HAWTHORNE, Calif., November 14, 2008 – Cereplast, Inc. (OTC BB: CERP), manufacturer of proprietary bio-based sustainable plastics, today reported financial results for the three months and nine months ended September 30, 2008.

For the first nine months of 2008, gross sales increased by $1,791,991, or 111%, to $3,401,011 compared to the nine months ended September 30, 2007. Gross sales increased by $766,160, or 116%, to $1,427,902 for the three months ended September 30, 2008 compared to the three months ended September 30, 2007. The sales increase for both periods is attributable to volume growth from both existing and new customers launching commercial applications with Cereplast bioplastic resins. 

Operating expenses were $10,182,160 for the nine months ended September 30, 2008, an increase of $5,042,710, or 98%, versus the comparable 2007 period.  For the three months ended September 30, 2008, operating expenses increased by $1,168,491, or 63%, to $3,013,753 compared to the three months ended September 30, 2007.  The increase for each of the respective periods is attributable to greater spending, both cash and non-cash related, to support the technical development and commercial introduction of new products and management of significant business growth. 

The Company reported a net loss of $10,101,003, or $0.04, per share, for the first nine months of 2008 compared with a net loss of $4,904,617, or $0.02 per share, for the comparable period in 2007. For the third quarter of 2008 the net loss was $3,075,228, or $0.01 per share, versus a net loss of $1,602,055, or $0.01 per share, for the comparable quarter in 2007. The increase in net loss for each of the respective periods was the result of higher operating and development expenses associated with the growth of the Company’s resin operations. 

The weighted average number of shares used in the calculation of earnings per share was 262.2 million for first nine months of 2008 compared to 231.6 million for the first nine months of 2007.  For the third quarter of 2008 the weighted average number of shares was 265.1 million versus 258.2 million for the same period in 2007. The increase in the weighted average number of shares primarily reflects the shares issued by the Company in private placement transactions and as part of employee compensation. Members of the management team continue to take a significant component of their personal compensation in the form of Cereplast stock in lieu of cash.

During the nine months ended September 30, 2008, the Company used $7,258,648 of cash for operating activities, compared to net cash used in operating activities of $4,020,563 for the first nine months of 2007. The increase in the use of cash for operating activities was a result of increased manufacturing, technical development and operational expenses, additional company staff resources and the acquisition of raw materials in anticipation of the start of continuous production at the new Indiana facility. Current inventory turns are expected to increase significantly through growth of the customer base and improvement in supply chain management.  Cash and short-term investments totaled $955,315 at September 30, 2008.

“We’re continuing to see triple-digit increases in gross sales versus 2007 figures, and equally important, a nearly 35% growth in sales compared with the second quarter of this year,” said Frederic Scheer, Cereplast’s Chairman and CEO. “Our business growth remains on track against our aggressive plans, and it reaffirms the market potential for our resins which offer sustainability gains and other benefits versus traditional plastics.”

“Despite turmoil in the global economy and securities markets, all areas of our business continue to deliver strong growth,” continued Scheer. “From a liquidity standpoint, we are in discussions with existing and new institutions, strategic partners, “green” funds and other investors, and we are confident that Cereplast will attract additional investment funds.”

“Step by step, Cereplast is enhancing its capabilities as a leader in the field of bioplastics. During the past quarter, we made major improvements to our development and commercialization process, took the first steps towards the concentration of our manufacturing activities to our new Indiana site, completed a comprehensive review of all of our operations to lower costs and strengthened our leadership team,” said Randy Woelfel, President and COO. “All of these actions will drive faster and more profitable growth, and in turn, accelerate progress towards our goal of cash-positive operations within the next 18 months.”

Financing – Cereplast commenced a $10.0 million unregistered private placement during the second quarter.  In early September, 2008, Cereplast completed the first step of this ongoing fundraising campaign, closing an interim round of $2.6 million in new equity financing. The funding was raised in a private placement of common stock to a group of existing and new institutions, “green” funds, an external Director of Cereplast and other investors.  The net proceeds of this financing and subsequent funding will be used for: the completion and start-up of the new Seymour manufacturing facilities; a major project to upgrade the productivity and cost competitiveness of the Compostables^®manufacturing lines; the completion of the Company’s application development and testing laboratory; and funding the growth in working capital needed to support the significant business expansion in the upcoming quarters.

Product Development and Intellectual Property – In the third quarter of 2008, Cereplast made significant progress toward full implementation of its upgraded application development and resin testing laboratory at its headquarters in Hawthorne, California.  When fully operational in 2009, this facility will enable Cereplast to conduct all standard product development and qualification testing in-house, greatly speeding up the development cycle for new resin development and enhancing technical support to customers.

Customer Development and Joint Development Agreements – As of September 30, 2008, more than 150 companies have requested and been provided with samples of our bioplastic resin and 80 customers have purchased resin for trials and testing. Of these, 60 customers have advanced to prototype testing and market qualification aimed at more than 100 different product applications. Eighteen  customers, including WNA, Alcoa, Genpak, Innoware, Penley and Pace Industries, have commercialized and introduced approximately 85 different bioplastic products using Cereplast resin, representing a 27% increase from the beginning of 2008, and 340% more than the beginning of 2007 when only 25 products were commercialized. 

Cereplast made several major new customer announcements during the third quarter of 2008, representing significant market opportunities. These included:

·        Through IraPlast-Krest, the company’s exclusive representative in Brazil, Cereplast will provide two million pounds of Cereplast Compostables^® resin over two years to two companies in Brazil.  One of the companies, Canguru Embalagens Ltda., a leading provider of single-use food service items, is the first Cereplast client to launch a biodegradable and compostable food service ware line in Brazil.  Its Bio-Zanatta line, which consists of cups, plates and compostable bags, is being manufactured exclusively using Cereplast Compostables^® resin. Both Canguru and the second company, the Brazil-based subsidiary of a global agribusiness and food company, will be receiving their first shipments of Cereplast resin this month.

·        WNA, Inc., a leading manufacturer and marketer of high-quality plastic disposable cups, plates, cutlery, serving ware, dessert ware and custom packaging, recently launched its EarthSense™ line of products. The EarthSense™ line is initially comprised of upscale disposable plates and cutlery manufactured exclusively using Cereplast Compostables^® resin. This launch represents a “total system solution” as it combines a leading food service ware converter, distributor and major composting facility in the Pacific Northwest in a joint program aimed at delivering a step change in environmental sustainability to food service customers in that region of the country.

Additionally, the Company is underway with the second phase of previously-announced joint development agreements with major market and brand leaders, including Group Danone, for the development of bio-based food packaging, and PSA Peugeot-Citroen Group for the introduction of sustainable automotive bioplastics.  Other JDAs similarly are moving into an aggressive phase of qualification and testing.  In total, the Company’s portfolio of joint development projects represents additional growth opportunities of several hundred million pounds for Cereplast resins within the next three to five years.

Production – The Company continues to focus on improving its production process and expanding capacity. During the third quarter of 2008, Cereplast began implementation of a broad plan to maximize operating efficiency and increase profit margins.  Integral to the plan are the start of production at Cereplast’s 105,000 square foot Seymour, Indiana facility currently being used as a distribution facility for the Company’s products. Construction and installation of the first production line is mechanically completed and now undergoing final stages of start-up preparation and commissioning. The newly installed production line has a nameplate production capacity of 50 million pounds of bioresin annually.

Subsequent steps during 2009 will result in the concentration of all core manufacturing assets at the Seymour facility. Cereplast’s Hawthorne, California facility currently has a nameplate capacity of about 50 million pounds of bioresin annually. 

The decision to focus production at the Seymour facility is driven by: the greater efficiencies and lower production costs per pound that will come from a centralized manufacturing location located in Indiana; the increased total production volumes required to fulfill forecast demand; and the capability to expand Seymour’s ultimate capacity to as much as 500 million pounds per year of resin production.

Corporate Management and Infrastructure – Since mid-year 2008, Cereplast has strengthened its management team with the addition of highly-qualified personnel from within the traditional plastics or plastics compounding industries.  Additionally, staffing at the Company’s Seymour facility is continuing with a recent job fair producing a large number of applicants. The Company is confident that it will be able to meet current and future staffing needs at its Indiana plant.

Cereplast, Inc. (OTC BB: CERP) designs and manufactures proprietary bio-based, sustainable plastics which are used as substitutes for petroleum-based plastics in all major converting processes – such as injection molding, thermoforming, blow molding and extrusions – at a pricing structure that is competitive with petroleum-based plastics. On the cutting-edge of bio-based plastic material development, Cereplast now offers resins to meet a variety of customer demands. Cereplast Compostables^® Resins are ideally suited for single use applications where high bio-based content and compostability are advantageous, especially in the food service industry. Cereplast Hybrid Resins^® combine high bio-based content with the durability and endurance of traditional plastic, making them ideal for applications in industries such as automotive, consumer electronics and packaging. Learn more at www.cereplast.com.

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