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                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

          For the quarterly period ended June 24, 2000

                                       OR

[ ]  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: 1-8456

                             THE CERPLEX GROUP, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter.)

           Delaware                                             75-1539534
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization.)                              Identification No.)


            111 PACIFICA AVENUE, SUITE 300, IRVINE, CALIFORNIA 92618
--------------------------------------------------------------------------------
               (Address of principal executive office.) (Zip Code)


                                 (949) 754-5300

--------------------------------------------------------------------------------
               Registrant's telephone number, including area code.

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                 Yes [X] No [ ]

Indicated  below  is the  number  of  shares  outstanding  of each  class of the
registrant's Common Stock, as of June 24, 2000:

TITLE OF EACH CLASS OF COMMON STOCK                        NUMBER OUTSTANDING
-----------------------------------                        ------------------
  Common Stock, $0.03 par value                             7,273,041 shares

                                       3

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<PAGE>





                             THE CERPLEX GROUP, INC.

                                TABLE OF CONTENTS

                                                                            PAGE

PART I.  FINANCIAL INFORMATION

Item 1.     Financial Statements

            Condensed Consolidated Balance Sheets as of  June 24, 2000
            and September 25, 1999                                             6

            Condensed Consolidated Statements of Operations for the Three
            Months and The Nine Months Ended June 24, 2000
            and June 30, 1999                                                  7

            Condensed Consolidated Statements of Cash Flows for the Nine
            Months Ended June 24, 2000 and June 30, 1999                       8

            Notes to Unaudited Condensed Consolidated Financial Statements     9

Item 2.     Management's Discussion and Analysis of Financial Condition and
            Results of Operations                                             14


Item 3.     Quantitative and Qualitative Disclosures About Market Risk        22

PART II.  OTHER INFORMATION                                                   23

Signatures                                                                    25

Index to Exhibits                                                             26


                                       4
<PAGE>



                             THE CERPLEX GROUP, INC.


                                     PART I

                              FINANCIAL INFORMATION




                                       5
<PAGE>

                     THE CERPLEX GROUP, INC. and Subsidiary
                  (A DEBTOR-IN-POSSESSION, as of July 26, 2000)
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                 (In thousands)
<TABLE>
<CAPTION>

                                                                            (Unaudited)
                                                                              June 24,        SEPTEMBER 25,
                                                                                2000               1999
                                                                            -----------        -------------

                                     ASSETS

Current assets:
<S>                                                                           <C>                  <C>
    Cash and cash equivalents                                                 $      14            $     382
    Accounts receivable, less allowance for doubtful accounts
      of $536 and $912                                                            5,472                9,234
    Inventories, net                                                              3,345                5,375
    Other current assets                                                          1,228                1,191
                                                                              ---------            ---------
Total current assets                                                             10,059               16,182

Goodwill                                                                             --                9,560
Property, plant and equipment, net                                                7,698                9,406
Intangible and other assets                                                         333                  483
                                                                              ---------            ---------
                                                                              $  18,090            $  35,631
                                                                              =========            =========


                LIABILITIES AND STOCKHOLDERS' DEFICIT


Current liabilities:
    Current portion of long-term debt (all current)                           $  39,588               39,406
    Accounts payable                                                              9,489                6,674
    Accrued expenses                                                              4,262                4,802
    Accrued interest expense                                                        741                  458
    Other current liabilities                                                     4,828                1,338
                                                                              ---------            ---------
Total liabilities                                                                58,908               52,678

Commitments and contingencies

Redeemable convertible preferred stock, 1000 shares
    authorized and 216 shares issued                                             31,624               30,492

Stockholders' deficit:
    Series B senior cumulative preferred stock, 59 shares
            authorized and issued                                                62,748               59,669
    Common stock 75,000 shares authorized, 7,850 shares issued
            and outstanding                                                       2,270                2,270
    Additional paid-in capital                                                  121,626              121,601
    Treasury  stock, at cost, 474 shares                                        (16,675)             (16,675)
    Accumulated deficit                                                        (242,612)            (214,415)
    Accumulated other comprehensive income                                          201                   11
                                                                              ---------            ---------
Total stockholders' deficit                                                     (72,442)             (47,539)
                                                                              ---------            ---------

                                                                              $  18,090            $  35,631
                                                                              =========            =========
</TABLE>


         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.


                                       6
<PAGE>

                     THE CERPLEX GROUP, INC. and Subsidiary
                  (A DEBTOR-IN-POSSESSION, as of July 26, 2000)
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)
                                   (Unaudited)


<TABLE>
<CAPTION>


                                             THREE MONTHS ENDED           NINE MONTHS ENDED
                                         ---------------------------   ------------------------
                                              June 24,     June 30,       June 24,      June 30,
                                                 2000         1999           2000          1999
                                         ------------    ----------    ------------    ----------
<S>                                         <C>          <C>              <C>            <C>
Net revenues                                $  9,053     $ 23,914         $36,361        $ 77,427
Cost of sales                                  9,612       22,547          37,621          75,039
                                             --------     --------         -------       --------
Gross margin                                    (559)       1,367          (1,260)          2,388

Selling, general and administrative
  expenses                                     2,652        5,811          10,220          16,837
Amortization of intangible assets                250        1,450             574           5,758
Write-off of goodwill                          9,074       18,375           9,074          18,375
Reduction in accruals                            ---       (2,006)            ---          (2,006)
                                             --------     --------         -------       --------
Operating loss                               (12,535)     (22,263)        (21,128)        (36,576)

Interest expense                              (1,012)      (1,622)         (2,834)         (5,760)
Other income (expense), net                     (257)         208            (257)          3,500
                                             --------     --------         -------       --------
Loss before income taxes                     (13,804)     (23,677)        (24,219)        (38,836)
Income tax benefit                               ---         (646)           (233)           (631)
                                             --------     --------         -------       --------
Net loss                                     (13,804)     (23,031)        (23,986)        (38,205)
Accrued dividends on preferred stock          (1,403)        (377)         (4,210)         (1,174)
                                             --------     --------         -------       --------
Net loss applicable to common stockholders  $(15,207)    $(23,408)       $(28,196)       $(39,379)
                                             ========     ========         =======       ========
Basic and diluted  loss per common share     $ (2.09)    $  (3.18)        $ (3.88)      $   (5.38)
                                             ========     ========         =======       ========

Weighted average number of common
  shares outstanding                           7,272        7,368           7,270           7,322
                                            ========     ========          =======       ========

</TABLE>

         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.


                                       7
<PAGE>

                     THE CERPLEX GROUP, INC. and Subsidiary
                  (A DEBTOR-IN-POSSESSION, as of July 26, 2000)
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                 NINE MONTHS ENDED
                                                                     -------------------------------------
                                                                         JUNE 24,2000       JUNE 30, 1999
                                                                     -----------------    ----------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                     <C>                   <C>
Net loss                                                                $(23,986)             $ (38,205)
   Adjustments to reconcile net loss to net cash used in
   operations:
        Depreciation and amortization                                      2,052                  8,323
        Non-cash interest expense                                          2,411                  1,505
        Foreign currency translation                                         190                    ---
        Loss on disposition of assets                                        ---                     32
        Write-off of goodwill                                              9,074                 18,375
        Reduction in accruals                                                                    (2,006)
        Changes in assets and liabilities:
           Current assets                                                  6,187                   (392)
           Current liabilities                                             3,470                  1,888
                                                                        --------               --------

Net cash used in operating activities                                       (602)               (10,480)
                                                                        --------               --------

CASH FLOWS FROM INVESTING ACTIVITIES:

    Acquisition of property, plant and equipment                            (140)                (1,218)
                                                                        --------               --------
    Net cash used in investing activities                                   (140)                (1,218)
                                                                        --------               --------

CASH FLOWS FROM FINANCING ACTIVITIES:

    Proceeds from promissory note                                            ---                  4,600
    Payment on capital leases                                                ---                   (100)
    Payments on revolving line of credit                                 (21,830)                   ---
    Payment on other debt                                                 (3,225)                   ---
    Proceeds from revolving line of credit                                24,408                    ---
    Proceeds from other debt                                                 996                    ---
    Other                                                                     25                    ---
                                                                        --------               --------
Net cash provided by financing activities                                    374                  4,500
                                                                        --------               --------
Net change in cash and cash equivalents                                     (368)                (7,198)
                                                                        --------               --------
Cash and cash equivalents at beginning of period                             382                 14,196
                                                                        --------               --------
Cash and cash equivalents at end of period                              $     14               $  6,998
                                                                        ========               ========

</TABLE>


              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.


                                       8
<PAGE>


                             THE CERPLEX GROUP, INC.
                                 AND SUBSIDIARY
                  (A DEBTOR-IN-POSSESSION, as of July 26, 2000)

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED
    FINANCIAL STATEMENTS June 24, 2000, June 30, 1999 and September 25, 1999

NOTE A.  CURRENT FINANCIAL CONDITION

On June 20, 2000 an  involuntary  Chapter XI bankruptcy  petition was filed by a
group of The Cerplex  Group,  Inc.  ("Group")  creditors  against  Group.  Group
consented to the involuntary filing on July 11, 2000. On July 27, 2000, Cerplex,
Inc filed a  voluntary  petition  for  protection  under  Chapter XI of the U.S.
Bankruptcy  Code (the  "Code").  An Order for  Relief  was  issued by the United
States  Bankruptcy Court for the District of Delaware (the "Court") in the Group
case on July 26,  2000 and on July 27, 2000 in the  Cerplex,  Inc.  case.  Under
Chapter  XI of the  Code,  both  Group  and  Cerplex,  Inc.  (collectively,  the
"Company")   are   considered    debtors-in-possession   of   the   assets.   As
debtors-in-possession  ("DIP"),  management of the Company  continues to operate
the business  under the  supervision  of the Court and,  among other things,  is
granted  a 120 day  exclusive  right to  propose  a plan of  reorganization.  In
accordance  with the  provisions  of the Code,  an automatic  stay provides that
creditors of the Company are prevented  from seeking  repayment of  pre-petition
debts.  The Company has  arranged  for a  debtor-in-possession  credit  facility
through  Congress  Financial   Corporation   ("Congress")  by  entering  into  a
Ratification  and Amendment  Agreement ("DIP  Agreement") to finance its working
capital needs while in  bankruptcy;  see Note F for additional  information.  On
July 28, 2000, the Court approved the DIP Agreement on an interim basis.

As a result of the bankruptcy  proceedings,  substantially  all of the Company's
indebtedness is in default. The repayment of such indebtedness,  if any, will be
the subject of the Company's plan of  reorganization  or order of the Court.  An
important  element in successfully  reorganizing the Company will be the ability
to sell certain assets to reduce indebtedness and provide funding for operations
(see Note J - "Subsequent Events").

During the nine  months  ended June 24,  2000 and the year ended  September  25,
1999, the Company  experienced  recurring operating losses. As a result of these
losses, at June 24, 2000 the Company had a stockholders'  deficit of $72,442 and
negative working capital of $48,849. In addition,  since recapitalization of the
Company in March 1996,  the Company has relied upon the financial  support of an
investment  fund managed by the  investment  firm of Welsh,  Carson,  Anderson &
Stowe ("WCAS"),its  largest  stockholder,  for additional  capital.  At June 24,
2000, the Company had approximately  $26.8 million  outstanding under its senior
secured term debt owed to WCAS which matures on April 1, 2001,  and $2.6 million
and $3.8  million  outstanding  related to a senior  secured line of credit with
Congress  Financial  Corporation  (Western)  ("Congress") and Burdale  Financial
Limited ("Burdale"), respectively.

As part of the process to attempt a reorganization  of the Company,  the Company
is pursuing various financing alternatives that may be available, although there
can be no assurance that the Company will be able to successfully implement such
alternatives.  Though the Company intends to make efforts to increase  revenues,
the Company's  losses are expected to continue for the  foreseeable  future.  To
maintain continuing operations,  the Company will require additional funding and
financial  support  from a third  party.  There  can be no  assurance  that such
additional  funding and financial support will be available on acceptable terms,
or that  such  funds,  if  available,  would  enable  the  Company  to  continue
operating, or that the Company will be successful in increasing revenues.  These
matters  raise  substantial  doubt  about the  Company's  ability to continue to
exist.

                                       9
<PAGE>

NOTE B.  BASIS OF PRESENTATION

The significant  accounting  policies of the Company as of June 24, 2000 are set
forth  in Note B  "Summary  of  Significant  Accounting  Policies"  of  Notes to
Consolidated  Financial  Statements  included in the 1999 Annual  Report on Form
10-K for The Cerplex Group,  Inc. See the "Future  Reporting While in Chapter XI
Proceedings" section of Note J for additional information.

In the opinion of management,  the accompanying  condensed  consolidated balance
sheets and related interim condensed  consolidated  statements of operations and
cash flows include all adjustments  (consisting  only of normal recurring items,
except as  described  in Note I)  necessary  for their  fair  presentation.  The
preparation of financial  statements in conformity  with  accounting  principles
generally  accepted in the United States  requires  management to make estimates
and  assumptions  that  affect the  reported  amounts  of  assets,  liabilities,
revenues,  and expenses.  Actual results could differ from those estimates,  and
such  differences  could  be  material.  Interim  results  are  not  necessarily
indicative of results for a full year.

Certain  information  in  footnote   disclosures  normally  included  in  annual
financialstatements  has been condensed or omitted in accordance  with the rules
and  regulations  of the  Securities and Exchange  Commission.  The  information
included  in this Form  10-Q  should be read in  conjunction  with  Management's
Discussion  and Analysis and the  consolidated  financial  statements  and notes
thereto  included in the 1999  AnnualReport  on Form 10-K for The Cerplex Group,
Inc.

NOTE C.  LOSS PER SHARE OF COMMON STOCK

Basic loss per common  share is computed by  dividing  net loss by the  weighted
average  number of common shares  outstanding  after adding to the net loss from
operations   cumulative   dividends  to  holders  of  the  Company's  redeemable
convertible preferred stock.

Diluted  loss per share is  computed by dividing  net loss  available  to common
stockholders  by  the  sum of the  weighted  average  number  of  common  shares
outstanding and potential  common stock.  For all periods  presented,  potential
common  stock  (stock  options)  was  excluded  from such  calculations  as they
wereantidilutive. The Company's 7% Senior Cumulative Convertible Preferred Stock
and  10%  Series  B  Senior  Subordinated  Debentures  (which  mature  in  equal
installments  on December 31, 2002,  2003 and 2004),  were not potential  common
stock  at  the  time  of  issuance  and  are  therefore  not  considered  in the
calculation of dilutedloss per share.

NOTE D.  INVENTORIES

Inventories (net of the allowance for obsolete and slow-moving items of $792 and
$2,186, respectively) consisted of the following:

                                            June 24,         September 25,
                                              2000               1999
                                           ------------      -------------
                                                   (IN THOUSANDS)

Spare and repair parts                        $3,150          $ 4,687
Work in process                                   68              493
Finished goods and purchased product             127              195
                                              ------           ------
        Total inventories                     $3,345           $5,375
                                              ======           ======


                                       10
<PAGE>

NOTE E.  EQUITY CAPITALIZATION

On October 5, 1998, a majority of the  outstanding  capital stock of the Company
entitled  to vote,  voted at a  Special  Meeting  of  Stockholders  to  effect a
one-for-ten reverse stock split (the "One-for-Ten Reverse Split"), in which each
ten shares of the Company's  Common Stock were  converted  into one share of the
Company's Common Stock.  Stockholders who would have received  fractional shares
of Common Stock as a result of the One-for-Ten Reverse Split, were paid, in lieu
of  receiving  fractional  shares,  cash in an amount equal to $0.104 per share.
Unless otherwise stated,  figures as to the number of shares  outstanding,  loss
per common share,  exercise price to convert the 7% Convertible  Preferred Stock
and other per share figures  included  herein,  reflect the One-for-Ten  Reverse
Split.  Immediately  following the  One-for-Ten  Reverse Split,  the outstanding
capital  stock of the  Company  consisted  of 215,500  shares of 7%  Convertible
Preferred  Stock,  44,000  shares of Series A  Convertible  Preferred  Stock and
7,118,285 shares of Common Stock.

On November 19, 1998,  249,233 shares of the Company's  Common Stock were issued
as a result of the conversion of 44,000 shares of Preferred Stock of the Company
 . A majority of such Preferred  Stock was held by WCAS. As a majority  holder of
such Preferred Stock,  WCAS elected to cause all of the shares of such Preferred
Stock to be converted to Common Stock of the Company. As of June 24, 2000, there
were 7,273,041 shares of the Company's Common Stock outstanding.

NOTE F.  DEBT

As a result  of  failing  to make a  sinking  fund  payment,  the  cross-default
provisions of certain other credit agreements,  and the bankruptcy  proceedings,
substantially all of the Company's debt is in default; see Note A for additional
information.

On November  24, 1999 the Company  and its  subsidiary  entered  into a Loan and
Security  Agreement  ("Congress  Line of Credit") with Congress  providing for a
$13.0 million senior secured  revolving  credit  facility.  Concurrent with this
financing,  WCAS agreed to  subordinate  its security  interest in the Company's
assets.  The  Congress  Line of Credit,  which  matures in February  2001,  will
provide  additional  working  capital and financing  for the Company's  domestic
operations. As of June 24, 2000 the Company had no borrowing capacity under this
credit  arrangement.  Borrowings under the Congress Line of Credit bear interest
at  fluctuating  rates of  either  the  Prime  Rate  plus  1/2% or the  Adjusted
Eurodollar  Rate plus 2 3/4%.  Borrowing  availability  pursuant to the Congress
Line of Credit is limited by the value, as defined in the credit  agreement,  of
assets pledged as collateral,  namely  accounts  receivable.  The agreement also
contains  customary  financial  covenants and events of default for financing of
this type. The liquidation of Cerplex S.A.S. (see Note G) caused a default and a
cross-default  under the Congress  loan.  The Company has received a waiver from
Congress  for an  exception  that  covers  this  default.  Cerplex,  Inc. is the
borrower  under the  Congress  Line of Credit  and the  Company  guarantees  the
repayment of its obligations thereunder.

On December 14, 1999, Cerplex, Ltd. closed a financing arrangement consisting of
debentures and a line of credit (the"Burdale  Loans") with Burdale, an affiliate
of  Congress.  The credit  facility  provides for advances to Cerplex Ltd. up to
$2.9 million  under a line of credit  secured by accounts  receivable  and up to
$3.5 million under a loan secured by real estate.  This credit facility was used
to repay  indebtedness to British  Telecommunications  plc ("BT") and to finance
the working  capital  needs of Cerplex Ltd. The Burdale  Loans bear  interest at
fluctuating  rates of  LIBOR  plus 2%.  The  Burdale  Loans  are  covered  by an
agreement that provides customary  financial covenants and events of default for
financing  arrangements  of this  type.  Indebtedness  under this  agreement  is
guaranteed by the Company.

On June 30, 2000,  Cerplex,  Ltd completed a sale of its real estate in Enfield,
England.  Proceeds from the sale totaled  approximately  $6.6 million,  of which
approximately  $5.6


                                       11
<PAGE>

million was paid to Cerplex Ltd in cash net of tenant improvement allowances and
rent security  deposits  held by the purchaser in connection  with a real estate
leaseback.  From the net cash  proceeds,  Cerplex  Ltd  repaid  amounts  owed to
Burdale  pursuant to the  Burdale  debenture  (secured  by real  estate) and the
Burdale  line of credit  (secured by  accounts  receivable).  The  Burdale  Loan
balances, repaid in full as of June 30, 2000, totaled approximately $.8 million
and $.3 million, respectively.

On July 28, 2000, the Court approved the DIP Agreement  entered into by Congress
and the Company that  establishes  a lending  arrangement  for the Company under
certain conditions while in bankruptcy. As with the Congress Line of Credit, the
DIP Agreement contains certain covenants and conditions that govern the loans to
the Company. Loans under the DIP Agreement are limited by the amount of eligible
collateral based upon a formula applied to the Company's accounts receivable. As
with the Congress  Line of Credit,  the DIP Funding is secured by  substantially
all the assets of the Company.  As of August, 10 2000, total indebtedness of the
Company under the DIP Agreement was $.8 million.  Additional  borrowing capacity
was $.1 million.

As of June 24, 2000 the Company had $2.6 million  outstanding under the Congress
Line of Credit,  $3.8 million outstanding under the Burdale Loans, $26.8 million
outstanding  under the WCAS Senior Secured Notes,  and $0.4 million  outstanding
under the 10% Series B Senior  Subordinated  Notes.  As of August  10,  2000 the
Company had $2.9 million  outstanding  under the Congress Line of Credit,  $27.1
million   outstanding  under  the  WCAS  Senior  Secured  Notes,  $11.1  million
outstanding  under  the 7 3/4%  Convertible  Subordinated  Debentures,  and $0.4
million outstanding under the 10% Series B Senior Subordinated Notes.

NOTE G.  LOSS OF CONTROL OF SUBSIDIARY

On July 20, 1999, the management of Cerplex S.A.S.  ("SAS") requested assistance
from the  Commercial  Court of Lille,  France to  structure  a social plan for a
portion of the work force.  The  Commercial  Court  declared SAS insolvent as of
July 15, 1999 and opened bankruptcy  proceedings with respect to SAS. A judicial
administrator  was appointed by the Court to assist the management of SAS in all
its  activities   pending  the  Court's  decision  on  the  development  of  the
proceedings.  The terms of  assignment  of the judicial  administrator  included
reviewing SAS's condition and prospects and issuing a recommendation relating to
a plan of  reorganization  developed by SAS management.  While the administrator
was  overseeing  SAS's   operations,   the  Company  believed  that  a  plan  of
reorganization  would be adopted.  In the event that the administrator could not
support a plan of reorganization, it would become necessary to refer the case to
a liquidator pursuant to Commercial Court guidelines.

On October 12, 1999, the Commercial Court, acting upon the recommendation of the
judicial administrator,  ordered the liquidation of SAS. Prior to this decision,
management   believed  it  would  realize  its   investment  in  SAS  through  a
reorganization.  However,  after the liquidation of SAS was ordered, the Company
recognized that its investment in SAS was at significant risk of realization and
should  therefore be written off as of July 20,  1999,  the date  Cerplex,  Inc.
effectively   lost  control  of  SAS.  As  a  consequence  of  this  order,  SAS
discontinued its operations,  and the liquidator has laid off  substantially all
employees. As the Company effectively lost control of its subsidiary on July 20,
1999, the Company  deconsolidated  SAS from its financial  statements as of that
date. Based on Management's understanding and outside legal counsel's assessment
of the  situation  in  France,  the  Company  believes  there  is no  additional
financial  exposure  related  to  the  SAS  liquidation,  but  there  can  be no
assurances that a deficiency judgment will not be entered against Cerplex, Inc.,
the parent company.  This is described in the 1999 Annual Report on Form 10-K of
The Cerplex Group, Inc. under "European Operations".

The liquidator is responsible for selling the assets and paying off the debts of
SAS. As a result of the cost of laying-off all  employees,  the value of the SAS
assets may not exceed its  liabilities.  There can be no assurance that Cerplex,
Inc.,  as  shareholder,  will  receive any  liquidation  proceeds.  Accordingly,
Cerplex,  Inc. has written off its  investment in SAS which totaled $6.2 million
at July 20, 1999. The $6.2 million  write-off was comprised of assets

                                       12
<PAGE>

carried at $20.9 million,  liabilities carried at $13.8 million and intercompany
balances for SAS of $0.9  million.  For the third  quarter 1999 SAS had sales of
$8.4  million and a net loss of $.7 million.  These  amounts are included in the
accompanying  1999 condensed  consolidated  financial  statements. There were no
sales or operations by SAS during the nine months ended June 24, 2000.

NOTE H.  BUSINESS SEGMENT AND FOREIGN OPERTIONS

The Company  currently  operates in one industry  segment,  the  outsourcing  of
services to the computer and  electronics  industry.  The  Company's  operations
outside  the  United  States  include a  manufacturing  facility  in the  United
Kingdom.

For the quarter  ended June 24, 2000, a single  foreign  customer  accounted for
approximately  39% of the Company's  total revenue.  Unit sales to such customer
have been declining, and are expected to continue to do so.

Total  foreign  assets  approximated  $8.5 million at June 24, 2000;  see Note J
("Sale of U.K. Real Estate") for additional information.

NOTE I.  GOODWILL IMPAIRMENT CHARGE

As  discussed in Note A, the Group and Cerplex Inc are now  operating  under the
protection of the Court. If approved by the Court,  the Company proposes to sell
a  significant  portion  of  certain  operating  assets  as  described  in  Note
J;.additional  asset sales may be necessary to finance the  Company's  remaining
operations. The Company has a history of substantial operating losses, and had a
stockholders   deficit   (approximately  $72.4  million  before  the  adjustment
described below) and negative working capital at June 24, 2000.

Based on the matters  discussed in the preceding  paragraph and the  possibility
that the Company will not succeed in reorganizing  under the federal  bankruptcy
laws,  management has determined that goodwill was impaired as of June 24, 2000.
Accordingly,  the $9.1 million  carrying amount of such asset was written off in
the quarter ended June 24, 2000.

NOTE J.  SUBSEQUENT EVENTS

Major  subsequent  events other than the Company's  bankruptcy  filing (which is
described in Note A) are as follows:

Sale of U.S. Repair Assets

Since  January 2000 the Company has been  engaged in a process to sell  selected
assets  of its  subsidiary.  On  July  16,  2000,  the  Company  entered  into a
definitive  agreement  with  a  subsidiary  of  Teleplan   International,   N.V.
("Teleplan") for the sale of assets and customer  accounts of its three domestic
repair  operations  as well as the  technical  support  call center  operations.
During  the  course of due  diligence,  Teleplan  made  loans to  Cerplex,  Inc.
totaling  approximately  $.3  million  which  will  be  forgiven  as part of the
purchase,  if approved by the Court. In addition to this debt  forgiveness,  the
purchase  consideration  consists of cash and the  assumption  of certain  trade
supplier  liabilities  as well as  assumption of lease  obligations  for Cerplex
facilities located in Livermore, California, Louisville, Kentucky and Tewksbury,
Massachusetts.

Sale of asset will be an essential component of a plan of reorganization because
the  Company  lacks  sufficient  resources  to fund the  ongoing  operations  as
currently  constituted.Net  proceeds  from the sale are expected to  approximate
$4.2 million cash plus the  assumption of selected  liabilities  (as of the date
the Court approves the proposed  transaction)  owed to trade creditors which are
associated  with the assets sold. Cash proceeds from the sale will be used first
to repay all  indebtedness  owed to Congress,  both under the  Congress  Line of
Credit  and  under  the  DIP  Agreement.   After  such  repayment,  the  lending
arrangements  with  Congress  will cease.  The Company has no other bank lending
facilities  available to finance  working capital  requirements.  The Company is
attempting  to obtain a bank lending  arrangement  that would replace the credit
facilities from Congress.  Obtaining adequate financing and approval to use part
of the proceeds from the asset sale described above are both important  elements
of the Company's  reorganization  plans.  Without  working  capital funding from
these  sources,  the Company


                                       13
<PAGE>

will be unable to continue operation. The Company continues to experience losses
and it is uncertain  whether the Company will be successful in reducing expenses
and  increasing  revenues   sufficiently  to  become  profitable.   Accordingly,
additional  asset  sales (all of which are subject to approval by the Court) may
be necessary to generate additional cash and eliminate unprofitable operations.

Sale of U.K. Real Estate

On June 30, 2000 Cerplex Ltd. completed a sale of the land and building it owned
in connection with its repair operations in Enfield, England. The sale to Easter
Development  contemplated  a leaseback of part of the property  sold. See Note F
for additional information.

Future Financial Reporting While in Chapter XI Proceedings

Effective  with  the  fourth  quarter  of  fiscal  2000,  accounting  principles
generally  accepted  in the  United  States  will  require  that  the  Company's
financial  statements be prepared in accordance with AICPA Statement of Position
90-7 ("Financial  Reporting by Entities in  Reorganization  Under the Bankruptcy
Code," hereinafter referred to as "SOP 90-7"). The principal financial statement
requirements of SOP 90-7 for entities in Chapter XI bankruptcy  proceedings with
the expectation of reorganizing are as follows:

o             Balance sheet:  Distinguish between pre-petition  liabilities that
              are  and  are  not  subject  to  compromise,   and   post-petition
              liabilities.

o             Statement  of  operation:  Revenues,  expenses,  gains and  losses
              resulting  from the  reorganization/restructuring  are  separately
              reported  as  "reorganization   items,"  except  for  discontinued
              operations and extraordinary items.

Certain  additional  disclosures  including (1) claims not subject to reasonable
estimation of the amount to be allowed,  (2) the principal  categories of claims
subject to  compromise,  and (3) any  significant  difference  between  reported
interest expense and stated contractual interest are also required by SOP 90-7.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

OVERVIEW

The Company  provides  repair and  logistics  services,  and parts  sourcing and
service management for manufacturers of computer,  communications and electronic
office equipment.  In the computer  marketplace,  the Company primarily services
display terminals,  printed circuit boards,  laptops,  networking  equipment and
workstations.  In the  telecommunications  marketplace,  the  Company  primarily
services   switching   systems,    payphones,   video   conferencing   products,
multiplexers, mobile communications, transmission equipment, hubs and modems. In
the office automation marketplace,  the Company services printers, scanners, fax
machines and high value  products  such as copiers,  automatic  teller  machines
(ATMs) and other  paper-handling  equipment.  The Company  operates  through its
principal  subsidiary,  Cerplex,  Inc.,  and its  subsidiary.  Based in  Irvine,
California, the Company has locations across the United States and in the United
Kingdom.

The Company  entered the  computer  and  electronics  industry in 1992,  and has
expanded  its  operations  through the  acquisition  of  companies  that supply,
refurbish and recycle electronic parts and equipment.

In April 1998,  the Company  completed  the Merger with Old Cerplex,  in which a
wholly-owned subsidiary of the Company merged into Old Cerplex and each share of
Old Cerplex's  Common Stock was converted into 1.070167  shares of the Company's
Common Stock (or .1070167  shares after giving  effect to the  Company's  recent
One-for-Ten  Reverse  Split).  As a result of the Merger,  Old Cerplex  became a
wholly-owned  subsidiary  of the  Company.  The Company  changed its name to The
Cerplex  Group,  Inc.,  and Old Cerplex  changed its name to Cerplex,  Inc.  The
Company  now  conducts  its  operations  through  its  wholly-owned  subsidiary,
Cerplex, Inc. and its subsidiary, Cerplex, Ltd.

                                       14
<PAGE>

On June 25,  1999 the  Company  consented  to an  assignment  by Greyrock of its
rights and  interests  under the  Greyrock  Line of Credit to WCAS in return for
payment  in  full  of  all  outstanding   balances  of  principal  and  interest
thereunder.  WCAS repaid principal and interest  outstanding  under the Greyrock
Line of Credit  totaling $45.4 million.  Concurrent  with the  assignment,  WCAS
advanced to the Company an additional $4.6 million for working capital purposes,
resulting  in $50.0  million of total  indebtedness  outstanding  under the WCAS
Senior  Secured Notes as of June 25, 1999.  The terms of the WCAS Senior Secured
Notes are the same as those  under the  Greyrock  Line of Credit  except (i) the
interest rate was reduced to LIBOR plus 1 3/4%;  (ii) principal and interest are
due on April 1, 2001; (iii) collateral  consisting of the stock of the Company's
subsidiaries  in the UK and France that had secured the Greyrock  Line of Credit
was released;  (iv) the negative pledge agreements  covering assets owned by the
Company's  subsidiaries  in the UK and  France  were  terminated;  and  (v)  the
Company's  obligations  were no longer subject to minimum  collateral  borrowing
base requirements previously established in the Greyrock Line of Credit. On June
30, 1999 the Company  issued  approximately  58,643 shares of Series B Preferred
Stock at a price of $1,000 per share. The Series B Preferred Stock was issued as
repayment of various  obligations  owed to WCAS which  included $25.0 million of
principal  outstanding  under the WCAS Senior  Secured  Notes,  $16.5 million of
principal of the 10% unsecured  promissory notes ( "WCAS Notes"),  approximately
$15.6 million of principal of the 10% Series A Senior  Subordinated  Debentures,
and  approximately  $1.5  million of accrued  interest  owed to WCAS under these
obligations.   The  Series  B  Preferred   Stock   consist  of  7%   cumulative,
non-convertible  preferred  shares  that are  redeemable  by the  Company at its
option and redeemable by the holders upon a change of control of the Company.

As of April 30, 1998  following  the merger of Cerplex  and Aurora  Electronics,
Inc., the Company  recorded an excess of purchase price over net assets acquired
totaling  approximately  $40.6 million.  Since that time, the Company has closed
and consolidated several of its operations, exited certain lines of business and
has  revised  its  estimates  for  expected  future  cash flows from  continuing
operations.  Based on these  estimates  and the goodwill  ascribed to closed and
discontinued operations,  the Company determined,  in the quarter ended June 30,
1999, that an impairment  charge of  approximately  $18.4 million was necessary.
The carrying value of goodwill as of June 30, 1999, after the impairment charge,
was  approximately  $9.7  million.  The  blended  average  life of the  goodwill
attributable  to all  operations  originally  acquired was five years.  Based on
certain  recent events  including the Company's  bankruptcy  status as described
below,  management determined that it was appropriate to write off the remaining
goodwill of approximately $9.1 million during the quarter ended June 24, 2000.

On July 20, 1999, the management of SAS requested assistance from the Commercial
Court of Lille,  France to  structure  a social  plan for a portion  of the work
force.  Upon review,  the Commercial Court declared SAS insolvent as of July 15,
1999  and  opened  bankruptcy  proceedings  with  respect  to  SAS.  A  judicial
administrator  was appointed by the Court to assist the management of SAS in all
its  activities   pending  the  Court's  decision  on  the  development  of  the
proceedings.  The terms of  assignment  of the judicial  administrator  included
reviewing SAS's condition and prospects and issuing a recommendation relating to
a plan of  reorganization  developed by SAS management.  While the administrator
was  overseeing  SAS's   operations,   the  Company  believed  that  a  plan  of
reorganization  would be adopted.  In the event that the administrator could not
support a plan of reorganization, it would become necessary to refer the case to
a liquidator pursuant to Commercial Court guidelines.

On October 12, 1999, the Commercial Court, acting upon the recommendation of the
judicial administrator,  ordered the liquidation of SAS. Prior to this decision,
management   believed  it  would  realize  its   investment  in  SAS  through  a
reorganization.  However,  after the liquidation of SAS was ordered, the Company
realized its  investment in SAS was lost and should  therefore be written off as
of July 20, 1999, the date Cerplex,  Inc. lost control of its  subsidiary.  As a
consequence of this order, the Company terminated the operations of SAS, and the
liquidator  has  laid  off  substantially  all  employees.   The  liquidator  is
responsible  for  selling  the assets  and  paying off the debts of SAS.  As the
result of the cost of laying-off all employees,  the value of the SAS assets may
not exceed the value of its liabilities. There can be no assurance that Cerplex,
Inc.,  as  shareholder,  will  receive any  liquidation  proceeds.  Accordingly,


                                       15
<PAGE>
Cerplex,  Inc. has written off its  investment in SAS which totaled $6.2 million
at July 20, 1999.

Since the Company  effectively lost management  control as of July 20, 1999, SAS
has been deconsolidated from the Company's financial statements as of that date.
Based on Management's  understanding  and outside legal counsel's  assessment of
the situation in France,  the Company believes there is no additional  financial
exposure related to the SAS  liquidation,  but there can be no assurances that a
deficiency  judgment  will not be  entered  against  Cerplex,  Inc.,  the parent
company.

The primary factors affecting the Company's repair business include, but are not
limited to, the pricing of the  Company's  services and the  utilization  of the
Company's  resources  that  constitute  fixed  costs.  Pricing in the  Company's
industry is very  competitive and price  discounting  could adversely affect the
Company's  operating  results.  In addition,  the Company has made a significant
investment  in  facilities,   equipment  and  personnel.   While  the  Company's
facilities have the capability of generating  significantly more repair services
volume  than  current  levels,  the  Company  has,  due to a variety of factors,
experienced  decreasing  revenues which have resulted in  significant  operating
losses.  In  particular,  BT and Rank Xerox  constituted  Old  Cerplex's and the
Company's  largest  customers  in the last fiscal  year.  Revenues  from BT have
declined  from  fiscal 1997  through  the third  quarter of fiscal 2000 on a pro
forma basis and, with the  liquidation of SAS in 1999, the Company  generated no
revenues from Rank Xerox during the third quarter of fiscal 2000. As a result of
the  liquidation  of SAS the contract with Rank Xerox has been  terminated,  and
there can be no assurance  that  revenues  from BT or other  customers  will not
decline in the future.

On June 20, 2000 an  involuntary  Chapter XI  bankruptcy  petition  was filed by
certain creditors of The Cerplex Group, Inc.  ("Group").  Group consented to the
involuntary filing on July 11, 2000. At the time, Group's  subsidiary,  Cerplex,
Inc. and its  subsidiary,  Cerplex Ltd. were not in bankruptcy or subject to any
such proceedings.  On July 27, 2000, Cerplex, Inc filed a voluntary petition for
protection under Chapter XI of the U.S.  Bankruptcy Code (the "Code").  An Order
for Relief was issued by the United States  Bankruptcy Court for the District of
Delaware  (the  "Court") in the Group case on July 26, 2000 and on July 27, 2000
in the Cerplex, Inc. case. Under Chapter XI of the Code, both Group and Cerplex,
Inc. (collectively,  the "Company") are considered  debtors-in-possession of the
assets. As debtors-in-possession ("DIP"), management of the Company continues to
operate the business under the supervision of the Court and, among other things,
is granted a 120 day  exclusive  right to propose a plan of  reorganization.  In
accordance  with the  provisions  of the Code,  an automatic  stay provides that
creditors of the Company are prevented  from seeking  repayment of  pre-petition
debts.  Additionally,  the Company must, unless otherwise approved by the Court,
refrain from payment of pre-petition indebtedness.  The Company has arranged for
a DIP credit  facility  through  Congress by entering  into a  Ratification  and
Amendment Agreement ("DIP Agreement") to finance its working capital needs while
in  bankruptcy.  On July 28, 2000,  the Court  approved the DIP  Agreement and a
process for the sale of assets by the Company.

During the nine months  ended June 24,  2000,  the Company was in default  under
several of its senior and  subordinated  debt  obligations.  With  regard to the
Congress Line of Credit and the WCAS Senior Secured Notes (collectively, "Senior
Securities"),  defaults exist due to, among other  reasons,  failure to maintain
minimum required adjusted net worth and a cross-default arising from the default
which occurred under the Company's 7 3/4%  Convertible  Subordinated  Debentures
(the "Debentures").  On April 17, 2000, pursuant to the Debentures,  the Company
was required to make a sinking fund payment of principal of  approximately  $1.8
million and a payment of accrued  interest of  approximately  $0.4 million.  The
failure to make the sinking fund payment  resulted in a default  under the terms
of the Indenture  governing such  indebtedness.  The Company has been advised by
the  Indenture  Trustee that the entire amount of the  indebtedness  outstanding
under the  Debentures  is now due and  payable.  The Company  also failed to pay
semi-annual  interest of  approximately  $.02  million  due  pursuant to the 10%
Senior  Subordinated  Notes due on June 30, 2000.  Failure to make such payments
and the bankruptcy proceedings caused defaults under the 10% Senior Subordinated


                                       16
<PAGE>
Notes. At June 24, 2000, the total indebtedness owed pursuant to the WCAS Senior
Secured  Notes and Congress Line of Credit was  approximately  $26.8 million and
$2.6  million,  respectively.  At June 24,  2000,  the total  indebtedness  owed
pursuant  to  the  Debentures  and  the  10%  Senior   Subordinated   Notes  was
approximately $11.1 million and $0.4 million, respectively.

COMPARATIVE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 24, 2000
AND JUNE 30, 1999

Net revenues for the third quarter of fiscal 2000 were $9.1 million, as compared
to $23.9  million in net  revenues  for the  corresponding  quarter in the prior
fiscal  year.  The  Company's  decrease in revenues was due  principally  to the
impact  of  the  deconsolidation  of  the  SAS  operation.   SAS  revenues  were
approximately  $8.4 million in the third  quarter of fiscal 1999.  There were no
revenues  reported  from SAS in the third  quarter of fiscal 2000.  In addition,
revenues  generated by the Company's North American Repairs and Parts operations
declined  in the fiscal  quarter  ended June 24,  2000 to $4.6  million and $1.3
million,  respectively  from $9.2  million  and $2.1  million in the  comparable
fiscal 1999 quarter.  UK revenues during the third fiscal 2000 quarter were $3.2
million  compared to $4.3 million in the same fiscal 1999  quarter.  The Company
had  negative  gross  profit for the quarter  ended June 24, 2000 of $.6 million
(6.0% of net  revenues),  compared to a gross  profit of $1.4 million (6% of net
revenues) for the  corresponding  quarter of fiscal 1999.  The decrease in gross
profit was due  primarily to gross  profit  declines in certain  North  American
repair operations.  Selling,  general and administrative  expenses for the third
quarter of fiscal 2000 were $2.7 million (29.3% of net revenues),  ascompared to
$5.8 million (24.2% of net revenues) for the corresponding  quarter in the prior
fiscal year. SG&A expense reductions during the quarter ended June 24, 2000 were
primarily   attributable   to  the   deconsolidation   of  SAS  which  generated
approximately  $1.1 million of SG&A expenses  during the third fiscal quarter of
1999  and  the  reduction  of  expenses  within  the  Company's  North  American
operations.  Amortization  expense for the third quarter of fiscal 2000 was $0.3
million  compared  to $1.5  million for the  corresponding  quarter in the prior
fiscal year. The decrease was due to a goodwill  impairment  charge  incurred in
the third fiscal 1999 quarter.

Net interest  expense for the third quarter of fiscal 2000 was $1.0 million,  or
11.1% of revenues,  as compared to $1.6  million,  or 6.7% of revenues,  for the
corresponding quarter in the prior fiscal year. The decrease in interest expense
is due to the  reduction  of  interest  bearing  debt  that  resulted  from  the
financial  restructuring that occurred on June 25, 1999 as described in the 1999
Annual  report  on Form  10-K of the  Cerplex  Group,  Inc.  As a result of such
restructuring,  approximately  $58.6 million of indebtedness owed by the Company
to WCAS was converted to Series B Preferred  Stock which carries a 7% cumulative
dividend.

Net loss applicable to common  stockholders for the quarter was $15.2 million as
compared to a net loss of $23.4  million  for the  corresponding  quarter in the
prior fiscal year.

COMPARATIVE  RESULTS OF  OPERATIONS  FOR THE NINE MONTHS ENDED JUNE 24, 2000 AND
JUNE 30, 1999

Net  revenues  for the first nine months of fiscal 2000 were $36.4  million,  as
compared to $77.4  million in net revenues for the  corresponding  period in the
prior fiscal year. The Company's decrease in revenues was due principally to the
impact  of  the  deconsolidation  of  the  SAS  operation.   SAS  revenues  were
approximately  $25.4 million in the first nine months of fiscal 1999. There were
no  revenues  reported  from SAS in the first  nine  months of fiscal  2000.  In
addition,  revenues  generated by the Company's North American Repairs and Parts
operations declined in the first nine months of fiscal 2000 to $17.5 million and
$6.0 million,  respectively. The Company had negative gross profit for the first
nine months of fiscal 2000 of $1.3 million (3.5% of net revenues), compared to a
gross profit of $2.4 million (3.1% of net revenues) for the corresponding period
of

                                       17
<PAGE>

fiscal  1999.  The  decrease in gross profit of $3.7 million from the first nine
months  of fiscal  1999 to the  first  nine  months  of  fiscal  2000  primarily
attributable to the Company's North American Repair operations. Selling, general
and administrative  expenses for the first nine months of fiscal 2000 were $10.2
million  (28.1% of net  revenues),  as compared to $16.8  million  (21.7% of net
revenues) for the  corresponding  period in the prior fiscal year.  SG&A expense
reductions   during  the  first  nine  months  of  fiscal  2000  were  partially
attributable to the  deconsolidation  of SAS which generated  approximately $3.5
million of SG&A  expenses  during the first nine  months of fiscal  1999 and the
reduction of expenses within the Company's North American operations.

Amortization  expense for the first nine months of fiscal 2000 was $0.6  million
compared to $5.8 million for the corresponding  period in the prior fiscal year.
The  decrease  was due to a goodwill  impairment  charge  incurred  in the third
fiscal 1999 quarter.

Net interest  expense for the first nine months of fiscal 2000 was $2.8 million,
or 7.8% of revenues,  as compared to $5.8 million, or 7.4% of revenues,  for the
corresponding  period in the prior fiscal year. The decrease in interest expense
is due to the  reduction  of  interest  bearing  debt  that  resulted  from  the
financial  restructuring that occurred on June 25, 1999 as described in the 1999
Annual  report  on Form  10-K of the  Cerplex  Group,  Inc.  As a result of such
restructuring,  approximately  $58.6 million of indebtedness owed by the Company
to WCAS was converted to Series B Preferred  Stock which carries a 7% cumulative
dividend.

Net loss applicable to common  stockholders  for the first nine months of fiscal
2000 was $28.2 million as compared to $39.4 million for the corresponding period
in the prior fiscal year.

LIQUIDITY AND CAPITAL RESOURCES

The Company's inability to make payments of principal and interest that came due
on April 17, 2000 pursuant to the  Debentures  caused a default  thereunder  and
cross-defaults  relating to the  Company's  Congress Line of Credit and the WCAS
Senior  Secured  Notes.   Such  payments  of  principal  and  interest   totaled
approximately  $1.8 million and $.4  million,  respectively.  Subsequently,  the
Company received notice from the indenture trustee  accelerating the maturity of
the entire  amount  owed under the  Debentures.  The total  amount of  principal
indebtedness  outstanding  under the  Debentures  as of June 24,  2000 was $10.4
million.  The failure by the Company to make payment of these  obligations  when
due resulted in a filing on June 20, 2000 by a group of Debenture  holders of an
involuntary  bankruptcy  petition under Chapter XI of the Bankruptcy  Code (case
no. 00-2471).  The Company  consented to such petition on July 11, 2000. On July
27,  2000  Cerplex,  Inc, a  wholly-owned  subsidiary  of the  Company,  filed a
voluntary  petition under Chapter XI of the Bankruptcy Code (case no.  00-3172).
Orders for Relief were issued by the Bankruptcy  Court in these cases on July 26
and 27, respectively (collectively the "Bankruptcy Proceedings).

The Company also failed to make payment of semi-annual interest of approximately
$.02 million due pursuant to the 10% Senior  Subordinated  Notes due on June 30,
2000.  Failure to make such  interest  payment  and the  Bankruptcy  Proceedings
caused defaults under the 10% Senior Subordinated Notes.

The Company  has  arranged  interim  financing  from  Congress  while  operating
pursuant to the  Bankruptcy  Proceedings.  Such  debtor-in-possession  financing
("DIP Funding") is provided by Congress pursuant to a Ratification and Amendment
Agreement between the Company and Congress ("DIP Agreement").  The DIP Agreement
allows the Company to borrow  additional  amounts  from  Congress  post-petition
based on collateral as determined by the value of assets  pledged to Congress as
security for the Congress Line of Credit and the DIP Agreement. As of August 10,
2000 the Company  owed to Congress  approximately  $2.1  million and $.8 million
pursuant to the  Congress  Line of Credit and the DIP  Agreement,  respectively.
Based upon existing collateral and formulas for calculating available borrowing,
the Company may under certain  circumstances  borrow approximately an additional
$.2 million from Congress.

The Company's  primary  requirements for capital continue to be directly related
to its levels of accounts  receivable  and inventory.  The Company's  ability to
provide  financing  that is adequate  for such needs is directly  related to its
ability  to

                                       18
<PAGE>

borrow under the DIP  Agreement and the ability to negotiate  acceptable  credit
terms with supplier while engaged in Bankruptcy  Proceedings.  The Company had a
working  capital  deficit of $48.8  million as of June 24, 2000 as compared to a
working capital deficit of $36.5 million as of September 25, 1999. See Note A of
Notes to  Unaudited  Condensed  Consolidated  Financial  Statements  -- "Current
Financial  Condition."  There  can be no  assurance  that  sufficient  financial
resources will be available to meet the Company's  financing  requirements.  The
lack of adequate working capital financing and other factors,  some of which the
Company cannot  control,  may  eventually  result in an inability to continue to
conduct its operations.

The  Company  remains  highly  leveraged,  and has  significant  debt  repayment
obligations.  As of August 10, 2000, the Company had approximately $41.5 million
of indebtedness  (including accrued interest)  outstanding,  which consisted of:
(i) $27.1 million  indebtedness  under the WCAS Senior Secured Notes;  (ii) $0.4
million indebtedness under the Company's 10% Series B Senior Subordinated Notes;
(iii) $11.1  million  indebtedness  under the  Company's  Debentures;  (iv) $2.1
million  indebtedness  under the  Congress  Line of Credit;  and (v) $.8 million
indebtedness  outstanding under the DIP Agreement. In addition, the Company also
had as of August 10, 2000,  $21.6  million  outstanding  (par value only) of its
mandatorily  redeemable 7%  Convertible  Preferred  Stock.  Set forth below is a
summary  of the  terms of such  indebtedness,  as well as  redemption  and other
obligations of the Company's outstanding preferred stock.

During the nine months  ended June 24,  2000,  the Company was in default  under
several of its senior and  subordinated  debt  obligations.  With  regard to the
Congress Line of Credit and the WCAS Senior Secured Notes (collectively, "Senior
Securities"),  defaults exist due to, among other  reasons,  failure to maintain
minimum required adjusted net worth and a cross-default arising from the default
which occurred under the Company's  Debentures.  On April 17, 2000,  pursuant to
the  Debentures,  the Company was  required  to make a sinking  fund  payment of
principal of  approximately  $1.8  million and a payment of accrued  interest of
approximately  $0.4  million.  The  failure  to make the  sinking  fund  payment
resulted  in  a  default  under  the  terms  of  the  Indenture  governing  such
indebtedness.  The  Company  has been  advised  by the  Indenture  Trustee  that
maturity is accelerated and all amounts under the Debenture are due and payable.
Defaults  existing  under  the  Debentures  caused  a cross  default  under  the
Company's  10%  Senior   Subordinated   Notes.  At  June  24,  2000,  the  total
indebtedness owed pursuant to the WCAS Senior Secured Notes and Congress Line of
Credit was approximately $26.8 million and $2.6 million, respectively. At August
10, 2000,  the total  indebtedness  owed pursuant to the  Debentures and the 10%
Senior  Subordinated  Notes was  approximately  $11.2  million and $0.4 million,
respectively.  There can be no assurance that the Company will be able to obtain
default waivers from the holders of its Senior Securities, its Debentures or its
10% Senior  Subordinated  Notes.  In the event that  waivers  are not  obtained,
holders of such securities have the right, among others, to accelerate  maturity
of such indebtedness.  Such an event would have a material adverse effect on the
Company's financial condition.

Congress Line of Credit

On November  24, 1999 the Company  and its  subsidiary  entered  into a Loan and
Security Agreement providing for a $13.0 million senior secured revolving credit
facility (the "Congress Line of Credit").  Concurrent  with the financing,  WCAS
agreed with the Company and Congress to subordinate its security interest in the
Company's assets.  The Congress Line of Credit,  which matures in February 2001,
will provide  additional  working capital  financing for the Company's  domestic
operations. Loans under the Congress Line of Credit bear interest at fluctuating
rates of either the Prime Rate, as defined, plus 1/2% or the Adjusted Eurodollar
Rate, as defined,  plus 2 3/4%. Borrowing  availability pursuant to the Congress


                                       19
<PAGE>

Line of Credit is limited by the value as  defined in the credit  agreement,  of
assets  pledged as collateral,  namely  accounts  receivable and inventory.  The
agreement also contains customary  financial covenants and events of default for
lending  arrangements  of this type.  Cerplex,  Inc. is the  borrower  under the
Congress  Line of  Credit  and  the  Company  guarantees  the  repayment  of its
obligations thereunder.

Burdale Line of Credit.

On December 15, 1999,  Cerplex,  Ltd. closed the Burdale Loans with Burdale,  an
affiliate of  Congress.  The Burdale  Loans  consisted of a line of credit which
matures in February  2001 and provide  for  advances to Cerplex  Ltd. up to $2.9
million  under a line of credit  secured by  accounts  receivable.  The  Burdale
Debenture  provided for up to $3.5 million  under a loan secured by real estate.
The Burdale  Debenture was used to repay the BT Notes and the line of credit was
used to finance  the working  capital  needs of Cerplex  Ltd. On June 30,  2000,
Cerplex, Ltd completed a sale of its real estate in Enfield,  England.  Proceeds
from the sale totaled  approximately $6.6 million,  of which  approximately $5.6
million was paid to Cerplex Ltd in cash net of tenant improvement allowances and
rent security  deposits  held by the purchaser in connection  with a real estate
leaseback.  From the net cash  proceeds,  Cerplex  Ltd  repaid  amounts  owed to
Burdale  pursuant to the  Burdale  Debenture  (secured  by real  estate) and the
Burdale  Line of Credit  (secured by  accounts  receivable).  The  Burdale  Loan
balances, repaid in full as of June 30, 2000, totaled approximately $3.0 million
and $.3 million, respectively.

10% Series B Senior Subordinated Notes.

As of August 10, 2000,  there was  approximately  $0.4 million  principal amount
outstanding of the Company's 10% Series B Senior Subordinated Notes. These notes
were sold to certain public  stockholders.  The 10% Series B Senior Subordinated
Notes are  subordinate  in right of  payment  to all bank debt and other  senior
indebtedness  of  Cerplex  but  rank  senior  to  all  outstanding  subordinated
indebtedness.  The 10% Series B Senior Subordinated Notes are general, unsecured
obligations  of the  Company  and  bear  interest  at  10%  per  annum,  payable
semi-annually  in  arrears  in cash on June  30 and  December  31 of each  year,
beginning on June 30, 1998. The 10% Series B Senior Subordinated Notes mature in
three equal annual installments  commencing on December 31, 2002. The 10% Series
B Senior  Subordinated  Notes may be  prepaid  at any time at the  option of the
Company in whole or in part,  upon not less than 20 or more than 60 days  notice
at the unpaid principal amount thereof plus accrued and unpaid interest.

7 3/4% Convertible Subordinated Debentures.

As of August 10, 2000, there was  approximately  $10.4 million  principal amount
outstanding of the Company's 7 3/4%  Convertible  Subordinated  Debentures  (the
"Debentures"). The Debentures were originally scheduled to mature April 15, 2001
and are  convertible  into Common  Stock of the Company at a  conversion  price,
subject to adjustment in certain instances,  of approximately $116.60 per share,
and are  redeemable  at the option of the  Company  at face  value plus  accrued
interest  thereon.  However,  the Company did not make a required  sinking  fund
payment  of  principal  of  approximately  $1.8  million  in April,  2000 on the
Debentures causing a default.  Subsequently, the Indenture Trustee, on behalf of
the holders of the  Debentures,  accelerated  the maturity.  The Debentures bear
interest at 7 3/4% payable in April and October of each year until repaid.

Other Debt

As of August 10,  2000,  there was $0.3 million  principal  amount of other debt
outstanding consisting of unsecured prepaid from Teleplan Holding Inc.

7% Senior Cumulative Convertible Preferred Stock

As of April 22, 2000,  there was $21.6 million  outstanding  (excluding  accrued
dividends) of the Company's 7% Convertible  Preferred  Stock (215,500  shares at
$100 per share par value).  Holders of the 7%  Convertible  Preferred  Stock are
entitled  to receive  dividends  of $7.00 per share per annum (or 7% of the face


                                       20
<PAGE>

amount),  payable  when and as declared  by the  Company's  Board of  Directors.
Unpaid dividends are cumulative and accrue.  Accrued but unpaid dividends do not
Bear  interest.  The 7%  Convertible  Preferred  Stock must be  redeemed  by the
Company  in  equal  installments  on each of  December  31,  2006 and  2007.  In
addition,  the 7% Convertible Preferred Stock is redeemable at the option of the
holders thereof upon a change of control of the Company, which includes the sale
of 50% or more of the voting power of all outstanding shares of the Company to a
party other than WCAS. In the event of a liquidation,  dissolution or winding up
of the affairs of the Company, the holders of the 7% Convertible Preferred Stock
are entitled to receive a liquidation preference in the amount of $100 per share
of the 7%  Convertible  Preferred  Stock,  plus  accrued  and  unpaid  dividends
thereon,  prior and in preference to any distribution to holders of any class of
capital stock of the Company junior to such 7% Convertible  Preferred Stock. The
7% Convertible  Preferred Stock is convertible in whole or in part at the option
of the  holders  thereof.  Each  share  of 7%  Convertible  Preferred  Stock  is
convertible  into 40 shares of the  Company's  Common  Stock upon payment of the
conversion  price of $2.50  (subject to  antidilution  adjustment  under certain
circumstances).

OUTLOOK AND UNCERTAINTIES

The  following  is a  "safe  harbor"  statement  under  the  Private  Securities
Litigation Reform Act of 1995: the matters discussed in this Quarterly Report on
Form 10-Q contain statements that constitute  forward-looking  statements within
the meaning of Section 21E of the  Securities  Exchange Act of 1934, as amended.
The words "expect," "estimate,"  "anticipate," "predict," "believe," and similar
expressions  and  variations  thereof are  intended to identify  forward-looking
statements.  Such  statements  appear in a number  of  places in this  Quarterly
Report on Form 10-Q and  include  statements  regarding  the  intent,  belief or
current  expectations of the Company, its directors or its officers with respect
to, among other things: (i) trends affecting the Company's  financial  condition
or results of  operations;  (ii) the Company's  financing  plans;  and (iii) the
Company's  business  growth  strategies.  Readers  are  cautioned  that any such
forward-looking  statements are not guarantees of future performance and involve
risks and  uncertainties,  and that actual  results may differ  materially  from
those  projected  in the  forward-looking  statements  as a  result  of  various
factors.  These  risks and  uncertainties  include,  but are not limited to, the
following:

Chapter XI Bankruptcy Proceedings

On June 20, 2000 an  involuntary  Chapter XI bankruptcy  petition was filed by a
group of The Cerplex Group,  Inc.  ("Group")  creditors.  Group consented to the
involuntary filing on July 11, 2000. At the time, Group's  subsidiary,  Cerplex,
Inc. and its  subsidiary,  Cerplex Ltd.  were not in  bankruptcy or subject to a
proceeding.  Subsequently,  on July 27,  2000,  Cerplex,  Inc filed a  voluntary
petition  for  protection  under  Chapter  XI of the U.S.  Bankruptcy  Code (the
"Code").  An Order for Relief was issued by the United States  Bankruptcy  Court
for the  District of Delaware  (the  "Court") in the Group case on July 26, 2000
and on July 27, 2000 in the Cerplex,  Inc.  case.  Under Chapter XI of the Code,
both Group and  Cerplex,  Inc.  (collectively,  the  "Company")  are  considered
debtors-in-possession   of  the  assets.   As   debtors-in-possession   ("DIP"),
management  of  the  Company   continues  to  operate  the  business  under  the
supervision of the Court and, among other things, is granted a 120 day exclusive
right to propose a plan of reorganization.  In accordance with the provisions of
the Code, an automatic stay provides that creditors of the Company are prevented
from seeking repayment of pre-petition  debts.  Additionally,  the Company must,
unless  otherwise  approved by the Court,  refrain from payment of  pre-petition
indebtedness.  The  Company  has  arranged  for  a  debtor-in-possession  credit
facility  through  Congress  by  entering  into  a  Ratification  and  Amendment
Agreement  ("DIP  Agreement")  to finance  its  working  capital  needs while in
bankruptcy.  The Court  approved the DIP  Agreement  on July 28, 2000.  However,
there is no  assurance  that the  Company  will have  adequate  working  capital
financing to continue operations during the course of the bankruptcy proceeding.
Furthermore, there can be no assurance that creditors and the Court will approve
a plan of reorganization that will enable the Company to survive.

High Degree of Leverage; Future Capital Requirements

As of August 10, 2000,  the Company had  approximately  $41.5 million  principal
(including  accrued interest) of indebtedness  outstanding,  which consisted of:
(i) $27.1 million  indebtedness  under the WCAS Senior Secured Notes;  (ii) $0.4
million indebtedness under the Company's 10% Series B Senior Subordinated Notes;
(iii) $11.1 million indebtedness under the

                                       21
<PAGE>

Company's Debentures;  (iv) $2.1 million indebtedness under the Congress Line of
Credit;  (v) $.8 million  indebtedness  outstanding under the DIP Agreement.  In
addition,  the Company also had as of August 10, 2000, $21.6 million outstanding
(par value only) of its mandatorily  redeemable 7% Convertible  Preferred Stock.
Set forth  below is a  summary  of the  terms of such  indebtedness,  as well as
redemption and other obligations of the Company's  outstanding  preferred stock.
It is anticipated that the Company's cash from operations will not be sufficient
to  enable  it  to  meet  all  debt  service  and  preferred  stock   redemption
requirements,  and the  Company  will be  required  to obtain  additional  funds
through  equity or debt  financing in order to  reorganize  its  operations  and
continue operations.

LOSSES AND  ACCUMULATED  DEFICIT

For the quarter  ended June 24, 2000,  the Company  reported a net loss of $12.5
million and an operating loss of $12.8 million. As of June 24, 2000, the Company
has a  stockholders'  deficit of $72.4  million.  The  Company is  expecting  to
experience  losses  for the  foreseeable  future,  and will  require  additional
funding.  Continued losses and/or the failure to obtain such additional  funding
could  materially and adversely  affect the business and financial  condition of
the Company and the value of, and the market for, the Company's  equity and debt
securities.

Control by WCAS

WCAS  owns  approximately  69% of the  Company's  voting  capital  stock,  which
consists of outstanding Common Stock, and shares of the Company's 7% Convertible
Preferred Stock (which give the holders thereof the right to vote on all matters
on which  the  holders  of  Common  Stock  are  entitled  to vote,  as if the 7%
Convertible  Preferred  Stock had been converted to Common Stock).  As a result,
WCAS is  able  to  control  all  matters  requiring  approval  by the  Company's
stockholders,  including  the  election of  directors.  The  Company's  Board of
Directors has the authority to issue additional shares of preferred stock in one
or more  series and fix the rights,  preferences,  privileges  and  restrictions
granted to or imposed upon any such shares of preferred  stock.  The issuance of
such preferred  stock may adversely  affect voting and dividend  rights,  rights
upon  liquidation and other rights of holders of the Company's  Common Stock and
may result in immediate  and  substantial  dilution to the holders of the Common
Stock.  The  issuance  of such  preferred  stock and the  control by WCAS of the
Company may also have the effect of delaying,  deferring or  preventing a change
in control of the Company.

Dependence on Key Customers

For the quarter ended June 24, 2000, BT accounted for  approximately  39% of the
Company's  revenues.  These revenues were almost  entirely  attributable  to the
business of Old Cerplex.  There can be no assurance  that this customer will not
terminate  any or all of  their  arrangements  with the  Company,  significantly
change,  reduce or delay the amount of services  ordered  from the  Company,  or
significantly  change the terms  upon which the  Company  and this  customer  do
business.  Any  such  termination,  change,  reduction,  or delay  could  have a
material  adverse  effect on the Company's  business.  Unit volumes from BT have
been  declining  and are  expected to  continue  to decline due to,  among other
things,  product  evolution.  The  future  success  of  the  Company's  European
operations is dependent upon replacing these declining  volumes with new revenue
from either this customer or new  customers.  There can be no assurance that the
Company will be able to replace this declining  volume with sales to either this
or new customers.

Competition

The Company  competes with the in-house  repair and service  centers of OEMs and
TPMs. There is no indication that these companies will

                                       22
<PAGE>


choose to outsource their repair and service needs. In certain instances,  these
companies  compete  directly with the Company to provide services to third party
OEMs  and  TPMs.  Moreover,  the  industry  in which  the  Company  operates  is
fragmented,   and  the  Company  faces  competition  from  a  variety  of  small
independent suppliers. Competition for business from OEM, TPM and MVSO customers
is based on a number of  factors,  including  breadth of services  provided  and
price.  Certain of the  Company's  competitors  have  greater  revenue or larger
capitalization than the Company. There can be no assurance that the Company will
be able to compete effectively in its target markets.

Reliance on International  Sales

For the quarter ended June 24, 2000,  approximately  35% of the Company's  sales
were outside of North  America.  There can be no assurance that the Company will
continue to be able to successfully  market,  sell, and deliver its products and
services in these  markets.  In addition to the  uncertainty as to the Company's
ability to  maintain  or expand its  international  presence,  there are certain
risks inherent in doing business on an international  level,  such as unexpected
changes in regulatory requirements, export restrictions, tariffs and other trade
barriers,  difficulties  in staffing and  managing  foreign  operations,  longer
payment  cycles,   problems  in  collecting   accounts   receivable,   political
instability,  severance and other costs  associated with work force  reductions,
fluctuations   in  currency   exchange  rates,   and  potentially   adverse  tax
consequences,  any of which could adversely  impact the success of the Company's
international  operations.  There can be no  assurance  that one or more of such
factors will not have a material  adverse effect on the Company's  international
operations and, consequently,  on the Company's business,  operating results and
financial condition.

Reliance on Short Term  Purchase  Orders and  Contracts

The Company generally distributes parts to, and receives its recyclable material
from  customers  pursuant  to  non-exclusive   contracts  that  do  not  contain
guaranteed or minimum quantities and are subject to cancellation on short notice
at the customer's  discretion.  Similarly,  the Company's  repair  contracts are
typically  subject to termination on short notice at the customer's  discretion,
and purchase  orders under such  contracts  typically only cover services over a
90-day period.

Dependence on the Electronics and Computer  Industry

The Company's businesses are dependent upon the growth,  viability and financial
stability of its customers and potential  customers in the  electronics  and the
computer industry. The electronics and computer industry have been characterized
by rapid  technological  change,  compressed product life cycles and pricing and
margin pressures. The factors affecting segments of the electronics and computer
industry in general,  and the Company's OEM customers in particular,  could have
an adverse  effect on the  Company's  business.  There can be no assurance  that
existing customers or future customers will not experience financial difficulty,
which could have a material adverse effect on the Company's business.

Limited  Trading  Market and Possible  Volatility of Stock Price

The volume of trading of the  Company's  Common  Stock has been very limited and
there can be no  assurance of an active  trading  market for the Common Stock in
the future.  In addition,  the trading price of the  Company's  Common Stock has
been,  and in the  future  could be,  subject  to  significant  fluctuations  in
response to variations in quarterly operating results of the Company,  the depth
and liquidity of the market for the Company's Common Stock,  investor perception
of the Company and the industry  within  which it competes,  the gain or loss of
significant contracts, changes in management or new products or services offered
by the Company or any  competitors,  general  trends in the  industry  and other
events or factors.  In addition,  the stock market has experienced extreme price
and volume fluctuations,  which have particularly  affected the market price for
many

                                       23
<PAGE>

companies  in similar  industries  and which have  often been  unrelated  to the
operating  performance of these companies.  These broad market  fluctuations may
adversely affect the market price of the Company's Common Stock.

Shares Available for Future Sale

No prediction can be made as to the effect, if any, that future sales of shares,
or the  availability  of shares for future sale by WCAS, will have on the market
price of the  Company's  Common  Stock  prevailing  from time to time.  Sales of
substantial  amounts of Common Stock (including  shares issued upon the exercise
of stock options and the conversion of preferred  stock), or the perception that
such sales could occur,  may adversely affect  prevailing  market prices for the
Company's Common Stock.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The  Company is subject to market  risks with  respect to its  variable
note debt and its cash flows,  receivables  and payables  denominated in foreign
currencies.

         Of the Company's  $41.5 million  principal  amount of  indebtedness  at
August 10, 2000, $26.8 million  principal amount of such debt (which  represents
total principal indebtedness under the WCAS Senior Secured Notes) bears interest
at a rate that fluctuates based on changes in the LIBOR rate. A 1% change in the
underlying  LIBOR  rate  would  result in $262  change in the  annual  amount of
interest payable on such debt.

         The Company's oversees subsidiary  operates in England.  Both the trade
receivables  and the trade  payables for this unit are  denominated in the local
currency. The balance as of June 24, 2000 was $0.4 million. The Company does not
hedge these balances.  See Note O to the  Consolidated  Financial  Statements --
"Business Segment and Foreign Operations" in the Company's 1999 annual report on
Form 10-K.


                                       24
<PAGE>




                             THE CERPLEX GROUP, INC.

                                     PART II

                                OTHER INFORMATION

                                       21

THE CERPLEX GROUP, INC.

ITEM 1.   LEGAL PROCEEDINGS

          The Company has been operating as a debtor-in-possession under Chapter
          XI of the  Bankruptcy  Code since July 27,2000.  In October of 1999, a
          French  court  ordered  the   liquidation  of  SAS,  which  has  since
          discontinued its operations.

          See the  "Overview"  section of Item 2 in Part I of this  filing for a
          detailed   discussion  of  the  matters  described  in  the  preceding
          paragraph.

ITEM 2.   CHANGES IN SECURITIES

          Inapplicable.

ITEM 3.   Defaults Upon Senior and Subordinated Securities

          During the nine months ended June 24, 2000, the Company was in default
          under several of its senior and subordinated  debt  obligations.  With
          regard to the  Congress  Line of Credit  and the WCAS  Senior  Secured
          Notes  (collectively,  "Senior  Securities"),  defaults  exist due to,
          among other reasons, failure to maintain minimum required adjusted net
          worth and a  cross-default  arising  from the default  which  occurred
          under the Company's 7 3/4%  Convertible  Subordinated  Debentures.  On
          April  17,  2000,  pursuant  to  the 7 3/4%  Convertible  Subordinated
          Debentures, the Company was required to make a sinking fund payment of
          principal  of  approximately  $1.8  million  and a payment  of accrued
          interest  of  approximately  $0.4  million.  The  failure  to make the
          sinking  fund  payment  resulted  in a default  under the terms of the
          Indenture governing such indebtedness. The Company has been advised by
          the Indenture Trustee that, pending further discussions  regarding the
          default,  it will forbear  actions and remedies which may be available
          to holders  under the  indenture  provided the Company  refrains  from
          making payments other than in the ordinary course of business. At June
          24, 2000,  the total  indebtedness  owned  pursuant to the WCAS Senior
          Secured  Notes and  Congress  Line of Credit was  approximately  $26.8
          million and $2.6 million,  respectively. At August 10, 2000, the total
          indebtedness  owed  pursuant  to the 7 3/4%  Convertible  Subordinated
          Debentures  and the 10% Senior  Subordinated  Notes was  approximately
          $11.1 million and $0.4 million, respectively.

                                       25
<PAGE>

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At an Annual Meeting of Stockholders on April 5, 2000,  holders of a majority of
the  capital  stock of the  Company  entitled  to vote  approved  the  following
matters:

     1. Ratification of KPMG LLP as the Company's Independent Accountants

     2. Election of Larry McTavish,  Richard H. Stowe,  Thomas E. McInerney and
        Bruce K. Anderson as the Directors of the Company.


ITEM 5.   OTHER INFORMATION

          Following  the end of the third  fiscal  2000,  Thomas  E.  McInerney,
          Richard H. Stowe and Bruce K. Anderson  resigned from group's board of
          director.


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a) Exhibits

 EXHIBIT

 NUMBER                       DESCRIPTION OF EXHIBITS
 -------                      -----------------------
  3.1.1    The Restated  Certificate of Incorporation of the Company, as amended
           (incorporated   by  reference  from  Exhibit  3.1  to  the  Company's
           Transition  Report  on Form  10-K  for  the  transition  period  from
           December 31, 1991 to September 30, 1992).

  3.1.2    The   Certificate  of  Amendment  to  the  Restated   Certificate  of
           Incorporation of the Company,  filed on April 28, 1998  (incorporated
           by  reference  from  Exhibit  4.1.1 of the  Company's  Post-Effective
           Amendment No. 2 to the Company's  Registration Statement on Form S-3,
           filed on May 13, 1998 (Registration No. 333-47973)).

  3.1.3    The   Certificate  of  Amendment  to  the  Restated   Certificate  of
           Incorporation of the Company,  filed on April 30, 1998  (incorporated
           by  reference  from  Exhibit  4.1.2 of the  Company's  Post-Effective
           Amendment No. 2 to the Company's  Registration Statement on Form S-3,
           filed on May 13, 1998 (Registration No. 333-47973)).

  3.1.4    Certificate  of  Amendment to  Certificate  of  Incorporation  of the
           Company  filed on October 6, 1998  (incorporated  by  reference  from
           Exhibit  3.1.4 of the  Company's  Annual  Report on Form 10-K for the
           fiscal year ended September 30, 1998 and filed on January 12, 1999).

  3.2.1    Bylaws of the Company, as amended (incorporated by reference from
           Exhibit 4.2 of the Company's Registration Statement on Form S-8
           (Registration No. 33-79426)).

  3.2.2    Resolutions  adopted  by the Board of  Directors  on April 30,  1998,
           amending the Bylaws of the Company  (incorporated  by reference  from
           Exhibit 4.2.1 of the Company's  Post-Effective Amendment No. 2 to the
           Company's  Registration  Statement on Form S-3, filed on May 13, 1998
           (Registration No. 333-47973).

  4.1      Certificate of  Designations,  Preferences  and Rights of Convertible
           Preferred Stock filed on November 19, 1998  eliminating the Series B,
           C and D Convertible  Preferred Stock  (incorporated by reference from
           Exhibit  4.18 of the  Company's  Annual  Report  on Form 10-K for the
           fiscal year ended September 30, 1998 and filed on January 12, 1999).

  4.2      Certificate of Elimination  of Convertible  Preferred  Stock filed on
           December 15, 1998 (incorporated by reference from Exhibit 4.19 of the
           Company's  Annual  Report  on Form  10-K for the  fiscal  year  ended
           September 30, 1998 and filed on January 12, 1999).
                                       26
<PAGE>


10.18      Loan and  Security  Agreement  dated  November  24, 1999 by and among
           Congress Financial Corporation (Western) as lender and Cerplex, Inc.,
           as borrower and The Cerplex Group, Inc. as Guarantor (incorporated by
           reference from Exhibit 10.18 of the Company's Report on Form 10-K for
           the year ended September 25, 1999 and filed on January 11, 2000).

10.19      Deed of Debenture  dated December 15, 1999 between Cerplex Limited as
           borrower and Burdale  Financial  Limited as lender  (incorporated  by
           reference from Exhibit 10.19 of the Company's Report on Form 10-K for
           the year ended September 25, 1999 and filed on January 11, 2000).

10.20      Guarantee and Indemnity agreement dated December 14, 1999 between The
           Cerplex Group,  Inc. as a guarantor and Burdale  Financial Limited as
           lender (incorporated by reference from Exhibit 10.20 of the Company's
           Report on Form 10-K for the year ended  September  25, 1999 and filed
           on January 11, 2000).

10.21      Facility Agreement dated December 14, 1999 between Cerplex Limited as
           borrower and Burdale  Financial  Limited as lender  (incorporated  by
           reference from Exhibit 10.21 of the Company's Report on Form 10-K for
           the year ended September 25, 1999 and filed on January 11, 2000).

*11        Computation of Per Share Earnings.
*27        Financial Data Schedule - Article 5 of Regulation S-X.

-----------
* Filed herewith.


           (b) Reports on Form 8-K

               None

                             THE CERPLEX GROUP, INC.

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly  caused  this  report  to be signed  on its  behalf by the  undersigned
thereunto duly authorized.

Date: August 14, 2000

                                        THE CERPLEX GROUP, INC.

                                        /s/  Richard A. Alston
                                        ----------------------------------------
                                        Richard A. Alston
                                        President and Chief Operating Officer


                                       27
<PAGE>




                              THE CERPLEX GROUP, INC.

                                INDEX TO EXHIBITS

 EXHIBIT

 NUMBER                       DESCRIPTION OF EXHIBITS
 -------                      -----------------------

  3.1.1    The Restated  Certificate of Incorporation of the Company, as amended
           (incorporated   by  reference  from  Exhibit  3.1  to  the  Company's
           Transition  Report  on Form  10-K  for  the  transition  period  from
           December 31, 1991 to September 30, 1992).

  3.1.2    The   Certificate  of  Amendment  to  the  Restated   Certificate  of
           Incorporation of the Company,  filed on April 28, 1998  (incorporated
           by  reference  from  Exhibit  4.1.1 of the  Company's  Post-Effective
           Amendment No. 2 to the Company's  Registration Statement on Form S-3,
           filed on May 13, 1998 (Registration No. 333-47973)).

  3.1.3    The   Certificate  of  Amendment  to  the  Restated   Certificate  of
           Incorporation of the Company,  filed on April 30, 1998  (incorporated
           by  reference  from  Exhibit  4.1.2 of the  Company's  Post-Effective
           Amendment No. 2 to the Company's  Registration Statement on Form S-3,
           filed on May 13, 1998 (Registration No. 333-47973)).

  3.1.4    Certificate  of  Amendment to  Certificate  of  Incorporation  of the
           Company  filed on October 6, 1998  (incorporated  by  reference  from
           Exhibit  3.1.4 of the  Company's  Annual  Report on Form 10-K for the
           fiscal year ended September 30, 1998 and filed on January 12, 1999).

  3.2.1    Bylaws of the Company, as amended (incorporated by reference from
           Exhibit 4.2 of the Company's Registration Statement on Form S-8
           (Registration No. 33-79426).

  3.2.2    Resolutions  adopted  by the Board of  Directors  on April 30,  1998,
           amending the Bylaws of the Company  (incorporated  by reference  from
           Exhibit 4.2.1 of the Company's  Post-Effective Amendment No. 2 to the
           Company's  Registration  Statement on Form S-3, filed on May 13, 1998
           (Registration No. 333-47973).

  4.1      Certificate of  Designations,  Preferences  and Rights of Convertible
           Preferred Stock filed on November 19, 1998  eliminating the Series B,
           C and D Convertible  Preferred Stock  (incorporated by reference from
           Exhibit  4.18 of the  Company's  Annual  Report  on Form 10-K for the
           fiscal year ended September 30, 1998 and filed on January 12, 1999).

  4.2      Certificate of Elimination  of Convertible  Preferred  Stock filed on
           December 15, 1998 (incorporated by reference from Exhibit 4.19 of the
           Company's  Annual  Report  on Form  10-K for the  fiscal  year  ended
           September 30, 1998 and filed on January 12, 1999).

*11        Computation of Per Share Earnings.

*27        Financial Data Schedule - Article 5 of Regulation S-X.

-----------
* Filed herewith.



      EX-11
          2

             EXHIBIT 11


                                       28
<PAGE>





                             THE CERPLEX GROUP, INC.
                        COMPUTATION OF PER SHARE EARNINGS
                      (In thousands, except per share data)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                          NINE MONTHS ENDED
                                               --------------------------------------
                                                JUNE  24,                 JUNE  30,
                                                   2000                      1999
                                               ------------              ------------
<S>                                             <C>                       <C>
Net loss available to common stockholder

ADJUSTED NUMBER OF COMMON SHARES                $(28,196)                 $(39,379)
                                                 =======                   =======
Weighted average shares outstanding                7,270                     7,322

Net loss per common shares                       $ (3.88)                  $ (5.38)
                                                 =======                   =======
</TABLE>






                                       29