EL SEGUNDO, Calif., Aug. 14, 2012 (GLOBE NEWSWIRE) -- Cereplast, Inc. (Nasdaq:CERP), a leading manufacturer of proprietary biobased, sustainable bioplastics, today announced its financial results for the second quarter ending June 30, 2012.
"Bringing liquidity into our company and controlling our costs has remained the focus of the entire management team," stated Cereplast Chairman and Chief Executive Officer, Mr. Frederic Scheer. "We continue to make progress with our partner in India to distribute the Cereplast Hybrid Resins® products. We remain excited about this relationship, as we believe it will resolve our receivables issue in the near term while opening the door to multiple revenue generating opportunities. I recently visited Hyderabad with key members from Cereplast's senior management team; we met with our partners in India to review the strategy and progress to date. Based on the trials that have been completed, several parties have been identified that are interested in purchasing up to 2000 tons per month depending on the application."
Mr. Scheer continued, "Although the financial constraints forced us to conserve our working capital, we have maintained our existing research and development capability, and as a result we have been awarded patent protection for high heat resistant polymer composition formulations having polylactic acid. This further improvement of our already valuable intellectual property portfolio, coupled with new distribution agreements with Albis to distribute bioplastic resins in the United Kingdom and Ireland, enables us to maintain our optimism for the future of Cereplast."
Second Quarter 2012 and Recent Highlights:
- The United States Patent and Trademark Office (USPTO) granted Cereplast patent protection for high heat resistant polymer compositions having polylactic acid (PLA). PLA has limitations in terms of melt strength and heat resistance, which has restricted its use for high temperature applications. In contrast, Cereplast's high heat PLA compositions can be industrially compostable and can retain their structural properties at temperatures greater than 165 degrees Fahrenheit (74 degrees Celsius).
- Entered into a distribution agreement with Hamburg, Germany-based ALBIS PLASTIC GMBH to supply Cereplast bioplastic resins to the United Kingdom and Ireland. Cereplast has shipped the first purchase order to ALBIS PLASTIC, who will distribute both Cereplast Compostables® resins, with an emphasis on blown film grades and blow molding grades, as well as Cereplast Sustainables® resins, including the Cereplast Hybrid Resins® product line. This contract signifies the growing demand in Europe for bioplastic resins, and expands Cereplast's foothold on the continent.
2012 Second Quarter and First Six Months Financial Results:
Net sales for the three months ended June 30, 2012 were approximately $190,000, compared to $7.6 million for the same period in 2011. Net sales for the first six months of 2012 totaled $293,000 as compared to $14.9 million for the first six months of 2011. The decrease in sales over the prior year was due to our planned transition of all our sales and marketing resources, as well as senior management's efforts toward recovery of past due accounts receivables from our customers and minimizing any additional exposure to our accounts receivable credit risk. Our current period sales were primarily to our established existing U.S. customers with low risk credit limits and prepaid shipments of sample material.
Cost of sales for the three months ended June 30, 2012 were approximately $545,000, compared to $6.7 million for the same period in 2011. Cost of sales for the first six months of 2012 totaled $1.2 million as compared to $13.2 million for the first six months of 2011. The decline in cost of sales is due to our lower variable manufacturing costs from the Company's reduced sales volumes and reduction in manufacturing overhead through lower supplies utilization and headcount attrition.
Research and development expenses for the three months ended June 30, 2012 were approximately $126,000, compared to approximately $259,000 for the same period of 2011, or a decline of over 51%. Research and development expenses for the first six months of 2012 were approximately $255,000, compared to approximately $509,000 for the first six months of 2011, or a decline of nearly 50%. The decrease was primarily due to a reduction in legal expenses and outside services used in our current product development projects.
Selling, general and administrative expenses for the three months ended June 30, 2012 were approximately $1.7 million as compared to $2.7 million for the same period in 2011. Selling, general and administrative expenses for the first six months of 2012 totaled approximately $2.9 million as compared to $4.8 million for the first six months of 2011, for a decline in both periods of over 39%. The decrease was primarily due to reduced headcount and variable sales and marketing expenses due to lower sales volume in the current year, offset by an increase in our allowance for doubtful accounts of $0.5 million in the second quarter of 2012.
Net loss for the three months ended June 30, 2012 was approximately $3.9 million as compared to $2.4 million for the same period in 2011. Net loss for the first six months of 2012 was approximately $6.7 million as compared to approximately $4.1 million for the first six months of 2011. The increase in our net loss for 2012 was primarily due to a full period of interest expense related to the coupon of our Convertible Debentures issued in May 2011, non-cash interest expense of $734,000 recognized from our Forbearance Agreement with the holders of our Convertible Debentures which reduced the conversion price in the Indenture from $5.80 to $1.00 per share, debt extinguishment costs of $427,000 related to exchange and retirement of $1 million of our Convertible Debentures and a loss of $99,000 on the change of an embedded derivative within our Warrants.
On the balance sheet, the Company had approximately $190,000 in cash and $14.3 million in accounts receivable, net of allowance for doubtful accounts. Current assets and total assets were $19.5 million and $31.2 million respectively. Current liabilities and total liabilities were $6.4 million and $21.1 million respectively, for working capital of $13.1 million. As of June 30, 2012, the Company had approximately 21 million shares issued and outstanding.
| Conference Call Details: | |
| Date: | Tuesday, August 14, 2012 |
| Time: | 4:30 p.m. EDT |
| Dial-In: | (877) 312-5508 |
| International Dial-In: | (253) 237-1135 |
| Live Webcast: | http://investor.cereplast.com/events.cfm |
A live webcast and archive of the call will also be available on the Investor Relations section of Cereplast's website at www.cereplast.com. If you are unable to participate on the call at this time, a telephonic replay will be available for three days starting two hours after the conclusion of the call. To access the telephonic replay, dial 855-859-2056, international callers dial 404-537-3406, and enter the Conference ID 18839439.
About Cereplast, Inc.
Cereplast, Inc. (Nasdaq:CERP) designs and manufactures proprietary biobased, sustainable bioplastics which are used as substitutes for traditional plastics in all major converting processes - such as injection molding, thermoforming, blow molding and extrusions - at a pricing structure that is competitive with traditional plastics. On the cutting-edge of biobased plastic material development, Cereplast now offers resins to meet a variety of customer demands. Cereplast Compostables® resins are ideally suited for single-use applications where high biobased content and compostability are advantageous, especially in the food service industry. Cereplast Sustainables® resins combine high biobased content with the durability and endurance of traditional plastic, making them ideal for applications in industries such as automotive, consumer electronics and packaging. Learn more at www.cereplast.com. You may also visit the Cereplast social networking pages at Facebook.com/Cereplast, Twitter.com/Cereplast and Youtube.com/Cereplastinc.
The Cereplast, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=9567
Safe Harbor Statement
Matters discussed in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words "anticipate," "believe," "estimate," "may," "intend," "expect" and similar expressions identify such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties. These include, but are not limited to, risks and uncertainties associated with: the impact of economic, competitive and other factors affecting the Company and its operations, markets, product, and distributor performance, the impact on the national and local economies resulting from terrorist actions, and U.S. actions subsequently; and other factors detailed in reports filed by the Company.
| CEREPLAST, INC. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (in thousands, except shares data) | ||
| June 30, 2012 | December 31, 2011 | |
| (Unaudited) | ||
| ASSETS | ||
| Current Assets | ||
| Cash | $190 | $3,940 |
| Accounts Receivable, Net | 14,318 | 14,744 |
| Inventory, Net | 4,070 | 4,406 |
| Prepaid Expenses and Other Current Assets | 964 | 966 |
| Total Current Assets | 19,542 | 24,056 |
| Property and Equipment | ||
| Property and Equipment | 13,813 | 13,752 |
| Accumulated Depreciation and Amortization | (3,492) | (3,151) |
| Property and Equipment, Net | 10,321 | 10,601 |
| Other Assets | ||
| Restricted Cash | 43 | 43 |
| Deferred Loan Costs | 1,062 | 1,321 |
| Intangible Assets, Net | 217 | 183 |
| Deposits | 47 | 47 |
| Total Other Assets | 1,369 | 1,594 |
| Total Assets | $31,232 | $36,251 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current Liabilities | ||
| Accounts Payable | $1,411 | $1,813 |
| Accrued Expenses | 2,794 | 2,760 |
| Capital Leases, Current Portion | 77 | 73 |
| Loan Payable, Current Portion | 1,655 | 1,855 |
| Convertible Subordinated Notes, Current Portion | 164 | — |
| Derivative Liability | 297 | — |
| Total Current Liabilities | 6,398 | 6,501 |
| Long-Term Liabilities | ||
| Loan Payable | 6,657 | 7,307 |
| Convertible Subordinated Notes | 7,831 | 12,500 |
| Capital Leases, Long-Term | 206 | 245 |
| Total Long-Term Liabilities | 14,694 | 20,052 |
| Total Liabilities | 21,092 | 26,553 |
| Shareholders' Equity | ||
| Preferred Stock, $0.001 par value; 5,000,000 shares authorized and none outstanding | — | — |
| Common Stock, $0.001 par value; 495,000,000 shares authorized; 21,027,204 and 18,933,139 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively | 21 | 19 |
| Additional Paid in Capital | 73,150 | 66,524 |
| Accumulated Deficit | (63,242) | (56,935) |
| Accumulated Other Comprehensive Income | 207 | 86 |
| 10,136 | 9,694 | |
| Noncontrolling Interests | 4 | 4 |
| Total Equity | 10,140 | 9,698 |
| Total Liabilities and Shareholders' Equity | $31,232 | $36,251 |
| CEREPLAST, INC. | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME | ||||
| (unaudited, in thousands, except per share data) | ||||
| Three Months Ended | Six Months Ended | |||
| June 30, 2012 | June 30, 2011 | June 30, 2012 | June 30, 2011 | |
| Gross Product Sales | $191 | $8,149 | $305 | $15,435 |
| Sales Discounts, Returns and Allowances | (1) | (538) | (12) | (583) |
| Net Sales | 190 | 7,611 | 293 | 14,852 |
| Cost of Goods Sold | 545 | 6,688 | 1,183 | 13,226 |
| Gross Profit (Loss) | (355) | 923 | (890) | 1,626 |
| Operating Expenses: | ||||
| Research and Development | 126 | 259 | 255 | 509 |
| Selling, General and Administrative | 1,661 | 2,724 | 2,877 | 4,768 |
| Total Operating Expenses | 1,787 | 2,983 | 3,132 | 5,277 |
| Operating Loss | (2,142) | (2,060) | (4,022) | (3,651) |
| Debt Extinguishment Costs | (427) | — | (427) | — |
| Loss on Derivative Liability | (99) | — | (99) | — |
| Interest and Other Income | — | — | 18 | — |
| Interest Expense | (1,253) | (327) | (1,777) | (486) |
| Loss Before Provision for Income Taxes | (3,921) | (2,387) | (6,307) | (4,137) |
| Provision for Income Taxes | — | — | — | — |
| Net Loss | (3,921) | (2,387) | (6,307) | (4,137) |
| Gain (Loss) on Foreign Currency Translation | 119 | 8 | 121 | (39) |
| Total Comprehensive Loss | ($3,802) | ($2,379) | ($6,186) | ($4,176) |
| Net Loss Per Share—Basic and Diluted | ($0.20) | ($0.15) | ($0.32) | ($0.27) |
| Weighted Average Common Shares Outstanding—Basic and Diluted | 19,947,205 | 15,750,217 | 19,471,441 | 15,314,040 |
| CEREPLAST, INC. | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (unaudited, in thousands, except shares data) | ||
| Six Months Ended | ||
| June 30, 2012 | June 30, 2011 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net Loss | ($6,307) | ($4,137) |
| Adjustment to Reconcile Net Loss to Net Cash Used in Operating Activities | ||
| Depreciation and Amortization | 356 | 449 |
| Allowance for Doubtful Accounts | 521 | 97 |
| Common Stock Issued for Services, Salaries and Wages | 143 | 747 |
| Amortization of Loan Discount | 779 | 38 |
| Impairment of Intangible Assets | — | 64 |
| Extinguishment of Convertible Debt | 348 | — |
| Loss on Derivative Liability | 99 | — |
| Changes in Operating Assets and Liabilities | ||
| Accounts Receivable | (95) | (10,646) |
| Deferred Loan Costs | 262 | 98 |
| Inventory | 336 | (544) |
| Deposits | — | (35) |
| Prepaid Expenses | 2 | (1,381) |
| Accounts Payable | (402) | 341 |
| Accrued Expenses | 34 | 1,192 |
| NET CASH USED IN OPERATING ACTIVITIES | (3,924) | (13,717) |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchase of Property and Equipment, and Intangibles | (125) | (638) |
| Proceeds from Sale of Equipment | 15 | — |
| NET CASH USED IN INVESTING ACTIVITIES | (110) | (638) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Payments on Capital Leases | (36) | (4) |
| Proceeds from Capital Leases | — | 32 |
| Noncontrolling Interest Activities | — | 4 |
| Payments made on Notes Payable | (603) | — |
| Proceeds from Loan Payable, Net of Loan Costs | — | 2,500 |
| Proceeds from Convertible Notes, Net of Issuance Costs | 450 | 11,243 |
| Proceeds from Issuance of Common Stock and Subscriptions, Net of Issuance Costs | 488 | 11,364 |
| NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES | 299 | 25,139 |
| FOREIGN CURRENCY TRANSLATION | (15) | (39) |
| NET INCREASE (DECREASE) IN CASH | (3,750) | 10,745 |
| CASH, BEGINNING OF PERIOD | 3,940 | 2,391 |
| CASH, END OF PERIOD | $190 | $13,136 |