What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2022-03-29 compared with 2013-04-16 · 51 added, 536 removed, 1 unchanged (100% of the section changed)

Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is

listed on OTCQB marketplace under the trading symbol CERP. Previously our common stock was quoted on the NASDAQ Capital Markets from April 12, 2010 to December 17, 2012.

The following table shows the reported high and low

closing bid quotations per share for our common stock based on information provided by the NASDAQ and the OTCQB.

First Quarter ended March 31

Second Quarter ended June 30

Third Quarter ended September 30

Fourth Quarter ended December 31

As of April 5, 2013 there were approximately 137 record holders of our common stock, not counting shares held in street name in brokerage

accounts which is unknown.

As of April 5, 2013 there were 332,681,674 shares of our common stock issued and outstanding according to our transfer agent, Computershare.

Dividend Policy

Historically, we have not paid any dividends to the holders of our common

stock and we do not expect to pay any such dividends in the foreseeable future as we expect to retain our future earnings for use in the operation and expansion of our business.

Recent Issuance of Unregistered Securities

We issued the following unregistered securities

during the fiscal year ended December 31, 2012:

On November 20, 2012, we issued 61,644 shares of common stock valued at $9,000 for legal services.

We relied on an exemption from the registration requirements of the Securities Act of 1933, as amended (the Securities Act) pursuant to

Section 4(2) of the Securities Act with respect to the foregoing issuance.

Equity Compensation Plan Information

As of December 31, 2012:

Plan Category

Number of shares to be

issued upon exercise of

exercise price

of outstanding

Number of shares

remaining available for

future issuance under

plans (excluding

securities reflected in

Equity Compensation Plans approved by security holders

Equity Compensation Plan not approved by security holders

STOCK OPTION PLAN

The 2004 Employee Stock Option Plan (the Plan was adopted by the Board

of Directors.

The Board of Directors has initially reserved 625,000 shares of our common stock for issuance under the Plan.

Under the Plan, options may be granted which are intended to qualify as Incentive Stock Options (ISOs) under

Section 422 of the Internal Revenue Code of 1986 (the Code) or which are not (Non-ISOs) intended to qualify as Incentive Stock Options thereunder.

The Plan and the right of participants to make purchases there under are intended to qualify as an

employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended (the Code).

The Plan is not a qualified deferred compensation plan under Section 401(a) of the Internal Revenue Code

and is not subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

The primary purpose of the Plan is to attract and retain the best available personnel for our company in order to promote the success of our business and

to facilitate the ownership of our stock by employees.

Administration

The Plan is administered by our Board of Directors, as the Board of Directors may be composed from time to time.

All questions of interpretation of the Plan are determined by the Board, and its decisions

are final and binding upon all participants.

Any determination by a majority of the members of the Board of Directors at any meeting, or by written consent in lieu of a meeting, shall be deemed to have been made by the whole Board of Directors.

Notwithstanding the foregoing, the Board of Directors may at any time, or from time to time, appoint a committee (the Committee)

of at least two members of the Board of Directors, and delegate to the Committee the authority of the Board of Directors to administer the Plan.

Upon such appointment and delegation, the Committee shall have all the powers, privileges and duties of

the Board of Directors, and shall be substituted for the Board of Directors, in the administration of the Plan, subject to certain limitations.

Members of the Board of Directors who are eligible employees are permitted to participate in the Plan, provided that any such eligible member may not

vote on any matter affecting the administration of the Plan or the grant of any option pursuant to it, or serve on a committee appointed to administer the Stock Option Plan.

In the event that any member of the Board of Directors is at any time not a

disinterested person, as defined in Rule 16b-3(c)(3)(i) promulgated pursuant to the Securities Exchange Act of 1934, as amended (the Exchange Act), the Plan shall not be administered by the Board of Directors, and may only by

administered by a Committee, all the members of which are disinterested persons, as so defined.

Under the Plan, options may be granted to our key employees, officers, directors or consultants, as provided in the Plan.

Terms of Options

The term of each

Option granted under the Plan shall be contained in a stock option agreement between the Optionee and us and such terms shall be determined by the Board of Directors consistent with the provisions of the Plan, including the following:

(a) Purchase Price.

The purchase price of the shares of our common stock subject to each ISO shall not be less than the fair market value (as set

forth in the Stock Option Plan), or in the case of the grant of an ISO to a Principal Stockholder, not less than 110% of fair market value of such shares at the time such Option is granted.

The purchase price of the shares subject to each Non-ISO

shall be determined at the time such Option is granted, but in no case less than 85% of the fair market value of such shares at the time such Option is granted.

The dates on which each Option (or portion thereof) shall be exercisable and the conditions precedent to such exercise, if any, shall be fixed by the Board of Directors, in its

discretion, at the time such Option is granted.

The expiration of each Option shall be fixed by the Board of

Directors, in its discretion, at the time such Option is granted;

however, unless otherwise determined by the Board of Directors at the time such Option is granted, an Option shall be exercisable for ten (10) years after the date on which it

was granted (the Grant Date).

Each Option shall be subject to earlier termination as expressly provided in the Plan or as determined by the Board of Directors, in its discretion, at the time such Option is granted.

(d) Transferability.

No Option shall be transferable, except by will or the laws of descent and distribution, and any Option may be exercised

during the lifetime of the Optionee only by him.

No Option granted under the Plan shall be subject to execution, attachment or other process.

(e) Option Adjustments.

The aggregate number and class of shares as to which Options may be granted under the Plan, the number and class shares

covered by each outstanding Option and the exercise price per share thereof (but not the total price), and all such Options, shall each be proportionately adjusted for any increase decrease in the number of issued shares of our common stock

resulting from split-up spin-off or consolidation of shares or any like capital adjustment or the payment of any stock dividend.

Except as otherwise provided in the Plan, any Option granted hereunder shall terminate in the event of a

merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation of our company.

However, the Optionee shall have the right immediately prior to any such transaction to exercise his Option in whole or in part

notwithstanding any otherwise applicable vesting requirements.

(f) Termination, Modification, and Amendment.

The Plan (but not Options

previously granted under the Plan) shall terminate ten (10) years from the earlier of the date of its adoption by the Board of Directors or the date on which the Plan is approved by the affirmative vote of the holders of a majority of the

outstanding shares of our common stock of the Company entitled to vote thereon, and no Option shall be granted after termination of the Plan.

Subject to certain restrictions, the Plan may at any time be terminated and from time to time be modified

or amended by the affirmative vote of the holders of a majority of the outstanding shares of our common stock present, or represented, and entitled to vote at a meeting duly held in accordance with the applicable laws of the State of Nevada.

Market For Registrant’s Common Equity, Related Stockholder

Matters And Issuer Purchases Of Equity Securities.

of our common stock trade in the pink sheets market and quotations for the common stock are listed in the “Pink Sheets” produced

by the OTC Markets under the symbol “HGYN”.

following table sets forth for the respective periods indicated the prices of our common stock in this market as reported and summarized

by the National Quotation Bureau.

Such prices are based on inter-dealer bid and asked prices, without markup, markdown, commissions,

or adjustments and may not represent actual transactions.

Year ended December 31, 2020

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Year ended December 31, 2021

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

were 206 holders of record as of December 31, 2021;

however, we believe the number of beneficial holders of our shares of common stock

to be approximately 290.

In many instances, a registered stockholder is a broker or other entity holding shares in street name for one

or more customers who beneficially own the shares.

have never paid cash dividends and have no plans to do so in the foreseeable future.

Our future dividend policy will be determined by

our board of directors and will depend upon a number of factors, including our financial condition and performance, our cash needs and

expansion plans, income tax consequences, and the restrictions that applicable laws, any future preferred stock instruments, and any

future credit arrangements may then impose.

Purchases of Equity Securities

Authorized for Issuance under Equity Compensation Plans

Company does not have any equity compensation plans or any individual compensation arrangements with respect to its Common Stock or Preferred

The issuance of any of our Common Stock or Preferred Stock is within the discretion of our Board of Directors, which has the power

to issue any or all of our authorized but unissued shares without stockholder approval.

Sales of Unregistered Equity Securities

October 04, 2019, the Company issued 50,000,000 shares of common stock to Custodian Ventures, LLC at par for shares valued at $50,000

in exchange for settlement of a portion of a related party loan for amounts advanced to the Company in the amount of $20,100, and a note

receivable due to the Company in the amount of $29,900.

The note bears an interest of 3% and matures in 180 days following written demand

by the holder.

At December 31, 2020, the note receivable with a balance of $31,383 was written off because the collectability of the

note is unlikely after the change of control, the written off balance of the note consisted of the principal in the amount of $29,900

and interest receivable of $1,483.

May 4, 2020, the Company issued 5,000,000 shares of the Series A-1 Preferred stock valued at $5,000 to Custodian Ventures LLC as repayment

of funds loaned to the Company

of the securities set forth above were sold pursuant to exemptions from registration under Section 4(2) of the Securities Act of 1933,

as amended, as transactions by an issuer not involving any public offering.

No general advertising or solicitation was used.

investors were purchasing the Shares for investment purposes only, without a view to resale.

All issued securities were affixed with

appropriate legends restricting sales and transfers.

Selected Financial Data.

The following selected financial data should be read in conjunction with our consolidated financial statements and the related notes and

Managements Discussion and Analysis of Financial Condition and Results of Operations appearing elsewhere in this report.

The selected consolidated statements of operations data presented below for each of the years ended

December 31, 2012, and 2011, and the consolidated balance sheet data at December 31, 2012 and 2011 are derived from our consolidated financial statements included elsewhere in this report.

The selected consolidated statements of operations

data for the years ended December 31, 2010, 2009 and 2008 and consolidated balance sheet data at December 31, 2010, 2009, and 2008 are derived from the audited consolidated financial statements not included in this report (in thousands).

Consolidated Statements of Operations Data:

Cost of net revenues

Research and development

Selling, general and administrative

LOSS FROM OPERATIONS BEFORE OTHER EXPENSES

OTHER EXPENSES

Restructuring and debt extinguishment costs

Loss on derivative liability

Interest income (expense), net

TOTAL OTHER EXPENSE, NET

Loss before income taxes

Income tax expense

OTHER COMPREHENSIVE INCOME

Gain on Foreign Currency Translation

TOTAL COMPREHENSIVE LOSS

Basic and diluted loss per share

Weighted average shares outstanding basic and diluted:

Consolidated Balance Sheet Data:

Working capital

Long-term liabilities

Stockholders equity

Managements Discussion and Analysis of Financial Condition and Results of Operations.

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

(1) Cereplast

Compostables ®

resins, which are compostable and bio-based, ecologically sound substitutes for traditional

petroleum-based non-compostable plastics, and (2) Cereplast Sustainables resins, which replace up to 90% of the petroleum-based content of traditional plastics with materials from renewable resources.

Our resins aim to be competitively

priced compared to fully petroleum-based plastic resins and 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, is each being driven globally by a variety of factors, including environmental concerns, new stringent regulations on compostable material, fossil fuel price volatility and energy security.

These factors have led to increased spending on

clean and sustainable products by corporations and individuals as well as legislative initiatives at the local and state level.

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 17 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 four 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 eight 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.

Our patent portfolio is

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

Our trademark portfolio is currently comprised of 47 registered marks, 4 allowed marks and

12 pending applications in the U.S.

Trends and Uncertainties that May Impact Future Results of Operations

Global Market and Economic Conditions.

Recent global market and economic conditions, particularly in Europe, have been unprecedented

and challenging with tighter credit conditions and slower growth.

These conditions, combined with volatile oil prices, declining business and consumer confidence and increased unemployment have contributed to continued volatility of unprecedented

As a result of these market conditions, the cost and availability of credit has been, and may continue to be, adversely affected by

illiquid credit markets and wider credit spreads.

Concern about the stability of the markets generally, and the strength of counterparties specifically, has led many lenders and institutional investors to reduce, and in some case cease, to provide

funding to borrowers and to

developing companies, such as our company.

Continued turbulence in the U.S.

and international markets and economies may adversely affect our liquidity and financial condition and the liquidity

and financial condition of our customers.

If these market conditions continue, they may limit our ability, and the ability of our customers, to timely replace maturing liabilities and access the capital markets to meet liquidity needs, resulting in

an adverse effect on our financial condition and results of operations.

We record sales at the time that we ship our products,

provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, fees are fixed or determinable and collection of the related receivable is reasonably assured.

We record sales net of sales discounts and

Beginning in 2011, we provided price incentives to several customers that entered into significant supply contract for their initial purchase commitments to assist in commercial launch activities.

In the future, we may offer these

incentives on a selective basis as we continue to grow our customer base.

The amount of these incentives in future periods will be a function of the growth of our customer base and the particular commercialization.

Operating Expenses.

Operating expenses consist principally of salaries (both cash and non-cash equity-based compensation), professional fees

(including legal, accounting, patent-related, government compliance), marketing, sales commissions, rent and research and development.

Salaries include all cash and non-cash compensation and related costs for all principal selling, general and

administrative functions.

During recent periods we have made grants of equity awards, including shares of restricted stock and stock options, to attract directors and members of senior management, which have resulted in non-cash compensation expense

for the periods reported.

We expect that non-cash compensation expense attributed to equity-based awards may increase in future periods as the result of future equity-based incentive compensation awards granted to attract and retain talented

employees as we continue to grow our business.

In addition, we expect to experience increases in our research and development expenses as we continue to develop new products and formulations, as well as increases in marketing and promotional

expenses as we seek to increase our customer base.

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in

accordance with accounting principles generally accepted in the United States of America.

The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and

expenses, and related disclosure of contingent assets and liabilities.

We monitor our estimates on an on-going basis for changes in facts and circumstances, and material changes in these estimates could occur in the future.

Changes in estimates are

recorded in the period in which they become known.

We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances.

Actual results may differ from our estimates if past experience or

other assumptions do not turn out to be substantially accurate.

Revenue Recognition

We recognize revenue at the time of shipment of products, when the following fundamental criteria are met:

(i) persuasive evidence of an arrangement

(ii) delivery has occurred;

(iii) the price to the customer is fixed or determinable;

and (iv) collection of the sales price is probable.

Certain of our product sales are made to distributors under agreements with generally the same terms of sale and credit as all other customer agreements.

Revenue from product sales to our customers,

including our customers who are distributors, is recognized upon shipment provided the above noted fundamental criteria of revenue recognition are met.

The sale of products to our customers who are distributors is not contingent upon the distributor

selling the product to the end-user, and our current agreements with distributors do not have any rights of return.

Compensation cost for all stock-based awards is measured at fair value on the date of grant and recognized over the service

period for awards expected to vest.

The fair value of stock options is determined using the Black-Scholes valuation model.

Such value is recognized as expense over the service period, net of estimated forfeitures, using the straight-line method.

Adjustments to this expense are made periodically to recognize actual rates of forfeiture which vary significantly from estimates.

Accounts Receivable

We maintain an

allowance for doubtful accounts for estimated losses that may arise if any of our customers are unable to make required payments.

Management performs a quantitative and qualitative review of the receivables past due from customers on a monthly

Quantitative factors include customers past due balance, prior payment history, recent sales activity and days sales outstanding.

Qualitative factors include macroeconomic environment, current product demand, estimated inventory levels

and customers financial position.

In certain cases, we may have access to repossess unsold products held at customer locations as recourse for payment defaults.

The fair market value of these products are considered as potential recovery in

estimating net losses from uncollectible accounts.

On July 27, 2012, we entered into a Settlement Agreement with Colortec S.r.l.

(Colortec) to resolve a

dispute regarding unfair competition within the Italian market and our claims on outstanding accounts receivable balances.

In exchange for renouncing our claim on outstanding accounts receivable

from Colortec, we were granted access to recover unused containers of our products held by Colortec, valued at approximately $1.5 million.

We have eliminated the outstanding accounts receivable balance due from Colortec in exchange for the value of

inventory we recovered.

We record an allowance against uncollectible items for each customer after all reasonable means of collection have been exhausted, and the potential for recovery is considered remote.

Inventories are stated at

the lower of cost (first-in, first-out basis) or market, and consist primarily of raw materials used in the manufacturing of bioplastic resins, finished bioplastic resins and finished goods.

Inventories are assessed for recoverability through an

ongoing review of inventory levels in relation to foreseeable demand, which is typically six to twelve months.

We consider any quantities in excess of three years of inventory to be excessive due to the shelf life of our products.

A significant

qualitative factor used in our evaluation is the fact that polypropylene is a core ingredient to our bioplastic resin products.

Polypropylene is a multi-billion dollar commodity market within the plastics industry, which provides us an active

marketplace to monetize potential excess or obsolete inventory.

Our foreseeable demand, which is based upon all available information, including sales forecasts, new product marketing plans and product life cycles, indicates that our current

inventory on hand represents approximately 12-18 months of inventory.

When the inventory on hand exceeds the foreseeable demand, we write down the value of those inventories which, at the time of our review, we expect to be unable to sell or return

to the vendor.

The amount of the inventory write down is the excess of historical cost over estimated realizable value.

Once established, these write downs are considered permanent adjustments to the cost basis of the excess inventory.

Intangibles are stated at

cost and consist primarily of patents and trademarks.

Amortization is computed on the straight-line method over the estimated life of these assets, estimated to be between five and fifteen years.

Property and Equipment

equipment are stated at cost, and depreciation is computed on the straight-line method over the estimated useful lives of the assets.

The estimated useful lives of the assets are between three and seven years.

Repairs and maintenance expenditures

are charged to expense as incurred.

Assets under construction are not depreciated until placed into service.

Impairment of Long-Lived

We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value may not be

Factors we consider include:

Significant changes in the operational performance or manner of use of acquired assets or the strategy for our overall business,

Significant negative market conditions or economic trends, and

Significant technological changes or legal factors which may render the asset obsolete.

We evaluate long-lived assets based upon an estimate of future undiscounted cash flows.

Recoverability of these assets is measured by comparing the

carrying value to the future net undiscounted cash flows expected to be generated by the asset.

An impairment loss is recognized when the carrying value exceeds the undiscounted future cash flows estimated to result from the use and eventual

disposition of the asset.

Future net undiscounted cash flows include estimates of future revenues and expenses which are based on projected growth rates.

We continually use judgment when applying these impairment rules to determine the timing of the

impairment tests, the undiscounted cash flows used to assess impairments and the fair value of a potentially impaired asset.

The reasonableness of our judgment could significantly affect the carrying value of our long-lived assets.

During fiscal year 2012, we experienced a significant decline in sales volume due to liquidity and sales resource constraints, which we believe to be

Our reduced production volume has not changed the manner in which we use our property and equipment, nor its physical condition.

Our current estimate of future net undiscounted cash flows indicates that the carrying value of our

long-lived assets is recoverable and therefore no impairment is indicated.

Deferred Income Taxes

Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and

operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences.

Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.

The benefit of a tax position is recognized in the financial statements in the period during which, based on

all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.

Tax positions taken are not offset or aggregated with

other positions.

Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority.

portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and

penalties that would be payable to the taxing authorities upon examination.

Derivative Financial Instruments

Our derivative financial instruments consist of embedded and free-standing derivatives related primarily to the convertibles notes.

derivatives include the conversion features, and liquidated damages clauses in the registration rights agreement.

The accounting treatment of derivative financial instruments requires that we record the derivatives and related warrants at their fair

values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date.

The recorded value of all derivatives at December 31, 2012 totaled approximately $3.2 million.

We did not carry any derivative

financial instruments at December 31, 2011.

Any change in fair value of these instruments will be recorded as non-operating, non-cash income or expense at each reporting date.

If the fair value of the derivatives is higher at the subsequent

balance sheet date, the Company will record a non-operating, non-cash charge.

If the fair value of the derivatives is lower at the subsequent balance sheet date, the Company will record non-operating, non-cash income.

At December 31, 2012

derivatives were valued primarily using the Black-Scholes Option Pricing Model.

RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2012

COMPARED TO THE YEAR ENDED DECEMBER 31, 2011

Net sales for the year ended December 31, 2012 were approximately $0.9 million, compared to $20.3 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

Cost of sales is comprised of both fixed and variable costs, including materials and supplies, labor, facilities and other overhead costs associated with

our product revenues.

Cost of sales for the year ended December 31, 2012 were approximately $1.0 million, compared to $18.2 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 the reclassification of fixed production overhead from cost of sales to selling, general and administrative expense due to extended period of abnormally low production volume experienced in 2012.

Gross Profit (Loss)

Gross profit (loss)

for the year ended December 31, 2012 was approximately ($0.1) million, compared to $2.0 million for the same period in 2011.

Our decline in gross profit was attributable to our decline in sales as stated above.

Research and Development Expenses

Research and development expenses for the year ended December 31, 2012 were $0.5 million, compared to approximately $1.0 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

Selling, general and administrative expenses

for the year ended December 31, 2012 were $18.9 million, compared to $13.4 million for the same period in 2011.

Our increase in sales, general and administrative expenses was primarily due to bad debt expense of $12.3 million in 2012,

offset by reduced headcount and variable sales and marketing expenses due to lower sales volume in the current year.

Other Income and

Other income and expense, net for the year ended December 31, 2012 was ($10.7) million, as compared to ($1.6) 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, short term convertible debt and preferred stock agreements.

Net loss for the year ended December 31, 2012 was $30.2 million, as compared to $14.0 million in the same period in 2011.

As discussed above, our results were unfavorably impacted by our decrease in

LIQUIDITY AND CAPITAL RESOURCES

We require working capital to fund our operations, including payments to finance our research and development and expand sales and marketing, to purchase equipment, service indebtedness, satisfy lease

obligations and execute on our business plan and growth strategy.

We had net unrestricted cash of $0.2 million at December 31, 2012

as compared to $3.9 million at December 31, 2011.

The decrease in unrestricted cash is primarily due to cash used in operations, offset by financing provided through issuance of debt and equity securities.

Cash used in operating activities during the year ended December 31, 2012 was $5.5 million, compared to $24.8 million during the same period in

The decrease in cash used in operations was primarily a result of reducing our cash expenses in the current year due to a decline in sales activity.

Cash used in investing activities during the year ended December 31, 2012 was $0.2 million compared to cash used in investing activities of approximately $7.9 million during the same period in 2011.

Cash provided by financing activities during the year ended December 31, 2012 was $1.9 million compared to $34.2 million

provided by financing activities during the same period in 2011.

The decrease is attributable to $25.1 million of debt and equity financing that occurred in the prior year, compared to $1.4 million in debt and equity financing that occurred during

the current year.

We have incurred a net loss of $30.2 million for the year ended December 31, 2012, and $14.0 million for the year

ended December 31, 2011, and have an accumulated deficit of $87.1 million as of December 31, 2012.

Based on our operating plan, our existing working capital will not be sufficient to meet the cash requirements to fund our planned operating

expenses, capital expenditures and working capital requirements through December 31, 2013 without additional sources of cash.

to provide and preserve the necessary working capital to operate, we have successfully completed the following transactions in 2012:

Entered into a Stock Purchase Agreement with Ironridge Technology Co., a division of Ironridge Global IV, Ltd, (Ironridge) for the sale of

up to $5.0 million in shares of convertible redeemable Series A Preferred Stock.

Ironridge funded $0.5 million in exchange for 92 shares of Series A Preferred Stock.

Amended Venture Loan and Security Agreement with Compass Horizon Funding Company, LLC to provide an additional $0.4 million loan to fund operating

Entered into a Note Purchase Agreement (the Hanover Purchase Agreement) with Hanover Holding I, LLC (Hanover), pursuant to

which Hanover agreed to purchase from the Company, and we agreed to sell to Hanover (subject to the terms and conditions set forth therein), an aggregate of $0.8 million of convertible promissory notes (the Hanover Notes).

Hanover funded

$0.3 million of the Hanover Notes in 2012.

Entered into an Exchange Agreement with Magna Group LLC (Magna), pursuant to which we agreed to issue to Magna convertible notes, in the

aggregate principal amount of up to $4.6 million, in exchange for repayment of our Term Loan with Compass Horizon Funding Company, LLC.

This Exchange Agreement was subsequently terminated and assumed by Ironridge.

Obtained a Forbearance Agreement on our semi-annual coupon payment due on June 1, 2012 with certain holders of our Senior Subordinated Notes to

defer payment until December 1, 2012 and subsequently extended into January 2013.

Reduced future interest payments through executing an Exchange Agreement for $2.5 million with certain holders of our Senior Subordinated Notes for

conversion of their Notes and accrued interest into shares at an exchange rate of one share of our common stock for each $1.00 amount of the Note and accrued interest.

Issued 84,959,270 shares of our common stock to an institutional investor in settlement of approximately $1.4 million of our outstanding accounts

payable balances.

Completed a Registered Direct offering to issue 1,000,000 shares of common stock at $0.50 per share for gross proceeds of $0.5 million.

Obtained unsecured short-term convertible debt financing of $0.8 million with additional availability of approximately $0.6 million at the

lenders sole discretion.

Returned unused raw materials to our suppliers in exchange for refunds net of restocking charges of approximately $0.2 million.

Our plan to address the shortfall of working capital is to generate additional financing through a combination of sale of

our equity securities, additional funding from our new short-term convertible debt financings, incremental product sales into new markets with advance payment terms and collection of outstanding past due receivables.

We are confident that we will be

able to deliver on our plans, however, there are no assurances that we will be able to obtain any sources of financing on acceptable terms, or at all.

If we cannot obtain sufficient additional financing in the short-term, we may be forced to curtail or cease operations or file for bankruptcy.

The consolidated financial statements do not include any

adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should we be forced to take such actions.

Loans Payable and Long Term Debt

Venture Loan Payable

December 21, 2010, we entered into a Venture Loan and Security Agreement (the Loan Agreement) with Compass Horizon Funding Company, LLC (the Lender or Horizon).

The Loan Agreement provides for a total loan

commitment of $5.0 million comprising of Loan A and Loan B, each in the amount of $2.5 million.

Loan A was funded at closing on December 21, 2010 and matures 39 months after the date of advance.

Loan B was funded on February 17, 2011 and

also matures 39 months after the date of advance.

We are obligated to pay interest per annum equal to the greater of (a) 12% or (b) 12% plus the difference between (i) the one month LIBOR Rate in effect on the date preceding the

funding of such loan by five business days and (ii) .30%.

We are required to make interest only payments for the first nine months of each loan and equal payments of principal over the final thirty months of each loan.

In connection with the

loan, we issued a seven year warrant to the Lender to purchase 140,000 shares of our common stock at an exercise price of $4.40.

We granted a security interest in all of our assets to the Lender.

Effective November 27, 2012, we entered into a Second Amendment (the Amendment) to the Loan Agreement.

Pursuant to the Amendment,

Horizon agreed to extend additional loans to us in the form of Loan C in the amount of $150,000 and Loan D in the amount of $250,000.

The Amendment provides for a maturity date of April 4, 2013 and an annual rate of interest of 15% for Loans C

The Amendment also amends other portions of the Loan Agreement to include Loans C and D and sets forth the terms governing repayment,

interest rate and use of proceeds and conditions to funding such loans.

Auto Loan Payable

We signed a promissory note in the amount of $20,359 related to the purchase of an automobile in fiscal year 2010.

The note bears interest at

7.7% per annum and is to be repaid over a period of 60 months.

We repaid this promissory note in full during the first quarter of 2012.

Convertible Subordinated Notes

May 24, 2011, we issued $12.5 million in aggregate principal amount of 7% Senior Subordinated Convertible Notes due June 1, 2016 (the Notes).

The Notes were issued pursuant to an indenture (the Indenture), entered

into between us and Wells Fargo Bank, National Association, as trustee, on May 24, 2011.

In connection with the issuance of the Notes, we entered into a Waiver to our Venture Loan and Security Agreement with Horizon, dated May 18, 2011

pursuant to which Horizon provided its consent to the offering of the Notes and waived any restrictions in the Loan Agreement.

The Notes are

senior subordinated unsecured obligations which will rank subordinate in right to payment to all of our existing and future senior secured indebtedness and bear interest at a rate of 7% per annum payable semi-annually in arrears on June 1

and December 1 of each year, commencing on December 1, 2011.

The Notes mature on June 1, 2016, with an early repurchase date of June 15, 2014 at the option of the purchaser.

The Notes are convertible into shares of our common

stock in accordance with the terms of the Notes and the Indenture, at the initial conversion rate of 172.4138 shares of our common stock per $1,000 principal amount of Notes, equivalent to a conversion price of approximately $5.80 per share, subject

to adjustment.

If the Notes are converted into shares of our common stock prior to June 2, 2014, an interest make-whole payment will be due based on the conversion date up until June 2, 2014.

Upon a non-stock change in control, additional

shares of our common stock may need to be issued upon conversion, with a maximum additional shares of 25.606 per $1,000 in principal amount of Notes being issuable thereunder, for a total maximum of 198.0198 shares per $1,000 Note.

customary anti-dilution provisions included in the Indenture and/or the Notes could adjust the conversion rate.

The conversion feature within the Notes is not considered to be a beneficial conversion feature within the

meaning of Accounting Standards Codification (ASC) 470, Debt, and therefore all of the gross proceeds from the Notes have been classified as long term debt.

In connection with the issue of the Notes, we incurred approximately $1.3

million of debt issue costs which were deferred and are being amortized to interest expense over the term to the early repurchase date of June 15, 2014.

Also in connection with the issuance of the Notes, we entered into a Securities Purchase Agreement dated May 18, 2011 pursuant to which we agreed to prepare and file a registration statement with the

Securities and Exchange Commission (the SEC) registering the resale of the Notes and the shares of common stock underlying the Notes.

The registration statement was declared effective on August 10, 2011.

On June 1, 2012, we entered into an Exchange Agreement and a Forbearance Agreement with certain of the holders of our Notes.

Pursuant to the terms

of the Exchange Agreement, certain of the holders agreed to exchange the Notes for shares at an exchange rate of one share of our common stock for each $1.00 amount of the Notes exchanged.

Pursuant to the terms of the Forbearance Agreement, certain of the holders agreed to forbear from exercising their rights to require us to pay accrued interest on June 1, 2012 until the earlier of

December 1, 2012 or our failure to meet certain milestones.

In addition, pursuant to the terms of the Forbearance Agreement, we agreed to amend the conversion rate of the Notes as set forth in the Indenture to provide for an effective

conversion rate of $1.00.

At December 31, 2012 the Notes were convertible into 10,000,000 shares of our common stock.

On January 3,

2013, we received a Notice of Event of Default from Wells Fargo Bank, National Association, the Trustee under the Indenture.

The Notice was triggered by our failure to pay on December 1, 2012 pursuant to the terms of the Forbearance Agreements

dated as of May 31, 2012 entered into with the holders of the Notes, interest in the amount of $332,500 that was due on June 1, 2012 (the June 2012 Interest Payment) and interest in the amount of $332,500 due on

December 1, 2012 (the December 2012 Interest Payment).

On January 25, 2013, the Holders of the Notes entered into a payment agreement with IBC Funds, LLC pursuant to which IBC agreed to purchase up to $2,000,000 of the

principal amount of the Notes in tranches.

In connection with the execution of the payment agreement, the Holders agreed to waive the Event of Default and forebear from exercising any of their rights and remedies under the Indenture in connection

with our failure to make the June 2012 and December 2012 Interest Payments until the earlier of December 31, 2013 or the date IBC has failed to make payments as set forth in the Payment Agreement.

Mortgage Payable

October 24, 2011, Cereplast Italia S.p.A (Cereplast Italia), our wholly owned subsidiary, completed its acquisition of an industrial plant and the real estate on which the industrial plant is located in Cannara, Italy.

Sale between Cereplast Italia and Societa Regionale Per Lo Sviluppo Economico DellUmbria Sviluppumbria S.p.A, provided for an aggregate purchase price of approximately $6.5 million.

The acquisition had previously been secured by a

mortgage loan with Banca Monte Dei Paschi Di Sienna S.p.A for the principal of $4.5 million.

Effective October 25, 2012, Cereplast

Italia renegotiated the terms of the acquisition of the industrial plant located in Cannara, Italy with Societa Regionale Per Lo Sviluppo Economico DellUmbria Sviluppumbria S.p.A In connection with our renegotiation, the sale of the

land was rescinded and Cereplast Italia retained the existing building, reducing the value of the purchase price to approximately $4.2 million.

In exchange, Cereplast Italia rescinded the Mortgage loan with Banca Monte Dei Paschi Di Sienna S.p.A for

the principal of $4.5 million in paying a limited rescission fee and cancelled all credit facility.

Sviluppumbria S.p.A accepted to carry over a Note secured by the building, in amount of $3.2 million with an annual interest rate of 5.5%, until a

new lender is secured.

During that period of time Cereplast Italia agreed to negotiate the refurbishment of the building by a third party at no cost.

Svilluppumprbia requested Cereplast Italia to represent a plan of development to occur within a

longer period of time.

Preferred Stock

On August 24, 2012, we entered into a Stock Purchase Agreement (SPA) with Ironridge Technology Co., a division of Ironridge Global IV, Ltd, for the sale of up to $5 million in shares of

convertible redeemable Series A Preferred Stock (Series A Preferred Stock) at a price of $10,000 per share of Series A Preferred Stock.

The closing of the transactions contemplates the fulfillment of certain closing conditions.

initial closing with respect to the sale of 30 shares of Series A Preferred Stock occurred on August 24, 2012.

On August 24, 2012,

we filed a Certificate of Designation of Preferences, Rights and Limitations of Series A Preferred Stock (Certificate of Designation) with the Secretary of State of Nevada.

The Certificate of Designation provides that the Series A

Preferred Stock ranks senior with respect to dividend and rights upon liquidation to the Companys common stock and junior to all existing and future indebtedness.

Except as otherwise required by law, the Series A Preferred Stock shall have no

voting rights.

The Certificate of Designation provides for the payment of cumulative dividends at a rate of 2.5% per annum when and if declared by the Board of Directors in its sole discretion.

Dividends and any Embedded Derivative Liability

(as defined in the Certificate of Designation) may be paid in cash or free trading shares of the Company as provided in the Certificate of Designation.

Unless we have received the approval of the holders of a majority of the Series A Preferred Stock then

outstanding, we shall not (i) alter or change adversely the powers, preferences or rights of the holders of the Series A Preferred Stock or alter or amend the Certificate of Designation;

(ii) authorize or create any class of stock ranking

senior as to distribution of dividends senior to the Series A Preferred Stock;

(iii) amend its certificate of incorporation in breach of any provisions of the Certificate of Designation;

increase the authorized number of Series A Preferred

(iv) liquidate, or wind-up the business and affaires of the Corporation or effect any Deemed Liquidation Event, as defined in the Certificate of Designation.

Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be

entitled to receive, pari pasu with any distribution to the holders of Common Stock of the Company, an amount equal to $10,000 per share of Series A Preferred Stock plus any accrued and unpaid dividends.

Upon or after 18 years after the Issuance Date, the Corporation will have the right to redeem 100% of the Series A Preferred Stock at a price of $10,000

per share plus any accrued and unpaid dividends (the Corporation Redemption Price).

We are also permitted to redeem the Series A Preferred Stock at any time after issuance as provided in the Certificate of Designation.

The Certificate of

Designation also provides for mandatory redemption if the Company determines to liquidate, dissolve or wind-up its business and affects or effect any Deemed Liquidation Event as such term is defined in the Certificate of Designation.

The Series A Preferred Stock may be converted into share of common stock of the Company at the option of the Company or the holder.

In the event of a

conversion by the Holder at a price per share equal to the sum of (a) the Corporation Redemption Price plus the Embedded Derivative Liability (as defined in the Certificate of Designation) less any dividends paid, multiplied by (b) the

number of shares being converted, divided by (c) the conversion price of $0.25.

Contractual Obligations

Our material contractual obligations for the next five years and thereafter as of December 31, 2012, are as follows (in thousands):

Loans Payable and Long-Term Debt (1)

Interest payments (2)

Operating Leases (3)

Capital Leases (4)

The interest payment amounts above include the fixed interest rate payments for the Credit Agreement with Wells Fargo and an estimated interest rate payment on the

variable rate IRB based on the five year historical interest rate average for the Municipal Swap Index plus 20 basis points plus the letter of credit and remarketing fees of 62.5 basis points resulting in an estimated rate of 2.515%.

Interest related to all obligations except operating leases.

Related to rental expenses at El Segundo, CA, Seymour, IN and Bönen, Germany facilities.

Principal only reported;

the related interest is included in the Interest Expense line.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any relationships with unconsolidated

entities or financial partnerships such as entities often referred to as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance-sheet arrangements or for other contractually narrow

or limited purposes.

As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Financial Statements and Supplementary Data

Financial statements required by this item are included after the signature page of this filing.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

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 5. Market for Registrant’s Common Equity