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Cereplast Announces Third Quarter 2012 Financial Results



Cereplast Announces Third Quarter 2012 Financial Results

EL SEGUNDO, Calif., Nov. 14, 2012 (GLOBE NEWSWIRE) -- Cereplast, Inc.
(Nasdaq:CERP), a leading manufacturer of proprietary biobased, sustainable
bioplastics, today announced its financial results for the third quarter ended
September 30, 2012.

Mr. Frederic Scheer, Chairman and Chief Executive Officer of Cereplast,
stated, "Thus far in 2012 we have focused on several areas which have resulted
in the achievement of key milestones, new product launches and important
strategic relationships. Since the opening of our offices with a dedicated
team in India, we have begun selling our Cereplast Hybrid Resins® product line
in this emerging marketplace, which is the world's third largest consumer of
polymers. The Cereplast Hybrid Resins® products are being tested with a large
polymer converter for other applications and are part of the unsold inventory
we recouped from our European clients. We continue to move our relationship
with A.R.M.Y. forward, which has resulted in the introduction of key strategic
relationships including the engineering and marketing team of Tirumala
Thirupathi Devastanam, an independent trust to the largest shrine in the
world. Our Cereplast Compostables® resins are being tested on 25,000 bags for
their expected use by millions of annual visitors to their shrine. Lastly, the
Italian government has moved toward reinstating legislation to ban
non-compostable resins. Several large supermarket chains have expressed an
interest in testing our products, while multiple product lines are currently
in progress. As we work diligently towards transforming these opportunities
into revenue, we will continue managing our cash flow accordingly."

Mr. Scheer continued, "Heading into 2013 we are refining our strategy to
ensure we give ourselves the greatest opportunity for revenue growth. The
experience we have gained through our recent history of operating within the
bioplastics industry has allowed us to understand what the market demands; we
therefore find it more important to target specific applications rather than
the broader approach we have taken in the past. We believe that by tailoring
our offerings specifically for the customer's product application, the
adoption of our product will become greater. With the plan I just described I
want to reassure our shareholders that Cereplast's management team is focused
and working very hard every day to ensure that we will prevail over our
challenging environment."

Operational Highlights:

  o Cereplast has begun to sell its first Cereplast Hybrid Resins® application
    in India. This milestone follows the Company's opening of a corporate
    office in India to service its partners in South Asia and the appointment
    of a Technical Services Engineer to provide on-site services. Management
    visited India several times to assist with the marketing launch of our
    resin.
  o The same Cereplast Hybrid Resins® grade utilized for the safety helmet
    application was qualified by a large converter of S-B Polymers to make
    bioplastic buckets. This potential customer is one of three dedicated
    converters who manufacture buckets for a large consumer products company
    in India. This relationship has a projected demand of several thousand
    tons per month.
  o Each of these opportunities in India would allow us to monetize the
    inventory recouped from our European customers.
  o A.R.M.Y. made a formal presentation of Cereplast's Compostable 3002 resin
    to the engineering and marketing departments of "Tirumala Thirupathi
    Devastanam," an independent trust which manages the Tirumala Venkateswara
    Temple, the largest shrine in the world. The presentation resulted in the
    commercial test of 25,000 bags over a 60 day period to test strength and
    reception of the product.
  o The Italian government has reinstated legislation calling for the ban of
    non-compostable resins. Management believes this legislation will be
    implemented by the end of 2012.
  o Several large supermarket chains have expressed an interest in Cereplast
    Compostables® resins for bags and orders have been made to test the
    product.
  o Cereplast successfully tested their Hybrid 101 product for fruit and
    vegetable shipping baskets. The addressable market for this application is
    several thousand tons per month.
  o Cereplast Hybrid 651D wins MATERIALICA Design + Technology 2012 silver
    award for outstanding innovation in the "Material" category.

2012 Third Quarter and First Nine Months Financial Results:

Net sales for the three months ended September 30, 2012 were approximately
$477,000, compared to $5.4 million for the same period in 2011. Net sales for
the first nine months of 2012 were approximately $0.8 million, compared to
$20.2 million in the same period in 2011. The decrease in sales was due to
transitioning significant resources and efforts toward recovery of past due
accounts receivables from customers and minimizing any additional exposure to
our accounts receivable credit risk. Our current period sales were primarily
prepaid shipments of sample materials and nominal shipments to established
existing customers with low risk credit limits.

Cost of sales for the three months ended September 30, 2012 were approximately
$910,000, compared to $4.5 million for the same period in 2011. Costs of sales
for the first nine months of 2012 were approximately $2.1 million, compared to
$17.7 million for the same period in 2011. The decline in cost of sales is due
to our lower variable manufacturing costs from our reduced sales volumes and
reduction in manufacturing overhead through reduced supplies and headcount.

Research and development expenses for the three months ended September 30,
2012 were approximately $115,000, compared to $280,000 for the same period in
2011. Research and development expenses for the first nine months of 2012 were
$0.4 million, compared to approximately $0.8 million for the same period in
2011. Our decrease in research and development expenses was primarily
attributable to lower outside services costs related to our current projects.

Selling, general and administrative expenses for the three months ended
September 30, 2012 were approximately $6.4 million, compared to $3.7 million
for the same period in 2011. Selling, general and administrative expenses for
the first nine months of 2012 were $9.3 million, compared to $8.5 million for
the same period in 2011. Our increase in sales, general and administrative
expenses was primarily due to an increase in our allowance for doubtful
accounts of $4.8 million during the third quarter of 2012, offset by reduced
headcount and variable sales and marketing expenses due to lower sales volume
in the current year.

Other income and expense, net for the three months ended September 30, 2012
was approximately 3.0 million, compared to $0.5 million for the same period in
2011. Other income and expense, net for the first nine months of 2012 was $5.2
million, as compared to $1.0 million in the same period in 2011. The increase
was primarily related to additional interest expense related to the issuance
of our convertible debentures in May 2011, the impact from our Forbearance and
Exchange Agreement with certain holders of our convertible debentures and the
change in our derivative liability related to our warrants.

On the balance sheet, the Company had approximately $237,000 in cash and $7.3
million in accounts receivable, net of allowance for doubtful
accounts. Current assets and total assets were $14.1 million and $25.5 million
respectively. Current liabilities and total liabilities were $9.0 million and
$22.1 million respectively. Total shareholders' equity was $3.3 million as of
September 30, 2012, with approximately 29 million shares of common stock
issued and outstanding. 

Conference Call Details:  
Date:                    Wednesday, November 14, 2012
Time:                    4:30 p.m. EST
Dial-In:                 (877) 312-5508
International Dial-In:   (253) 237-1135
Live Webcast:            http://investor.cereplast.com/events.cfm

A live webcast and archive of the call will also be available on the Investor
Relations section of Cereplast's website at www.cereplast.com. If you are
unable to participate on the call at this time, a telephonic replay will be
available for three days starting two hours after the conclusion of the call.
To access the telephonic replay, dial 855-859-2056, international callers dial
404-537-3406, and enter the Conference ID 64671679.

About Cereplast, Inc.

Cereplast, Inc. (Nasdaq:CERP) designs and manufactures proprietary biobased,
sustainable bioplastics which are used as substitutes for traditional plastics
in all major converting processes−such as injection molding, thermoforming,
blow molding and extrusions−at a pricing structure that is competitive with
traditional plastics. On the cutting-edge of biobased plastic material
development, Cereplast now offers resins to meet a variety of customer
demands. Cereplast Compostables® resins are ideally suited for single-use
applications where high biobased content and compostability are advantageous,
especially in the food service industry. Cereplast Sustainables® resins
combine high biobased content with the durability and endurance of traditional
plastic, making them ideal for applications in industries such as automotive,
consumer electronics and packaging. Learn more at www.cereplast.com. You may
also visit the Cereplast social networking pages at Facebook.com/Cereplast,
Twitter.com/Cereplast and Youtube.com/Cereplastinc.

The Cereplast, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=9567

Safe Harbor Statement

Matters discussed in this press release contain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
When used in this press release, the words "anticipate," "believe,"
"estimate," "may," "intend," "expect" and similar expressions identify such
forward-looking statements. Actual results, performance or achievements could
differ materially from those contemplated, expressed or implied by the
forward-looking statements contained herein. These forward-looking statements
are based largely on the expectations of the Company and are subject to a
number of risks and uncertainties. These include, but are not limited to,
risks and uncertainties associated with: the impact of economic, competitive
and other factors affecting the Company and its operations, markets, product,
and distributor performance, the impact on the national and local economies
resulting from terrorist actions, and U.S. actions subsequently; and other
factors detailed in reports filed by the Company.

                                       

                                                                     
CEREPLAST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
 
                                   Three Months Ended    Nine Months Ended
                                   September  September  September  September
                                   30, 2012   30, 2011   30, 2012   30, 2011  
Gross Product Sales                $ 481      $ 5,414    $ 786      $ 20,849
Sales Discounts, Returns and        (4)        (45)       (16)       (628)
Allowances 
Net Sales                           477        5,369      770        20,221
                                                                     
Cost of Goods Sold                  910        4,475      2,093      17,701
Gross Profit (Loss)                 (433)      894        (1,323)    2,520
                                                                     
Operating Expenses:                                                  
Research and Development            115        280        371        789
Selling, General and                6,410      3,689      9,286      8,457
Administrative 
Total Operating Expenses            6,525      3,969      9,657      9,246
Operating Loss                      (6,958)    (3,075)    (10,980)   (6,726)
                                                                     
Debt Extinguishment Costs           —          —          (427)      —
Loss on Derivative Liability        47         —          (52)       —
Interest and Other Income           —          —          18         —
Interest Expense                    (3,057)    (513)      (4,834)    (999)
Loss Before Provision for Income    (9,968)    (3,588)    (16,275)   (7,725)
Taxes 
Provision for Income Taxes          —          —          —          —
Net Loss                           $ (9,968)  $ (3,588)  $ (16,275) $ (7,725)
Net Loss Per Share—Basic and       $ (0.40)   $ (0.23)   $ (0.77)   $ (0.50)
Diluted 
Weighted Average Common Shares     24,739,449 15,777,793 21,242,115 15,470,324
Outstanding—Basic and Diluted 

                                       

CEREPLAST, INC. 
CONSOLIDATED BALANCE SHEETS 
(in thousands, except shares data) 
                                                              
                                          September 30, 2012 December 31, 2011
                                          (Unaudited)         
ASSETS                                                        
Current Assets                                                
Cash                                      $237               $3,940
Accounts Receivable, Net                  7,293              14,744
Inventory, Net                            5,424              4,406
Prepaid Expenses and Other Current        1,136              966
Assets 
Total Current Assets                      14,090             24,056
Property and Equipment                                        
Property and Equipment                    13,836             13,752
Accumulated Depreciation and              (3,668)            (3,151)
Amortization 
Property and Equipment, Net               10,168             10,601
Other Assets                                                  
Restricted Cash                           43                 43
Deferred Loan Costs                       867                1,321
Intangible Assets, Net                    248                183
Deposits                                  47                 47
Total Other Assets                        1,205              1,594
Total Assets                              $25,463            $36,251
LIABILITIES AND SHAREHOLDERS' EQUITY                          
Current Liabilities                                           
Accounts Payable                          $1,134             $1,813
Accrued Expenses                          3,049              2,760
Capital Leases, Current Portion           77                 73
Loan Payable, Current Portion             4,023              1,855
Convertible Subordinated Notes, Current   357                —  
Portion 
Derivative Liability                      344                —  
Total Current Liabilities                 8,984              6,501
Long-Term Liabilities                                         
Loan Payable                              4,423              7,307
Convertible Subordinated Notes            8,532              12,500
Capital Leases, Long-Term                 191                245
Total Long-Term Liabilities               13,146             20,052
Total Liabilities                         22,130             26,553
Shareholders' Equity                                          
Preferred Stock, $0.001 par value;
5,000,000 shares authorized; 73 and 0
shares issued and outstanding at          —                  —  
September 30, 2012 and December 31, 2011,
respectively
Common Stock, $0.001 par value;
495,000,000 shares authorized; 28,989,829
and 18,933,139 shares issued and          29                 19
outstanding at September 30, 2012 and
December 31, 2011, respectively 
Additional Paid in Capital                76,398             66,524
Accumulated Deficit                       (73,210)           (56,935)
Accumulated Other Comprehensive Income    112                86
                                          3,329              9,694
Noncontrolling Interests                  4                  4
Total Equity                              3,333              9,698
Total Liabilities and Shareholders'       $25,463            $36,251
Equity 

                                       

                                       

                                                           
CEREPLAST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands, except shares data)
 
                                       Nine Months Ended
                                       September 30, 2012 September 30, 2011  
CASH FLOWS FROM OPERATING ACTIVITIES:                      
Net Loss                               $ (16,275)         $ (7,725)
Adjustment to Reconcile Net Loss to                        
Net Cash Used in Operating Activities 
Depreciation and Amortization           536                694
Allowance for Doubtful Accounts         5,082              1,780
Common Stock Issued for Services,       160                874
Salaries and Wages
Amortization of Loan Discount           3,223              57
Impairment of Intangible Assets         —                  64
Extinguishment of Convertible Debt      368                — 
Loss on Derivative Liability            52                 — 
Changes in Operating Assets and                            
Liabilities 
Accounts Receivable                     537                (15,609)
Deferred Loan Costs                     458                223
Inventory                               814                (2,095)
Deposits                                —                  (35)
Prepaid Expenses                        (171)              (1,514)
Accounts Payable                        659                269
Accrued Expenses                        288                864
NET CASH USED IN OPERATING ACTIVITIES   (4,269)            (22,153)
CASH FLOWS FROM INVESTING ACTIVITIES:                      
Purchase of Property and Equipment,     (180)              (1,290)
and Intangibles 
Proceeds from Sale of Equipment         15                 — 
NET CASH USED IN INVESTING ACTIVITIES   (165)              (1,290 )
CASH FLOWS FROM FINANCING ACTIVITIES:                      
Payments on Capital Leases              (50)               (13)
Proceeds from Capital Leases            —                  96
Noncontrolling Interest Activities      —                  4
Payments made on Notes Payable          (603)              —
Proceeds from Loan Payable, Net of      —                  2,500
Loan Costs 
Proceeds from Convertible Notes, Net    600                11,225
of Issuance Costs
Proceeds from Issuance of Common Stock
and Subscriptions, Net of Issuance      400                11,363
Costs
Proceeds from Issuance of Preferred     400                —
Stock, Net of Issuance Costs
NET CASH (USED) PROVIDED BY FINANCING   747                25,175
ACTIVITIES 
FOREIGN CURRENCY TRANSLATION            (15)               (93)
NET INCREASE (DECREASE) IN CASH         (3,702)            1,639
CASH, BEGINNING OF PERIOD               3,940              2,391
CASH, END OF PERIOD                    $ 237              $ 4,030
SUPPLEMENTAL DISCLOSURE OF CASH FLOW                       
INFORMATION
Cash Paid During the Year For:                             
Interest                               $ 460              $ 417
Income Taxes                           $ —                $ —
SUPPLEMENTAL DISCLOSURE OF NON-CASH                        
TRANSACTIONS

CONTACT: Cereplast, Inc.
         Public Relations
         Nicole Robertson
         (310) 615-1900 x154
         nrobertson@cereplast.com
        
         Investor Relations:
         Alliance Advisors, LLC
         Alan Sheinwald
         914-669-0222
         asheinwald@allianceadvisors.net
         www.AllianceAdvisors.net

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