##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
 Commission File Number 333-126378
 CEREPLAST, INC.
  Nevada
(State or Other Jurisdiction of Incorporation or Organization)
    
    91-2154289
(I.R.S. Employer Identification No.)3421-3433 West El Segundo Boulevard 
Hawthorne, California
(Address of Principal Executive Office)
    
    90250
(Zip Code)
 (310) 676-5000
(Registrants Telephone Number, Including Area Code)
 Yes þ No o
 Yes o
No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 Yes o No þ




---



##### 



CEREPLAST, INC.
 FORM 10-Q
 TABLE OF CONTENTS
 PagePART IFINANCIAL INFORMATIONItem 1. FINANCIAL STATEMENTS
    
    
    3Consolidated Balance Sheets at June 30, 2009 and December 31, 2008
    
    
    3Consolidated Statements of Operations and Other Comprehensive Income for the Three and Six
months ended June 30, 2009 and 2008
    
    
    4Consolidated Statements of Cash Flows for the Six months ended June 30, 2009 and 2008
    
    
    5Notes to the Consolidated Financial Statements
    
    
    6Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    15Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    22Item 4T. CONTROLS AND PROCEDURES
    
    
    23PART IIOTHER INFORMATIONItem 1. LEGAL PROCEEDINGS
    
    
    23Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    23Item 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    24Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    24Item 5. OTHER INFORMATION
    
    
    24Item 6. EXHIBITS
    
    
    24SIGNATURES
    
    
    25Exhibit 31.1Exhibit 32.1
  Unless otherwise indicated or unless the context requires otherwise, all references in this report
to we, us, our, Cereplast or the Company shall refer to Cereplast, Inc.




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1.
    
    CONSOLIDATED FINANCIAL STATEMENTS
  
  6/30/09
    
    
    12/31/08(Unaudited)
    
    
    (Audited)ASSETSCurrent AssetsCash
    
    $
    384,898
    
    
    $
    501,699Accounts Receivable, Net
    
    
    271,391
    
    
    
    280,102Inventory, Net
    
    
    1,287,249
    
    
    
    1,838,775Prepaid Expenses
    
    
    700,058
    
    
    
    160,863Total Current Assets
    
    
    2,643,596
    
    
    
    2,781,439Property and EquipmentProperty and Equipment
    
    
    5,672,543
    
    
    
    5,729,051Accumulated Depreciation and Amortization
    
    
    (1,371,262
    )
    
    
    (1,132,337
    )Net Property and Equipment
    
    
    4,301,281
    
    
    
    4,596,714Other AssetsRestricted Cash
    
    
    49,008
    
    
    
    48,628Intangibles, Net
    
    
    188,337
    
    
    
    173,285Deposits
    
    
    41,311
    
    
    
    44,943Total Other Assets
    
    
    278,656
    
    
    
    266,856Total Assets
    
    $
    7,223,533
    
    
    $
    7,645,009LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts Payable
    
    $
    1,719,227
    
    
    $
    1,114,744Other Payables
    
    
    9,938
    
    
    
    33,634Accrued Expenses
    
    
    1,195,080
    
    
    
    829,933Capital Leases, Current Portion
    
    
    45,866
    
    
    
    47,440Convertible Shareholder Loan
    
    
    
    
    
    
    212,482Loan Payable, Current Portion
    
    
    
    
    
    
    3,874Total Current Liabilities
    
    
    2,970,111
    
    
    
    2,242,107Long-Term LiabilitiesCapital Leases
    
    
    13,718
    
    
    
    40,045Total Long-Term Liabilities
    
    
    13,718
    
    
    
    40,045Total Liabilities
    
    
    2,983,829
    
    
    
    2,282,152Shareholders EquityPreferred Stock, $0.001 par value;
5,000,0000 authorized preferred shares
    
    
    
    
    
    
    Common Stock, $0.001 par value;
495,000,000 authorized shares; 313,831,513 shares &
281,134,359 shares issued and outstanding, respectively
    
    
    313,831
    
    
    
    281,134Common Stock subscribed, not issued
    
    
    252,350
    
    
    
    250,000Additional Paid in Capital
    
    
    36,250,967
    
    
    
    34,175,023Retained Earnings/(Deficit)
    
    
    (32,614,812
    )
    
    
    (29,372,020
    )Other Comprehensive Income
    
    
    37,368
    
    
    
    28,720Total Shareholders Equity
    
    
    4,239,704
    
    
    
    5,362,857Total Liabilities and Shareholders Equity
    
    $
    7,223,533
    
    
    $
    7,645,009
   3




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##### Table of Contents



Three Months Ended
    
    
    Six Months Ended6/30/2009
    
    
    6/30/2008
    
    
    6/30/2009
    
    
    6/30/2008GROSS SALES
    
    $
    900,598
    
    
    $
    1,059,957
    
    
    $
    1,464,981
    
    
    $
    1,973,109Sales Discounts, Returns & Allowances
    
    
    (4,331
    )
    
    
    (5,559
    )
    
    
    (8,137
    )
    
    
    (27,481
    )NET SALES
    
    
    896,267
    
    
    
    1,054,398
    
    
    
    1,456,844
    
    
    
    1,945,628COST OF SALES
    
    
    818,846
    
    
    
    1,127,621
    
    
    
    1,281,653
    
    
    
    1,906,410GROSS
PROFIT/(LOSS)
    
    
    77,421
    
    
    
    (73,223
    )
    
    
    175,191
    
    
    
    39,218OPERATING EXPENSESDepreciation and Amortization
    
    
    136,179
    
    
    
    136,283
    
    
    
    272,089
    
    
    
    265,747Marketing Expense
    
    
    92,111
    
    
    
    284,788
    
    
    
    250,916
    
    
    
    680,360Professional Fees
    
    
    189,585
    
    
    
    210,274
    
    
    
    337,884
    
    
    
    556,314Rent Expense
    
    
    217,247
    
    
    
    263,343
    
    
    
    458,940
    
    
    
    527,985Research and Development
    
    
    62,579
    
    
    
    389,202
    
    
    
    203,789
    
    
    
    546,300Salaries & Wages
    
    
    387,527
    
    
    
    833,712
    
    
    
    1,135,847
    
    
    
    1,563,486Salaries & Wages  Stock Based Compensation
    
    
    (166,738
    )
    
    
    364,190
    
    
    
    182,517
    
    
    
    1,876,971Other Operating Expenses
    
    
    217,805
    
    
    
    649,960
    
    
    
    548,639
    
    
    
    1,151,244TOTAL OPERATING EXPENSES
    
    
    1,136,295
    
    
    
    3,131,752
    
    
    
    3,390,621
    
    
    
    7,168,407LOSS FROM OPERATIONS BEFORE OTHER
INCOME(EXPENSES)
    
    
    (1,058,874
    )
    
    
    (3,204,975
    )
    
    
    (3,215,430
    )
    
    
    (7,129,189
    )OTHER INCOME (EXPENSES)Gain on Settlement of Shareholder Loan
    
    
    
    
    
    
    
    
    
    
    81,982
    
    
    
    Waiver fee on Settlement of Shareholder Loan
    
    
    
    
    
    
    
    
    
    
    (90,000
    )
    
    
    Gain/(loss) on Sale of Equipment
    
    
    410
    
    
    
    
    
    
    
    (25,039
    )
    
    
    Interest Income
    
    
    11,995
    
    
    
    28,674
    
    
    
    20,274
    
    
    
    115,049Interest Expense
    
    
    (2,768
    )
    
    
    (5,065
    )
    
    
    (14,579
    )
    
    
    (11,635
    )TOTAL OTHER INCOME (EXPENSES)
    
    
    9,637
    
    
    
    23,609
    
    
    
    (27,362
    )
    
    
    103,414LOSS BEFORE PROVISIONS FOR TAXES
    
    
    (1,049,237
    )
    
    
    (3,181,366
    )
    
    
    (3,242,792
    )
    
    
    (7,025,775
    )Provision for Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NET LOSS
    
    
    (1,049,237
    )
    
    
    (3,181,366
    )
    
    
    (3,242,792
    )
    
    
    (7,025,775
    )OTHER COMPREHENSIVE INCOMEGain (loss) on Foreign Currency Translation
    
    
    8,387
    
    
    
    (541
    )
    
    
    8,648
    
    
    
    (541
    )TOTAL COMPREHENSIVE LOSS
    
    $
    (1,040,850
    )
    
    $
    (3,181,907
    )
    
    $
    (3,234,144
    )
    
    $
    (7,026,316
    )BASIC AND DILUTED LOSS PER SHARE
    
    $
    (0.00
    )
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.03
    )WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
BASIC AND DILUTED
    
    
    309,091,565
    
    
    
    261,717,949
    
    
    
    300,141,404
    
    
    
    260,642,902
   4




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##### Table of Contents



6/30/2009
    
    
    6/30/2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (3,242,792
    )
    
    $
    (7,025,775
    )Adjustment to reconcile net loss to net cash
used in operating activitiesDepreciation and amortization
    
    
    272,089
    
    
    
    265,747Reserve for Inventory Obsolescence
    
    
    (54,544
    )
    
    
    Allowance for Doubtful Accounts
    
    
    (1,900
    )
    
    
    Loss on sale of equipment
    
    
    25,039
    
    
    
    Common Stock Issued for Services, Salaries & Wages
    
    
    132,677
    
    
    
    1,876,971Common Stock Issued for Waiver Fee
    
    
    90,000
    
    
    
    Gain on Settlement of Shareholder Loan
    
    
    (81,982
    )
    
    
    (Increase) Decrease in:Accounts Receivable
    
    
    10,611
    
    
    
    (217,450
    )Inventory
    
    
    606,070
    
    
    
    (963,472
    )Deposits
    
    
    3,632
    
    
    
    (10,771
    )Prepaid Expenses
    
    
    89,804
    
    
    
    (74,129
    )Restricted Cash
    
    
    (380
    )
    
    
    (1,703
    )Intangibles
    
    
    (19,306
    )
    
    
    (84,872
    )Increase (Decrease) in:Accounts Payable
    
    
    660,167
    
    
    
    334,044Accrued Expenses
    
    
    365,147
    
    
    
    63,032Other Payables
    
    
    (23,696
    )
    
    
    35,696NET CASH USED IN OPERATING ACTIVITIES
    
    
    (1,169,364
    )
    
    
    (5,802,682
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property and equipment, and intangibles
    
    
    (6,869
    )
    
    
    (2,081,470
    )Proceeds from sale of equipment
    
    
    1,558
    
    
    
    NET CASH USED IN INVESTING ACTIVITIES
    
    
    (5,311
    )
    
    
    (2,081,470
    )CASH FLOWS FROM FINANCING ACTIVITIES:Payments on Capital Leases
    
    
    (27,901
    )
    
    
    (35,561
    )Payments on Term Loan Payable
    
    
    (3,874
    )
    
    
    (5,475
    )Proceeds from issuance of common stock and subscription receivable
    
    
    1,081,001
    
    
    
    NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    1,049,226
    
    
    
    (41,036
    )FOREIGN CURRENCY TRANSLATION
    
    
    8,648
    
    
    
    (541
    )NET DECREASE IN CASH
    
    
    (116,801
    )
    
    
    (7,925,729
    )CASH, BEGINNING OF PERIOD
    
    
    501,699
    
    
    
    8,593,714CASH, END OF PERIOD
    
    $
    384,898
    
    
    $
    667,985
       5




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##### Table of Contents



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 (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 17 commercial grades of Compostables Resins in this product line.
These resins are compatible with existing manufacturing processes and equipment making them
a ready substitute for traditional petroleum-based resins. We commercially introduced our
Compostables line in November 2006.
 
    
    Cereplast Hybrid Resins® replace up to 50% of the petroleum content in
conventional 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, and is compatible with
existing converter processes and equipment. 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.
We commercially introduced our first grade of Hybrid Resin, Hybrid 150, at the end of 2007.
We currently offer two commercial grades in this product line.
   6




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##### Table of Contents



Basis of Presentation and Consolidation
   Use of Estimates
  Recently Issued Accounting Pronouncements
  Basis of Presentation and Going Concern
   7




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##### Table of Contents



Cash and Cash Equivalents
  Concentration of Credit Risk
  Other Concentration
  Restricted Cash
   8




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##### Table of Contents



Fair Value of Financial Instruments
  Accounts Receivable
  Inventories
  6/30/09
    
    
    12/31/08Raw Materials
    
    $
    399,591
    
    
    $
    608,984Bioplastic Resins
    
    
    757,923
    
    
    
    1,040,255Finished Goods
    
    
    133,839
    
    
    
    291,890Work in Process
    
    
    39,795
    
    
    
    Packaging Materials
    
    
    33,557
    
    
    
    29,646Promo & Misc.
    
    
    
    
    
    
    Reserve for Obsolescence
    
    
    (77,456
    )
    
    
    (132,000
    )Inventories, Net
    
    $
    1,287,249
    
    
    $
    1,838,775
 Property and Equipment
  6/30/09
    
    
    12/31/08Equipment
    
    $
    2,526,775
    
    
    $
    2,582,204Construction in Progress
    
    
    2,592,866
    
    
    
    2,593,937Furniture & Fixtures
    
    
    325,738
    
    
    
    325,738Leasehold Improvements
    
    
    227,164
    
    
    
    227,1725,672,543
    
    
    
    5,729,051Less Accumulated Depreciation
    
    
    (1,371,262
    )
    
    
    (1,132,337
    )Net Property and Equipment
    
    $
    4,301,281
    
    
    $
    4,596,714
  9




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##### Table of Contents



Intangibles
  6/30/09
    
    
    12/31/08Intangibles
    
    $
    208,232
    
    
    $
    188,927Less Accumulated Amortization
    
    
    (19,895
    )
    
    
    (15,642
    )Net Intangibles
    
    $
    188,337
    
    
    $
    173,285
 Deferred Income Taxes
    Revenue Recognition
  Marketing and Advertising
  Research and Development Costs
   10




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##### Table of Contents



Stock-Based Compensation
  Loss per Share Calculations
  Legal Proceedings
    
    
    In a private placement transactions, 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, as amended (the Securities Act), we issued 10,679,819 restricted shares of common stock for gross cash proceeds of $533,991, and 5,000,000 restricted shares
of common stock in fulfillment of subscriptions received prior to December 31, 2008 of
$250,000.
 
    
    Also on February 18, 2009 we also issued 2,450,000 shares of restricted common stock
valued at $220,500 to one of our shareholders, a party related to our Chief Executive
Officer, in repayment of a convertible shareholder loan. The stock issuance includes
1,450,000 shares related to the original principal amount of $212,500 and 1,000,000
additional shares related to an agreement to waive default penalties.
 
    
    We issued 6,500,000 shares of restricted common stock valued at $629,000 to third
parties for services to be rendered over twelve-month terms beginning in March 2009 and May
2009.
  11




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##### Table of Contents




    
    We issued 3,499,052 shares of restricted common stock valued at $312,419 to various
employees, directors, and third parties for services rendered during the period.
 
    
    We issued 4,568,283 shares of restricted common stock for net cash proceeds of $300,000
pursuant to the Periodic Equity Investment Agreement with Cumorah Capital, Inc. dated
December 8, 2008.
 Stock Option Activity
  Six months endedJune 30, 2009Weighted AverageShares
    
    
    Exercise PriceOutstandingbeginning of year
    
    
    9,975
    
    
    $
    0.56Granted at fair value
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Canceled/forfeited
    
    
    (3,200
    )
    
    
    (0.56
    )Outstandingend of quarter
    
    
    6,775
    
    
    
    0.56Options exercisable at quarter-end
    
    
    6,040
    
    
    $
    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
    
    
    6,775
    
    
    $
    0.56
    
    
    
    4.47
    
    
    
    
    
    
    
    6,040
    
    
    $
    0.56
    
    
    
    4.11
    
    
    
    
     12




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##### Table of Contents



California Facilities
 
    
    a lease for office, industrial and warehouse space with monthly rents of $15,405
expiring in January 2010;
 
    
    a lease for office and warehouse space with monthly rents of $20,644 expiring in April
2012; and
  Indiana Facility 
  Term Loan
  Shareholder Loan
     13




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##### Table of Contents



Payment of Salaries & Employment Contracts
     Issuance of Capital Stock
    14




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   
    
    inability to raise sufficient additional capital to finance 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;
 
    
    decline in demand for our products and services;
 
    
    rapid and significant changes in markets and other factors that encourage use of
bioplastics;
 
    
    failure to successfully commence operations at our new Seymour facility and relocate
manufacturing activities from California to Indiana;
 
    
    failure to commercialize new grades of resin being pursued in our technical / market
development pipeline;
 
    
    competitor actions that curtail our market share, negatively affect pricing or limit
sales growth;
 
    
    inability to retain employees as a result of deferral of payment of salaries to preserve
cash;
 
    
    litigation with or legal claims and allegations by outside parties;
 
    
    insufficient revenues to cover operating costs;
 
    
    inability to successfully implement our Strategic Restructuring Program, including the
successful negotiation of a strategic partnership to outsource our manufacturing
activities, consolidation of product lines and the sale of our commercial production
equipment at attractive prices.
   15




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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 17 commercial grades of Compostables Resins in this product line.
These resins are compatible with existing manufacturing processes and equipment making them
a ready substitute for traditional petroleum-based resins. We commercially introduced our
Compostables line in November 2006.
 
    
    Cereplast Hybrid Resins® replace up to 50% of the petroleum content in
conventional 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, and is compatible with
existing converter processes and equipment. 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.
We commercially introduced our first grade of Hybrid Resin, Hybrid 150, at the end of 2007.
We currently offer two commercial grades in this product line.
   16




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##### Table of Contents



Trends and Uncertainties that May Impact Future Results of Operations
 Global Market and Economic Conditions.
  Strategic Restructuring Program
  Sales.
 Operating Expenses. rd th
  17




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Sales
  Gross Profit
   18




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##### Table of Contents



Operating Expenses
  
    
    Salaries and wages, including stock based compensation, decreased by $977,113, or 81.6%,
to $220,789 for the three months ended June 30, 2009 compared to the three months ended
June 30, 2008, largely as a result of the significant reductions in our workforce in 2009
and associated reductions in compensation expense related to the vesting of employee stock
options to reflect actual stock option forfeiture rates,
 
    
    Marketing expense decreased by $192,677, or 67.7%, to $92,111 for the three months ended
June 30, 2009 compared to the three months ended June 30, 2008. The decrease for the period
is directly attributable to focusing our pipeline process and implementing more rigorous
market and customer selection processes.
 
    
    Research and Development costs decreased by $326,623, or 83.9% to $62,579 for the three
months ended June 30, 2009 compared to the three months ended June 30, 2008 also as a
result of an improved focus of our pipeline process for technical development and
expansion of our resin families and other cost cutting measures.
 
    
    Rent expense decreased by $46,096, or 17.5%, to $217,247 for the three months ended June
30, 2009 compared to the three months ended June 30, 2008. The decrease for the period was
primarily the result of rental income from the sublease of one of our office and warehouse
premises in Hawthorne offsetting rent expense during the three months ended June 30, 2009.
No rental income was earned on any of our leased premises for the three months ended June
30, 2008.
 Net Loss
 ®.
  Sales
   19




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##### Table of Contents



Gross Profit
  Operating Expenses
  
    
    Salaries and wages, including non-cash compensation decreased by $2,122,093, or 61.7%,
to $1,318,364 for the six months ended June 30, 2009 compared to the six months ended June
30, 2008, largely as a result of the restructuring activities and the significant
reductions in our workforce made during the six months ended June 30, 2009 compared to June
30, 2008 and associated reductions in compensation expense related to the vesting of
employee stock options to reflect actual, vs. estimated, stock option forfeiture rates.
 
    
    Marketing expense decreased by $429,444, or 63.1%, to $250,916 for the six months ended
June 30, 2009 compared to the six months ended June 30, 2008. The decrease for the period
is directly attributable to focusing our pipeline process and implementing more rigorous
market and customer selection processes.
 
    
    Research and Development costs decreased by $342,511, or 62.7%, to $203,789 for the six
months ended June 30, 2009 compared to the six months ended June 30, 2008 also as a result
of an improved focus of our pipeline process for technical development and expansion of
our resin families.
 
    
    Rent expense decreased by $69,045, or 13.1%, to $458,940 for the six months ended June
30, 2009 compared to the six months ended June 30, 2008. The decrease for the period was
the result of rental income from the sublease of one of our office and warehouse premises
in Hawthorne offsetting rent expense during the six months ended June 30, 2009. No rental
income was earned on any of our leased premises for the six months ended June 30, 2008.
  20




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##### Table of Contents



Net Loss
 ®
           21




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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
    
    $
    59,584
    
    
    $
    45,866
    
    
    $
    13,718
    
    
    $
    
    
    
    $
    Rental lease obligations
    
    
    3,332,554
    
    
    
    665,318
    
    
    
    992,236
    
    
    
    600,000
    
    
    
    1,075,000Purchase obligations
    
    
    397,623
    
    
    
    397,623
    
    
    
    
    
    
    
    
    
    
    
    Indebtedness
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,789,761
    
    
    $
    1,108,807
    
    
    $
    1,005,954
    
    
    $
    600,000
    
    
    $
    1,075,000
    
 ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    22




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##### Table of Contents



ITEM 4.
    
    CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Internal Control Over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
  
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
    
    2,936,552 shares of our common stock valued at $264,607 to our directors and
employees as part of their compensation.
 
    
    2,450,000 shares of our common stock valued at $220,500 to a current shareholder, a
party related to our Chief Executive Officer, in repayment of a convertible shareholder
loan.
 
    
    562,500 shares of our common stock valued at $47,813 to third parties for services
rendered in the period.
 
    
    6,500,000 shares of our common stock valued at $629,000 to third parties for prepaid
services to be rendered over future periods.
  23




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##### Table of Contents




    
    10,679,819 shares of our common stock to accredited investors for gross proceeds of
$533,991.
 
    
    5,000,000 shares of our common stock to accredited investors to accredited investors
in fulfillment of subscriptions received prior to December 31, 2008 of $250,000.
 
    
    4,568,283 shares of our common stock for net cash proceeds of $300,000 pursuant to
the Periodic Equity Investment Agreement with Cumorah Capital, Inc.
  
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5.
    
    OTHER INFORMATION
  
 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 and Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of the Chief Executive Officer and Principal 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.  24




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##### Table of Contents



SIGNATURES
  Date: August 14, 2009
    CEREPLAST, INC.By:
    /s/  Frederic ScheerFrederic ScheerChairman, Chief Executive Officer, Principal
Financial Officer and Director  25




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description31.1
    
    
    Certification of the Chief Executive Officer and Principal Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of the Chief Executive Officer and Principal Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ***
 
 ***
    
    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.  26