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Item 1. Business

2022-03-29 compared with 2013-04-16 · 254 added, 370 removed, 0 unchanged (100% of the section changed)

We have developed and are commercializing proprietary bio-based resins through two complementary product families:

Cereplast Compostables ®

resins which are compostable, renewable, ecologically sound substitutes for

petroleum-based plastics, and Cereplast Sustainables resins (including the Cereplast Hybrid Resins product line), which replaces up to 90% of the petroleum-based content of traditional plastics with materials from renewable resources.

resins can be converted into finished products using conventional manufacturing equipment without significant additional capital investment by downstream converters.

The demand for non-petroleum based, clean and renewable sources for materials, such as bioplastics, and the demand for compostable/biodegradable products are being driven globally by a variety of factors,

including fossil fuel price volatility, energy security and environmental concerns.

These factors have led to increased spending on clean and renewable products by corporations and individuals as well as legislative initiatives at national, state

and local level.

We are a full-service resin solution provider uniquely positioned to capitalize on the rapidly increasing demand for

sustainable and environmentally friendly alternatives to traditional plastic products.

We primarily conduct our operations through two

product families:

Compostables ®

resins are compostable and bio-based, ecologically sound substitutes for petroleum-based plastics

targeting primarily compostable bags, single-use food service products and packaging applications.

We offer 13 commercial grades of Compostable resins in this product line.

These resins are compatible with existing manufacturing processes and

equipment making them a ready substitute for traditional petroleum-based resins.

We commercially introduced our Compostable line in November 2006.

Cereplast Sustainables resins are partially or fully bio-based, ecologically sound substitutes for fully petroleum-based plastics targeting

primarily durable goods, packaging applications.

We offer six commercial grades of Sustainable resins in this product line.

These resins are compatible with existing manufacturing processes and equipment, making them a ready substitute for

traditional petroleum-based resins.

We commercially introduced our Sustainable line in late 2007 under the name Cereplast Hybrid Resins ®

Cereplast Hybrid

products replace up to 55% of the petroleum content in conventional plastics with bio-based materials

such as industrial starches sourced from plants.

The Hybrid resins line is designed to offer similar properties to traditional polyolefins such as impact strength and heat deflection temperature, and is compatible with existing converter processes

and equipment.

The Cereplast Hybrid Resins ®

line provides a viable alternative for brand owners and converters

looking to partially replace petroleum-based resins in durable goods applications.

Hybrid resins address this need in a wide range of markets, including automotive, consumer goods, consumer electronics, medical, packaging, and construction.

commercially introduced our first grade of Hybrid resin, Hybrid 150, at the end of 2007.

We currently offer four commercial grades in this product line.

Cereplast Algae

Plastic ®

In October of 2009 we announced that we have been developing a new technology to transform

algae into bioplastics and intend to launch a new resin family containing algae-based materials that will complement our existing line of resins.

The first commercial product with Cereplast Algae Plastic ®

resin is now being produced and sold as part of our Sustainables resin family.

We believe that it is important to

enhance research on non-food crops as we expect a surge in demand in bioplastics in future years, thus potentially creating pressure on food crops.

Algae are the first non-food crop project that we have introduced and our R&D department is

contemplating the development of additional non-food crop based materials in future years.

In March 2013 we announced the incorporation of a wholly owned subsidiary Algaeplast, Inc.

This new company will serve as a vehicle to develop additional

research on algae based plastic with the ultimate scope to create 100% algae based polymers.

Our patent portfolio is

currently comprised of six patents in the United States (U.S.), one Mexican patent, and eight pending patent applications in the U.S.

Our trademark portfolio is currently comprised of approximately 45 registered marks and 21

pending applications in the U.S.

Business Strengths

Our competitive strengths position us well in the markets we choose to serve and reinforce our ability to execute our substantial growth plans.

Technology Leadership and Processing Expertise.

We are a technology leader in the development of bio-based resins.

As of December 31, 2012, our intellectual property includes 13 formulation

patents and pending patent applications on a worldwide basis.

Our unique formulation technology and proprietary manufacturing expertise, in-depth customer and product knowledge and patent portfolio provide us with a strong competitive position.

our expertise toward the design and adoption of new resins that can be rapidly commercialized by our customers.

Competitive Pricing with

Traditional Plastic .

Our bio-resins aim to be priced as competitively as possible to petroleum-based plastic alternatives.

We have the capability to work with multiple polymer families and sustainable additive families when manufacturing our

This gives us the ability to effectively source abundant and low-cost, renewable natural resources from various sources including industrial starches, polylactic acid (PLA), recycled bioplastic polymers and other bio-based virgin

The flexibility to continuously choose between various raw materials as market prices change allows us to consistently be more price competitive with traditional petroleum-based alternatives than many other bio-based competitors.

this unique breadth of feedstock options and pricing leadership commitment will further market adoption of our products as demand for renewable and clean alternatives to petroleum-based plastics increases in the future and as bio-based alternatives

improve in performance and cost.

Scalable and Low-Cost Manufacturing Platform .

Our proprietary process to

manufacture our resins is modular and scalable in nature, which we believe will allow us to readily expand manufacturing capacity at relatively low incremental cost.

Our capital requirement is approximately $7 million for every additional

50 million pounds of capacity.

Our manufacturing equipment can be used for both the Cereplast Compostables ®

and Cereplast Sustainables lines interchangeably.

All of the manufacturing equipment we are installing today is readily available from multiple manufacturers.

Our facility in Seymour, Indiana (the Seymour plant) which started

production on March 1, 2010, operates at manufacturing costs and a logistics scale comparable to traditional plastics compounding leaders.

The Seymour plants competitiveness is supported further by its attractive location close to

feedstock sources and major plastics converters.

Part of our strategy is to enter into a partnership agreement with large third party compounders around the world to expand manufacturing capability and make it more flexible and cost efficient.

Close Consultative Relationship with Customers .

We are a solution provider to both brand owners and converters.

We have built a team

of skilled technologists with experience in the design and performance characteristics of our resins.

Our formulation, processing and dispersion technologies allow us to create proprietary bio-resin blends to meet the specific needs of our converter

clients for various end products.

We work closely with our customers to understand their needs and develop solutions to address their customer base.

Our market reach continues to expand and develop beyond the U.S.

to include Europe, Latin America

Highly Experienced Management and Technical Team .

Senior management has extensive experience developing, manufacturing,

marketing and selling plastics and specialty chemicals.

This team is composed of veterans from the bioplastics, specialty chemicals, traditional plastics and process engineering industries.

In bioplastics alone, our team has over 75 years of

cumulative experience despite the young state of market development.

Our CEO is the founder of the Biodegradable Products Institute (BPI) and the 2010 Chair of the Society of Plastic Industry Bioplastic Council.

Business Strategy

Target High-Growth

Segments with Commercial Products .

We believe that bioplastics will continue to take market share from petroleum-based plastics as technologically advanced and commercially feasible alternatives are offered to consumers.

In 2007, the compostable

biodegradable bioplastic market was estimated to be greater than 540 million pounds.

BCC Research estimates this market will grow to 1.2 billion pounds by the end of 2014, a compounded annual growth rate of 17%.

We believe that the bioplastics

market share will continue to grow rapidly as these resins become increasingly viable due to improving supply and performance characteristics, growing environmental concerns regarding petroleum-based plastics and future concerns regarding oil prices

and supply uncertainty.

Closely support converter partners and brand owners in the adoption of bio-based plastics to expand our customer

We develop close working relationships with our customers that enable us to provide solutions and identify opportunities to employ our products.

Our strategy is to work closely with both converters and brand owners through a product push

and demand pull process.

For converters, the sales process is more technical in nature as they focus on the ability to utilize our resins in their traditional manufacturing processes.

Brand owners are following the green trend and

looking for ways to make packaging and other products more environmentally friendly and develop a green identity with consumers while satisfying performance and cost requirements.

Expand manufacturing capabilities .

We relocated all of our core manufacturing activities from Hawthorne, California (the Hawthorne plant) to the Seymour plant in March, 2010.

Seymour plant is in close proximity to various raw material sources and provides an ideal platform for continued expansion.

The combination of greater scale, enhanced manufacturing assets, improved logistics and lowered input costs (such as labor

and electricity) dramatically improved operating costs and quality to competitive benchmark levels.

A recent example of efficiency was the rail access that was installed by Franklin County and the City of Seymour in close proximity to our plant.

Subsequent expansion plans will depend on growth in market demand, but the Seymour plant offers ample infrastructure for development of capacity to a level of 500 million pounds per annum.

In 2011, we built an additional manufacturing line,

which increased our annual production capacity to 66 million pounds.

In mid-2011, we completed the purchase of an industrial plant in Cannara, Italy (the Cannara plant).

We expected to build and establish a 125,000 square foot

facility inside the

Cannara plant in two phases, with total per annum capacity of 220 million pounds of bioplastics resin production.

The 2011/2012 economic recession in Europe put our plans on hold and we

renegotiated with our lenders and our sellers the term of the sales to allow us for additional time to execute on the plan.

At this stage the Company is in a holding pattern until more clarity comes from the overall Italian economic and political

Strengthen our product leadership by developing new formulations and product lines in conjunction with customer demands .

continuously work to strengthen our position in new and more cost competitive resin formulations.

We interact with our customers and suppliers not only to improve the performance and broaden the applications for our resins, but also to reduce the

material and manufacturing costs of our products.

In addition, we maintain a rigorous research and development effort that continues to yield opportunities to broaden and extend our product lines.

We continue to develop and refine properties in our

resins that have high value for our customers including sustainability, compostability, better thermal properties and printability.

Strategic Alliances .

We continue to pursue strategic business relationships that complement our product portfolio, strengthen our competitiveness or create a new channel to market and increase our rate of growth.

We have built strategic

partnerships with suppliers, distributors, converters and brand owners to develop and commercialize our products and to bring them to market more quickly than we otherwise could on our own.

As a result of these efforts, we have strong or rapidly

maturing positions in several key fabrication technologies/industries including thermoforming, injection molding, extrusion coating and resin foaming.

Industry Overview and Outlook

The traditional plastics market is large, operates on a

global scale and is comprised of a number of different polymers and resins.

It includes a wide range of commodity polymers and resins as well as numerous lower volume, higher performance polymers and resins targeted at specific finished product

applications.

Plastics are sold in a variety of industries including consumer products, packaging, automotive, construction and electronics.

The ubiquitous nature of plastic can be attributed to its durability, cost, adaptability and functionality,

which have allowed it to meet a variety of end user requirements including increased health and safety requirements as well as consumer demand for enhanced appearance and packaging.

Led by growing demand in Asia-Pacific and South America, global bioplastics market will reach revenues of more than $2.8 billion in 2018, reflecting average annual growth rates of 17.8%, according to

market research firm Ceresana.

According to Reportlinker, it is estimated that the industry will grow over 7 fold in the

global market for bioplastics reaching 1.9 million metric tons by 2017 compared to only 264,000 in 2007.

Bioplastics currently represent a tiny percentage of the overall plastic market.

The worldwide market for biodegradable bioplastics was

estimated to be greater than 500 million pounds in 2007, or less than 1% of our targeted traditional plastics markets.

Based on recent consulting reports, the demand for bioplastics is estimated to be growing at 17% per annum reaching 1.2

billion pounds by the end of 2012.

Beyond the growth potential for fully biodegradable/compostable bioplastics, hybrid materials that are sophisticated blends of traditional plastics with sustainable polymers and additives (such as

Cereplast Hybrid Resins ®

that incorporate natural starches) open up additional markets.

By offering enhanced

performance characteristics (such as durability) when compared with fully compostable resins, yet delivering a step change in improved feedstock sustainability, these resins open up very large add-on market opportunities.

Market Opportunity

Environmental Concerns.

Bioplastics are positioned to benefit from powerful secular trends in favor of reducing the environmental impact of everyday materials.

It is estimated that the U.S.

generates 210 million tons of trash per year, with

approximately 20% of solid municipal waste coming from plastics.

According to the U.S.

Environmental Protection Agency, less than 6% of waste plastic is recycled.

There is concern among the scientific community that global climate change poses an

environmental risk that is attributable to an increase in carbon dioxide emissions.

According to an EF Consumer Survey, 88% of consumers in the United States believe that environmental issues are important or very important.

Furthermore, local

governments and large corporations are encouraging the replacement of conventional plastics with alternatives, including bioplastics.

Because of fossil fuels detrimental impact on the environment, individuals and governments increasingly

demand that material suppliers reduce their reliance on oil, curb greenhouse gas emissions and minimize the deposit of solid waste and plastics in the environment.

Bioplastics are considered a preferred purchasing item under Federal government

policy and numerous local governments have enacted or are considering outright bans on certain plastics or plastic articles.

Security Concerns.

consumes approximately 25% of worldwide oil production while only accounting for 5% of the worlds population and 2% of the worlds oil reserves.

The majority of U.S.

oil needs are met through imports, with

a large portion coming from potentially unstable areas of the world including the Middle East, Nigeria and Venezuela.

It has been suggested that the U.S.

dependence on oil imports is an issue of national security.

The use of bioplastics has the

ability to reduce U.S.

petroleum consumption;

approximately 7% of the oil consumed in the U.S.

is used for the production of plastic.

Health and Safety Concerns.

Consumers have become increasingly concerned about the safety and health of plastics materials that are used in their

daily lives, particularly items that are in contact with children (such as toys) or used in food packaging (such as water

Several widely used petroleum based resins including polycarbonates have been the subject of intense scientific and consumer concerns and study regarding their consumer safety.

concerns, along with other examples of tainted plastics and food products manufactured outside the U.S., have led to higher interest in locally manufactured environmentally friendly alternatives such as bioplastics.

Our Resin Products

We have developed and are commercializing proprietary bio-based resins through two complementary product families:

Compostables ®

, renewable, ecologically sound substitutes for single-use petroleum-based plastics and Cereplast

Sustainables, which replace up to 90% of the petroleum-based content of durable petroleum-based plastics with materials from renewable resources.

Our Compostable and Sustainable resins can be used in the following conventional converting

Injection molding

Thermoforming

Extrusion for profiles

Extrusion coating

our resins are genetically modified organism (GMO)-free and Food and Drug Administration (the FDA) -compliant.

Cereplast Compostables ®

Traditional foodservice disposables, wraps and paperboard are currently manufactured from a variety of materials, including paper and plastic.

that each of these materials fail to address fully all three of the principal challenges facing the foodservice industry:

performance, price and environmental impact.

Our Compostable resins are renewable substitutes for petroleum-based plastics targeting primarily single-use disposables.

We introduced our Compostable resin line in November 2006 and currently offer 13

commercial grades of Compostable Resins in our product line.

We designed our Compostable resins to meet the same product specifications of traditional plastic resins and to be processed with the existing equipment used by converters today.

Cereplast Compostables ®

resins are certified as biodegradable/compostable in the U.S.

and Europe, meeting

ASTM (American Society for Testing and Materials) standards and European standards for products and services by European Committee for Standardization (EN standards).

As required to meet these standards, Cereplast Compostables ®

resins will compost in municipal or commercial composting facilities in less than 180 days and will not leave

any harmful chemical residues.

Our Compostable Resins have been used to produce foodservice ware, including the first line of fully

biodegradable and compostable foodservice ware (plates, bowls, etc.), launched in late 2006.

In 2008, we continued to develop markets outside of foodservice ware where our resins have been used to produce commercial quantities of products targeted

at the health and beauty sector, advertising materials, rigid food packaging and consumer products.

All of these products were manufactured using our resins, which minimize the harmful impact on the environment without sacrificing competitive price

or performance.

Our Compostable Resins are primarily made from abundantly available, stable-cost natural raw materials such as plant starch

from annually renewable crops such as corn.

Cereplast Sustainables Resins ®

Cereplast Hybrid Resins ®

replace up to 55% of the petroleum

content in conventional plastics with renewable materials such as starches from corn and tapioca.

Cereplast Hybrid

products can be easily used by converter clients with no additional capital investment since our

bio-resins can run on existing equipment and can be processed at a lower manufacturing temperature than petroleum-based plastics.

Our Hybrid Resins target a balance between properties similar to traditional polyolefins in areas such as heat

deflection temperature, modulus and impact strength with a step change in sustainability.

Cereplast Hybrid

are an effective, affordable alternative for brand owners and converters interested in

alternatives to petroleum-based resins and can be used in a variety of applications and markets, including automotive, housewares, medical, cosmetic packaging and toys.

Cereplast Hybrid Resins ®

were introduced in October 2007 and

since then over 80 companies have requested samples for testing and commercial development.

We are one of only a few companies offering bioplastics as substitutes for durable petroleum-based plastics for a wide range of market applications.

Sales and Marketing

Our sales strategy is to work closely with converters and brand owners to educate on the benefits of bioplastics through both a performance push and demand creation pull approach.

To achieve our objective of establishing our Resins as the preferred bio-based material for plastic converters, we engage in the following

marketing strategies:

Targeted marketing aimed at the highest potential opportunities together with industry leaders in each market segment

Extensive commercial and technical support to customers to enhance their processing and product economics and speed to market

Assistance to our converter customers with end-user customer demand creation as well as product performance improvement and end user positioning

Selective extension of our global sales reach through our own resources and exclusive distributors

Pursuit of certain key market commercialization opportunities through exclusive, co-development agreements

Manufacturing

Our manufacturing process

for creating both Compostable and Sustainable resins consist of blending the component ingredients of a proprietary composite material in various industrial mixers, then processing such ingredients through heat and extrusion with custom designed

The resins are then subjected to crystallization and drying and are packaged at our facility.

We use readily available natural raw materials, such as plant starches, as well as natural polymers such as PLA for the Compostable resins and

traditional synthetic polymers, such as polypropylene for the Sustainable resins.

All the ingredients are blended in specific percentages according to patented/proprietary formulations and are processed on traditional equipment using our own

Since our resins are engineered from readily available, stable-cost natural raw materials such as plant starches, we believe our

products can be manufactured cost-effectively at commercial production levels without being substantively impacted by the fluctuating price of fossil fuels.

We manufacture our bio-based resins at our Seymour plant.

Our Seymour plant is a 105,000 square foot leased facility located on 12.4 acres.

This facility offers 14 truck loading docks and has access to

rail service.

With the 2010 start-up of continuous production at our Seymour plant and subsequent consolidation of all core manufacturing to this location, our manufacturing efficiency, quality and productivity was enhanced dramatically to

competitive benchmark levels.

Our production lines are versatile and could produce both Compostable and Sustainable resins if necessary.

estimated name-plate production capacity in pounds by normally produced resin by line is estimated as follows:

Annual Compostable Resin

Production Capacity

Annual Hybrid Resin

Production Capacity

Research and Development

No Commercial Production

Production Line 1

Production Line 2

Production Line 3

As of April 16, 2013, three lines have been installed with an aggregate name plate facility of about 66 million

pounds (36,000 tons) annually.

It is our plan to defer installation of additional lines until production requires additional capacity in Seymour.

Globalization

A necessary next step for us in our growth strategy was to strategically

position ourselves with a headquarters in Europe followed by a manufacturing facility.

We opened our European headquarters in Germany in order to provide our European clients with added service and better coordinate logistics between the U.S.

Shortly thereafter, we started establishing our bioplastic manufacturing plant in Italy with planned total estimated annual capacity of 100,000 tons or approximately 220 million pounds as compared to a capacity of 36,000 tons in our

facility, which is also expandable.

Our Italian plant development is however on hold until further positive development for the Company and from the overall economic and political situation in Italy.

The worldwide plastics market is large and comprised of many established players that have evolved from chemical processing of oil and natural gas to produce non-biodegradable petroleum-based resins.

There are a number of large and established companies in this segment, including BASF, Dow Chemical, Lyondell Basell, DuPont and SABIC among many others.

The price of conventional petroleum-based plastic is volatile and dependent on petroleum and

natural gas for feedstock.

These materials do not biodegrade, are not sustainable in terms of a natural carbon recycle loop and are major contributors to landfill usage.

While a number of companies have introduced, or are in the process of introducing, both bio-based resins, polymers and/or compostable synthetic-based resins, including BASF, DuPont, Novamont, NatureWorks

and Telles, we view the threat from this competition as low.

Just as a wide variety of different petroleum-based polymers and resins currently serves the needs of the plastic markets, we believe that the various bio-based resins and polymers offer

different properties and are targeted at different applications, making them more complementary and in turn broadening the overall applications for bio-based and compostable plastics.

Our flexible manufacturing process allows us to use different bio-based polymers, as they become commercially available, to manufacture our Compostable Resins and to use different synthetic polymers to

manufacture our Hybrid Resins.

We believe that our two families of Compostable and Hybrid resins possess a broad range of physical and thermal properties, including being able to be processed on traditional converting equipment, and being able to

target both single use disposable and durable goods applications in a sustainable and environmentally conscious manner, as an alternative to conventional petroleum-based plastics.

Government Regulation

An array of new regulation continues to drive growth in the

worldwide movement to ban the use of traditional plastic bags, including the following:

Effective January 1, 2011, Italy has banned the distribution of non-biodegradable plastic bags at shops and retail outlets.

The Application Decree

which enforces this legislation has been published in the Official Journal and sanctions for non-compliance will be enforced upon the effective date of May 27, 2013.

On October 1, 2011, Bulgaria implemented a tax on the use of plastic bags.

The tax will be increased each year from BGN 0.35 (USD $0.23) per bag

currently to BGN 0.55 (USD $0.37) per bag in 2014.

In February 2008, Chinas State Council enacted a nationwide ban on plastic bags.

The ban prohibits shops, supermarkets and sales outlets from

handing out free plastic bags and bans the production, sale and use of ultra-thin plastic bags.

The manufacture, sale and use of our resins are subject to regulation in the U.S.

The FDAs regulations are concerned with substances

used in food packaging materials.

Thus, food and beverage containers are in compliance with FDA regulations if the components used in the food and beverage containers are approved by the FDA as indirect food additives for their intended uses and

comply with the applicable FDA indirect food additive regulations, or are generally recognized as safe for their intended uses and are of suitable purity for those intended uses.

We believe that our resins are in compliance with all FDA requirements

and do not require further FDA approval prior to the sale of our products.

To assist us in this field, we retain the services of legal counsel that specializes in FDA issues.

We cannot be certain however, that the FDA will always agree with its

Research and Development

We have a well-developed research and development program that has enabled us to commercialize multiple grades and families of bio-based resins.

Expenditures related to our research and development

efforts were approximately $0.5 million in 2012 and $1.0 million in 2011.

Our approach to research and development follows our corporate

strategy of being a solution provider. As such, we are always working to find innovative alternatives to meet well understood market demands.

The primary goal of our research and development efforts is to:

Improve the properties and processing window of our portfolio of resins

Broaden the suitable conversion technologies and market applications of our resins

Reduce the cost of our resins to improve their competitiveness with fossil fuel alternatives

Continue to introduce and patent new resins to satisfy the demand of our converter customers and protect our intellectual property

Explore new alternatives and source new natural raw materials as platforms for new types of bio-based resins

Explore the possibility to increase the renewable content in Hybrid resins

Patents, Licenses and Trade Secrets

We regard our copyrights, service marks, trademarks, trade dress, trade secrets and similar intellectual property as critical to our

In addition, we have filed for patent and trademark protection for our proprietary technology.

In 2008, we were granted registration of several new trademarks in different international classes covering packaging and plastic resin.

continued to file for additional registered trademarks.

The most significant marks are Cereplast Compostables ®

and Cereplast Sustainables resins which have been registered in the U.S.

and in several countries abroad.

Currently we have 67

trademark registrations or applications on file in the U.S.

We have filed for patent protection of our proprietary resin formulation technology in the U.S.

and abroad and currently have been granted, have filed or licensed a total of 46

patents worldwide;

a large number of the patent applications were abandoned in 2008 and 2009.

As we continue to refine and develop additional bio-based resin formulation, we will actively seek patent protection.

We can give no assurance that any

such patent will be granted for our resin technology.

We rely on trademark and copyright law, trade secret protection and confidentiality or license agreements with our employees, customers, partners and others to protect our proprietary rights.

We have a total

of 16 full-time employees, broken down in the following functions:

two in sales and marketing, two in research and development, five in production, logistics and quality control and seven in general and administrative functions.

Among our staff,

some employees hold Ph.D.

or Masters Degrees in their respective fields.

None of our employees are represented by a labor organization, nor have we experienced any work stoppage.

We consider our relations with our employees to be good.

Yuan Holding Group, formerly Cereplast, Inc., a Nevada corporation (“Hong Yuan”, the “Company, “we”, “us”

or “our”) is a public shell company seeking to create value for its shareholders by merging with another entity with experienced

management and opportunities for growth in return for shares of our common stock.

potential merger candidate has been identified at this time.

do not propose to restrict our search for a business opportunity to any particular industry or geographical area and may, therefore,

engage in essentially any business in any industry.

We have unrestricted discretion in seeking and participating in a business opportunity,

subject to the availability of such opportunities, economic conditions, and other factors.

selection of a business opportunity in which to participate is complex and risky.

Additionally, we have only limited resources and may

find it difficult to locate good opportunities.

There can be no assurance that we will be able to identify and acquire any business opportunity

which will ultimately prove to be beneficial to us and our shareholders.

We will select any potential business opportunity based on our

management’s best business judgment.

activities are subject to several significant risks, which arise primarily as a result of the fact that we have no specific business,

and may acquire or participate in a business opportunity based on the decision of management, which potentially could act without the

consent, vote, or approval of our shareholders.

The risks faced by us are further increased as a result of its lack of resources and

our inability to provide a prospective business opportunity with significant capital.

and Corporate History

Company was incorporated in the state of Nevada on September 14, 2001 under the name Biocorp North America, Inc.

On July 19, 2004 the

Company changed its name to Nat-UR, Inc.

and on March 18, 2005 it changed its name again to Cereplast, Inc.

had developed and were commercializing proprietary bio-based resins through two complementary product families:

Cereplast Compostables

resins which are compostable, renewable, ecologically sound substitutes for petroleum-based plastics, and Cereplast Sustainables resins

(including the Cereplast Hybrid Resins product line), which replaces up to 90% of the petroleum-based content of traditional plastics

with materials from renewable resources.

Our resins could be converted into finished products using conventional manufacturing equipment

without significant additional capital investment by downstream converters.

In the summer of 2014, the Company ceased all operations

and since that time has been inactive

May 7, 2014, we voluntarily converted our Chapter 11 filing to a Chapter 7 filing in the U.S.

Bankruptcy Court for the Southern District

We ceased all business activities in August 2014.

May 10, 2019, the Trustees’ Final Account, the Certification of Full

Administration and Application for Discharge was filed and accepted by the Court.

All debts and liabilities were paid or discharged.

On May 11, 2019, the Bankruptcy Case was closed.

March 22, 2019, the eight judicial District Court of Nevada appointed Custodian Ventures, LLC as custodian for Cereplast, Inc., proper

notice having been given to the officers and directors of Cereplast, Inc.

There was no opposition.

June 04, 2019, the Company filed a certificate of revival with the state of Nevada, appointing David Lazar as, President, Secretary,

Treasurer and Director.

change of control of the Company was completed on November 3, 2020, Pursuant to a Stock Purchase Agreement dated October 22, 2020 control

was obtained by the sale of 50,000,000 common shares and 5,000,000 Series A-1 Preferred Shares from Custodian Ventures, LLC to Xudong

After November 3, 2020, the Company’s operations are determined and structured by the new major shareholder.

Business Plan

business plan to seek a merger has many uncertainties which pose risks to investors.

intend to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to us by persons

or firms which desire to seek the advantages of an issuer who has complied with the Securities Act of 1934 (the “1934 Act”).

We will not restrict our search to any specific business, industry or geographical location, and we may participate in business ventures

of virtually any nature.

This discussion of our proposed business is purposefully general and is not meant to be restrictive of our unlimited

discretion to search for and enter into potential business opportunities.

We anticipate that we may be able to participate in only one

potential business venture because of our lack of financial resources.

We may seek a business opportunity with entities which have recently

commenced operations, or that desire to utilize the public marketplace in order to raise additional capital in order to expand into new

products or markets, to develop a new product or service, or for other corporate purposes.

All of these activities have risk to investors

including dilution and management.

expect that the selection of a business opportunity will be complex.

Due to general economic conditions, rapid technological advances

being made in some industries and shortages of available capital, we believe that there are numerous firms seeking the benefits of an

issuer who has complied with the 1934 Act.

Such benefits may include facilitating or improving the terms on which additional equity financing

may be sought, providing liquidity for incentive stock options or similar benefits to key employees, providing liquidity (subject to

restrictions of applicable statutes) for all stockholders and other factors.

Potentially, available business opportunities may occur

in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis

of such business opportunities extremely difficult and complex.

We have, and will continue to have, essentially no assets to provide

the owners of business opportunities.

However, we will be able to offer owners of acquisition candidates the opportunity to acquire a

controlling ownership interest in an issuer who has complied with the 1934 Act without incurring the cost and time required to conduct

an initial public offering.

analysis of new business opportunities will be undertaken by, or under the supervision of, our Board of Directors.

We intend to concentrate

on identifying preliminary prospective business opportunities which may be brought to our attention through present associations of our

director, professional advisors or by our stockholders.

In analyzing prospective business opportunities, we will consider such matters

as (i) available technical, financial and managerial resources;

(ii) working capital and other financial requirements;

(iii) history

of operations, if any, and prospects for the future;

(iv) nature of present and expected competition;

(v) quality, experience and depth

of management services;

(vi) potential for further research, development or exploration;

(vii) specific risk factors not now foreseeable

but that may be anticipated to impact the proposed activities of the company;

(viii) potential for growth or expansion;

(ix) potential

(x) public recognition and acceptance of products, services or trades;

(xi) name identification;

and (xii) other factors

that we consider relevant.

As part of our investigation of the business opportunity, we expect to meet personally with management and

key personnel.

To the extent possible, we intend to utilize written reports and personal investigation to evaluate the above factors.

will not acquire or merge with any company for which audited financial statements cannot be obtained within a reasonable period of time

after closing of the proposed transaction.

implementing a structure for a particular business acquisition, we may become a party to a merger, consolidation, reorganization, joint

venture, or licensing agreement with another company or entity.

We may also acquire stock or assets of an existing business.

Upon consummation

of a transaction, it is probable that our present management and stockholders will no longer be in control of us.

In addition, our directors

may, as part of the terms of the acquisition transaction, resign and be replaced by new directors without a vote of our stockholders,

or sell his stock in us.

Any such sale will only be made in compliance with the securities laws of the United States and any applicable

is anticipated that any securities issued in any such reorganization would be issued in reliance upon exemption from registration under

application federal and state securities laws.

In some circumstances, as a negotiated element of the transaction, we may agree to register

all or a part of such securities immediately after the transaction is consummated or at specified times thereafter.

If such registration

occurs, it will be undertaken by the surviving entity after it has successfully consummated a merger or acquisition and is no longer

considered an inactive company.

issuance of substantial additional securities and their potential sale into any trading market which may develop in our securities may

have a depressive effect on the value of our securities in the future.

There is no assurance that such a trading market will develop.

the actual terms of a transaction cannot be predicted, it is expected that the parties to any business transaction will find it desirable

to avoid the creation of a taxable event and thereby structure the business transaction in a so-called “tax-free” reorganization

under Sections 368(a)(1) or 351 of the Internal Revenue Code (the “Code”).

In order to obtain tax-free treatment under the

Code, it may be necessary for the owner of the acquired business to own 80% or more of the voting stock of the surviving entity.

event, our stockholders would retain less than 20% of the issued and outstanding shares of the surviving entity.

This would result in

significant dilution in the equity of our stockholders.

part of our investigation, we expect to meet personally with management and key personnel, visit and inspect material facilities, obtain

independent analysis of verification of certain information provided, check references of management and key personnel, and take other

reasonable investigative measures, to the extent of our limited financial resources and management expertise.

The manner in which we

participate in an opportunity will depend on the nature of the opportunity, the respective needs and desires of both parties, and the

management of the opportunity.

respect to any merger or acquisition, and depending upon, among other things, the target company’s assets and liabilities, our

stockholders will in all likelihood hold a substantially lesser percentage ownership interest in us following any merger or acquisition.

The percentage ownership may be subject to significant reduction in the event we acquire a target company with assets and expectations

Any merger or acquisition can be expected to have a significant dilutive effect on the percentage of shares held by our stockholders.

will participate in a business opportunity only after the negotiation and execution of appropriate written business agreements.

the terms of such agreements cannot be predicted, generally we anticipate that such agreements will (i) require specific representations

and warranties by all of the parties;

(ii) specify certain events of default;

(iii) detail the terms of closing and the conditions which

must be satisfied by each of the parties prior to and after such closing;

(iv) outline the manner of bearing costs, including costs associated

with the Company’s attorneys and accountants;

(v) set forth remedies on defaults;

and (vi) include miscellaneous other terms.

stated above, we will not acquire or merge with any entity which cannot provide independent audited financial statements within a reasonable

period of time after closing of the proposed transaction.

If such audited financial statements are not available at closing, or within

time parameters necessary to insure our compliance within the requirements of the 1934 Act, or if the audited financial statements provided

do not conform to the representations made by that business to be acquired, the definitive closing documents will provide that the proposed

transaction will be voidable, at the discretion of our present management.

If such transaction is voided, the definitive closing documents

will also contain a provision providing for reimbursement for our costs associated with the proposed transaction.

Company is a Blank Check Company

present, the Company is a development stage company with minimal assets and no specific business plan or purpose.

The Company’s

business plan is to seek new business opportunities or to engage in a merger or acquisition with an unidentified company.

the Company is a “blank check company” and, as a result, any offerings of the Company’s securities under the Securities

Act of 1933, as amended (the “Securities Act”) must comply with Rule 419 promulgated by the Securities and Exchange Commission

(the “SEC”) under the Act.

The Company’s Common Stock is a “penny stock,” as defined in Rule 3a51-1 promulgated

by the SEC under the Securities Exchange Act.

The Penny Stock rules require a broker-dealer, prior to a transaction in penny stock not

otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about Penny Stocks and

the nature and level of risks in the penny stock market.

broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer

and its salesperson in the transaction, and monthly account statements showing the market value of each Penny Stock held in the customer’s

Also, the Penny Stock rules require that the broker-dealer, not otherwise exempt from such rules, must make a special written

determination that the Penny Stock is suitable for the purchaser and receive the purchaser’s written agreement to the transaction.

These disclosure rules have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject

to the Penny Stock rules.

So long as the common stock of the Company is subject to the Penny Stock rules, it may be more difficult to

sell the Company’s common stock.

are a “Shell Company,” as defined in Rule 405 promulgated by the SEC under the Securities Act.

A Shell Company is one that

has no or nominal operations and either:

(i) no or nominal assets;

or (ii) assets consisting primarily of cash or cash equivalents.

a Shell Company, we are restricted in our use of Registrations on Form S-8 under the Securities Act;

the lack of availability of the

use of Rule 144 by security holders;

and the lack of liquidity in our stock.

Unavailability

of Rule 144 for Resale

144(i) “Unavailability to Securities of Issuers With No or Nominal Operations and No or Nominal Non-Cash Assets” provides

that Rule 144 is not available for the resale of securities initially issued by an issuer that is a Shell Company.

We have identified

our company as a Shell Company and, therefore, the holders of our securities may not rely on Rule 144 to have the restriction removed

from their securities without registration or until the Company is no longer identified as a Shell Company and has filed all requisite

periodic reports under the Exchange Act for twelve (12) months.

a result of our classification as a Shell Company, our investors are not allowed to rely on the “safe harbor” provisions

of Rule 144, promulgated pursuant to the Securities Act, so as not to be considered underwriters in connection with the sale of our securities

until one year from the date that we cease to be a Shell Company.

This will likely make it more difficult for us to attract additional

capital through subsequent unregistered offerings because purchasers of securities in such unregistered offerings will not be able to

resell their securities in reliance on Rule 144, a safe harbor on which holders of restricted securities usually rely to resell securities.

419 of the Securities Act

provisions of Rule 419 apply to registration statements filed under the Securities Act by a blank check company, such as the Company.

Rule 419 requires that a blank check company filing a registration statement deposit the securities being offered and proceeds of the

offering into an escrow or trust account pending the execution of an agreement for an acquisition or merger.

While we are not currently

registering shares for an offering, we may do so in the future.

addition, an issuer is required to file a post-effective amendment to a registration statement upon the execution of an agreement for

an acquisition or merger.

The rule provides procedures for the release of the offering funds, if any, in conjunction with the post-effective

acquisition or merger.

The obligations to file post-effective amendments are in addition to the obligations to file Forms 8-K to report

for both the entry into a material definitive (non-ordinary course of business) agreement and the completion of the transaction.

419 applies to both primary and re-sale or secondary offerings.

five (5) days of filing a post-effective amendment setting forth the proposed terms of an acquisition, the Company must notify each investor

whose shares are in escrow, if any.

Each such investor then has no fewer than 20 and no greater than 45 business days to notify the Company

in writing if they elect to remain an investor.

A failure to reply indicates that the person has elected to not remain an investor.

all investors are allotted this second opportunity to determine to remain an investor, acquisition agreements should be conditioned upon

enough funds remaining in escrow to close the transaction.

believe we are an insignificant participant among the firms which engage in the acquisition of business opportunities.

There are many

established venture capital and financial concerns that have significantly greater financial and personnel resources and technical expertise

than we have.

In view of our limited financial resources and limited management availability, we will continue to be at a significant

competitive disadvantage compared to our competitors.

Company Act 1940

we will be subject to regulation under the Securities Act of 1933, as amended, and the 1934 Act, we believe we will not be subject to

regulation under the Investment Company Act of 1940 (the “1940 Act”) insofar as we will not be engaged in the business of

investing or trading in securities.

In the event we engage in business combinations that result in us holding passive investment interests

in a number of entities, we could be subject to regulation under the 1940 Act.

In such event, we would be required to register as an

investment company and incur significant registration and compliance costs.

We have obtained no formal determination from the SEC as

to our status under the 1940 Act and, consequently, any violation of the 1940 Act would subject us to material adverse consequences.

We believe that, currently, we are exempt under Regulation 3a-2 of the 1940 Act.

own no intellectual property.

presently have no full time executive, operational, or clerical staff.

Xudong has been a director and officer of the Company since 2020 and its principal shareholder.

Effecting Future Performance

than an operating business, our goal is to obtain debt and/or equity financing to meet our ongoing operating expenses and attempt to

merge with another entity with experienced management and opportunities for growth in return for shares of our common stock to create

value for our shareholders.

there is no assurance that this series of events will be successfully completed, we believe we can successfully complete an acquisition

or merger which will enable us to continue as a going concern.

Any acquisition or merger will most likely be dilutive to our existing

stockholders.

item is inapplicable because we are a “smaller reporting company” as defined in Exchange Act Rule 12b-2.

Unresolved Staff Comments

item is inapplicable because we are a “smaller reporting company” as defined in Exchange Act Rule 12b-2.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business