM 3. DEFAULTS UPON SENIOR SECURITIES:
    
    
    11ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    11ITEM 5. OTHER INFORMATION
    
    
    11ITEM 6. EXHIBITS
    
    
    11SIGNATURES
    
    
    12Exhibit 31.1Exhibit 32.1
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PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
  
    ASSETSCurrent AssetsCash
    
    $
    12,892,402Accounts Receivable, Net
    
    
    334,109Inventory
    
    
    1,470,647Prepaid Expenses
    
    
    10,062Total Current Assets
    
    
    14,707,220Property and EquipmentProperty and Equipment
    
    
    2,172,892Accumulated Depreciation and Amortization
    
    
    (373,446
    )Net Property and Equipment
    
    
    1,799,446Other AssetsInvestments
    
    
    500Intangibles, Net
    
    
    21,281Deposits
    
    
    21,844Total Other Assets
    
    
    43,625Total Assets
    
    $
    16,550,291LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts Payable
    
    $
    446,825Other Payable
    
    
    121Accrued Expenses
    
    
    78,922Capital Leases, Current Portion
    
    
    74,148Loan Payable, Current Portion
    
    
    5,294Total Current Liabilities
    
    
    605,310Long-Term LiabilitiesCaptial Leases
    
    
    122,349Loan Payable
    
    
    15,016Total Long-Term Liabilities
    
    
    137,365Total Liabilities
    
    
    742,675Shareholders EquityPreferred
Stock, $0.001 par value 5,000,000 authorized preferred shares, none issued and
outstanding
    
    
    Common Stock, $0.001 par value;
495,000,000 authorized shares;
258,179,019 shares issued and outstanding
    
    
    258,179Additional Paid in Capital
    
    
    26,224,159Deferred Equity Offering Cost
    
    
    (2,427,075
    )Retained Earnings/(Deficit)
    
    
    (8,247,647
    )Total Shareholders Equity
    
    
    15,807,616Total Liabilities and Shareholders Equity
    
    $
    16,550,291
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Three Months Ended
    
    
    Six Months Ended6/30/2007
    
    
    6/30/2006
    
    
    6/30/2007
    
    
    6/30/2006GROSS SALES
    
    $
    557,516
    
    
    $
    159,957
    
    
    $
    947,278
    
    
    $
    279,849Sales Discounts, Returns & Allowances
    
    
    (72,704
    )
    
    
    
    
    
    
    (136,353
    )
    
    
    NET SALES
    
    
    484,812
    
    
    
    159,957
    
    
    
    810,925
    
    
    
    279,849COST OF SALES
    
    
    543,935
    
    
    
    108,963
    
    
    
    814,479
    
    
    
    183,356GROSS PROFIT
    
    
    (59,123
    )
    
    
    50,994
    
    
    
    (3,554
    )
    
    
    96,493OPERATING EXPENSESDepreciation and Amortization
    
    
    87,812
    
    
    
    56,290
    
    
    
    148,212
    
    
    
    64,544Financing Discount Costs
    
    
    223,056
    
    
    
    
    
    
    
    816,385
    
    
    
    Marketing Expense
    
    
    25,982
    
    
    
    105,278
    
    
    
    40,830
    
    
    
    127,476Professional Fees
    
    
    178,155
    
    
    
    79,323
    
    
    
    231,078
    
    
    
    218,985Rent Expense
    
    
    56,637
    
    
    
    50,329
    
    
    
    104,158
    
    
    
    89,661Research and Development
    
    
    131,028
    
    
    
    36,612
    
    
    
    194,979
    
    
    
    46,344Salaries & Wages
    
    
    889,192
    
    
    
    122,784
    
    
    
    1,111,446
    
    
    
    226,446Other Operating Expenses
    
    
    373,987
    
    
    
    158,795
    
    
    
    647,100
    
    
    
    293,305TOTAL OPERATING EXPENSES
    
    
    1,965,849
    
    
    
    609,411
    
    
    
    3,294,188
    
    
    
    1,066,761LOSS FROM OPERATIONS BEFORE OTHER
INCOME(EXPENSES)
    
    
    (2,024,972
    )
    
    
    (558,417
    )
    
    
    (3,297,742
    )
    
    
    (970,268
    )OTHER INCOME (EXPENSES)Interest Income
    
    
    19,785
    
    
    
    2,744
    
    
    
    19,815
    
    
    
    5,903Interest Expense
    
    
    (14,248
    )
    
    
    (12,676
    )
    
    
    (24,635
    )
    
    
    (26,147
    )5,537
    
    
    
    (9,932
    )
    
    
    (4,820
    )
    
    
    (20,244
    )LOSS BEFORE PROVISIONS FOR TAXES
    
    
    (2,019,435
    )
    
    
    (568,349
    )
    
    
    (3,302,562
    )
    
    
    (990,512
    )Provision for Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NET LOSS
    
    $
    (2,019,435
    )
    
    $
    (568,349
    )
    
    $
    (3,302,562
    )
    
    $
    (990,512
    )BASIC AND DILUTED LOSS PER SHARE
    
    $
    (0.01
    )
    
    $
    (0.00
    )
    
    $
    (0.02
    )
    
    $
    (0.01
    )WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
BASIC AND DILUTED
    
    
    222,085,667
    
    
    
    200,050,486
    
    
    
    218,045,078
    
    
    
    196,842,143
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Six Months Ended6/30/2007
    
    
    6/30/2006CASH FLOWS FROM OPERATING ACTIVITIES:Net Loss
    
    $
    (3,302,562
    )
    
    $
    (990,512
    )Adjustment to reconcile net loss to net cash
used in operating activitiesDepreciation and Amortization
    
    
    148,212
    
    
    
    64,544Financing Discount Costs
    
    
    816,384
    
    
    
    13,889Common Stock Issued for Services
    
    
    619,465
    
    
    
    16,000(Increase) Decrease in:Accounts Receivable
    
    
    (201,638
    )
    
    
    (78,497
    )Inventory
    
    
    (494,567
    )
    
    
    (419,065
    )Employee Advances
    
    
    
    
    
    
    (5,012
    )Deposits
    
    
    4,500
    
    
    
    (2,608
    )Prepaid Expenses
    
    
    37,997
    
    
    
    172,686Increase (Decrease) in:Accounts Payable
    
    
    (320,125
    )
    
    
    32,291Other Payables
    
    
    (780
    )
    
    
    (4,540
    )Accrued Expenses
    
    
    31,012
    
    
    
    (83,777
    )NET CASH USED IN OPERATING ACTIVITIES
    
    
    (2,662,102
    )
    
    
    (1,284,601
    )NET CASH USED IN INVESTING ACTIVITIES:Purchase of Property and Equipment, and Intangibles
    
    
    (743,616
    )
    
    
    (436,586
    )NET CASH USED IN INVESTING ACTIVITIES
    
    
    (743,616
    )
    
    
    (436,586
    )CASH FLOWS FROM FINANCING ACTIVITIES:Advances/(Payments) on Shareholder Loans
    
    
    (372,074
    )
    
    
    29,438Advances/(Payments) on Credit Lines
    
    
    (47,468
    )
    
    
    (20,346
    )Advances/(Payments) on Capital Leases
    
    
    29,644
    
    
    
    (19,699
    )Advances/(Payments) on Notes Payable
    
    
    (250,000
    )
    
    
    Advances/(Payments) on Term Loan Payable
    
    
    (5,119
    )
    
    
    (54,783
    )Proceeds from Issuance of Common Stock
    
    
    16,738,115
    
    
    
    1,608,500NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    16,093,098
    
    
    
    1,543,110NET INCREASE IN CASH
    
    
    12,687,380
    
    
    
    (178,077
    )CASH, BEGINNING OF PERIOD
    
    
    205,022
    
    
    
    506,487CASH, END OF PERIOD
    
    $
    12,892,402
    
    
    $
    328,410
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1.
    
    ORGANIZATION AND LINE OF BUSINESS
 Organization
 th
  Line of Business
 th
  2.
    
    CAPITAL STOCK
  
    
    Through an initial private placement completed on March 10, 2007, 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 7,484,999 restricted
 shares of common stock for gross cash proceeds of $2,245,500.
 
    
    Through an initial private placement completed on July 2, 2007, 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 38,341,053 restricted
 shares of common stock for gross cash proceeds of $14,569,600. The subscribers to the
private placement were primarily comprised of institutions focused on the renewable and
clean technology sectors, including UBS Global Innovator Fund, Fortis
Investments Environmental Fund, Clariden Leu, Credit Suisse Future
Energy Fund
and Swisscanto Climate Control Fund. The shares acquired through this private placement were subsequently
registered with the SEC through an SB-2 filing, which was declared effective on July 11,
2007.
 
    
    The Company received funds of $1,830,000 under its Equity Line of Financing for
5,168,645 common stock shares issued.
 
    
    The Company issued 3,918,221 shares of common stock valued at $2,044,365 to various
employees and consultants for services rendered.
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3.
    
    EQUITY LINE OF FINANCING
  4.
    
    RELATED PARTY
  
    
    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 was 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. On June 27, 2007 the Company repaid all
fully outstanding principal and interest under this loan.
 
    
    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.
 5.
    
    SUBSEQUENT EVENTS
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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 and Six Months Ended June 30, 2007 compared to the Three
Months and Six Months Ended June 30, 2006.
 Sales
 Cost of Sales
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Gross Profit
 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 7,484,999 restricted shares of common stock 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 ScheerFrederic ScheerPresident, Chief Executive Officer, PrincipalFinancial/Accounting Officer and ChairmanDated: August 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.
  13