EL SEGUNDO, Calif., Nov. 14, 2012 (GLOBE NEWSWIRE) -- Cereplast, Inc. (Nasdaq:CERP), a leading manufacturer of proprietary biobased, sustainable bioplastics, today announced its financial results for the third quarter ended September 30, 2012.
Mr. Frederic Scheer, Chairman and Chief Executive Officer of Cereplast, stated, "Thus far in 2012 we have focused on several areas which have resulted in the achievement of key milestones, new product launches and important strategic relationships. Since the opening of our offices with a dedicated team in India, we have begun selling our Cereplast Hybrid Resins® product line in this emerging marketplace, which is the world's third largest consumer of polymers. The Cereplast Hybrid Resins® products are being tested with a large polymer converter for other applications and are part of the unsold inventory we recouped from our European clients. We continue to move our relationship with A.R.M.Y. forward, which has resulted in the introduction of key strategic relationships including the engineering and marketing team of Tirumala Thirupathi Devastanam, an independent trust to the largest shrine in the world. Our Cereplast Compostables® resins are being tested on 25,000 bags for their expected use by millions of annual visitors to their shrine. Lastly, the Italian government has moved toward reinstating legislation to ban non-compostable resins. Several large supermarket chains have expressed an interest in testing our products, while multiple product lines are currently in progress. As we work diligently towards transforming these opportunities into revenue, we will continue managing our cash flow accordingly."
Mr. Scheer continued, "Heading into 2013 we are refining our strategy to ensure we give ourselves the greatest opportunity for revenue growth. The experience we have gained through our recent history of operating within the bioplastics industry has allowed us to understand what the market demands; we therefore find it more important to target specific applications rather than the broader approach we have taken in the past. We believe that by tailoring our offerings specifically for the customer's product application, the adoption of our product will become greater. With the plan I just described I want to reassure our shareholders that Cereplast's management team is focused and working very hard every day to ensure that we will prevail over our challenging environment."
Operational Highlights:
- Cereplast has begun to sell its first Cereplast Hybrid Resins® application in India. This milestone follows the Company's opening of a corporate office in India to service its partners in South Asia and the appointment of a Technical Services Engineer to provide on-site services. Management visited India several times to assist with the marketing launch of our resin.
- The same Cereplast Hybrid Resins® grade utilized for the safety helmet application was qualified by a large converter of S-B Polymers to make bioplastic buckets. This potential customer is one of three dedicated converters who manufacture buckets for a large consumer products company in India. This relationship has a projected demand of several thousand tons per month.
- Each of these opportunities in India would allow us to monetize the inventory recouped from our European customers.
- A.R.M.Y. made a formal presentation of Cereplast's Compostable 3002 resin to the engineering and marketing departments of "Tirumala Thirupathi Devastanam," an independent trust which manages the Tirumala Venkateswara Temple, the largest shrine in the world. The presentation resulted in the commercial test of 25,000 bags over a 60 day period to test strength and reception of the product.
- The Italian government has reinstated legislation calling for the ban of non-compostable resins. Management believes this legislation will be implemented by the end of 2012.
- Several large supermarket chains have expressed an interest in Cereplast Compostables® resins for bags and orders have been made to test the product.
- Cereplast successfully tested their Hybrid 101 product for fruit and vegetable shipping baskets. The addressable market for this application is several thousand tons per month.
- Cereplast Hybrid 651D wins MATERIALICA Design + Technology 2012 silver award for outstanding innovation in the "Material" category.
2012 Third Quarter and First Nine Months Financial Results:
Net sales for the three months ended September 30, 2012 were approximately $477,000, compared to $5.4 million for the same period in 2011. Net sales for the first nine months of 2012 were approximately $0.8 million, compared to $20.2 million in the same period in 2011. The decrease in sales was due to transitioning significant resources and efforts toward recovery of past due accounts receivables from customers and minimizing any additional exposure to our accounts receivable credit risk. Our current period sales were primarily prepaid shipments of sample materials and nominal shipments to established existing customers with low risk credit limits.
Cost of sales for the three months ended September 30, 2012 were approximately $910,000, compared to $4.5 million for the same period in 2011. Costs of sales for the first nine months of 2012 were approximately $2.1 million, compared to $17.7 million for the same period in 2011. The decline in cost of sales is due to our lower variable manufacturing costs from our reduced sales volumes and reduction in manufacturing overhead through reduced supplies and headcount.
Research and development expenses for the three months ended September 30, 2012 were approximately $115,000, compared to $280,000 for the same period in 2011. Research and development expenses for the first nine months of 2012 were $0.4 million, compared to approximately $0.8 million for the same period in 2011. Our decrease in research and development expenses was primarily attributable to lower outside services costs related to our current projects.
Selling, general and administrative expenses for the three months ended September 30, 2012 were approximately $6.4 million, compared to $3.7 million for the same period in 2011. Selling, general and administrative expenses for the first nine months of 2012 were $9.3 million, compared to $8.5 million for the same period in 2011. Our increase in sales, general and administrative expenses was primarily due to an increase in our allowance for doubtful accounts of $4.8 million during the third quarter of 2012, offset by reduced headcount and variable sales and marketing expenses due to lower sales volume in the current year.
Other income and expense, net for the three months ended September 30, 2012 was approximately 3.0 million, compared to $0.5 million for the same period in 2011. Other income and expense, net for the first nine months of 2012 was $5.2 million, as compared to $1.0 million in the same period in 2011. The increase was primarily related to additional interest expense related to the issuance of our convertible debentures in May 2011, the impact from our Forbearance and Exchange Agreement with certain holders of our convertible debentures and the change in our derivative liability related to our warrants.
On the balance sheet, the Company had approximately $237,000 in cash and $7.3 million in accounts receivable, net of allowance for doubtful accounts. Current assets and total assets were $14.1 million and $25.5 million respectively. Current liabilities and total liabilities were $9.0 million and $22.1 million respectively. Total shareholders' equity was $3.3 million as of September 30, 2012, with approximately 29 million shares of common stock issued and outstanding.
| Conference Call Details: | |
| Date: | Wednesday, November 14, 2012 |
| Time: | 4:30 p.m. EST |
| Dial-In: | (877) 312-5508 |
| International Dial-In: | (253) 237-1135 |
| Live Webcast: | http://investor.cereplast.com/events.cfm |
A live webcast and archive of the call will also be available on the Investor Relations section of Cereplast's website at www.cereplast.com. If you are unable to participate on the call at this time, a telephonic replay will be available for three days starting two hours after the conclusion of the call. To access the telephonic replay, dial 855-859-2056, international callers dial 404-537-3406, and enter the Conference ID 64671679.
About Cereplast, Inc.
Cereplast, Inc. (Nasdaq:CERP) designs and manufactures proprietary biobased, sustainable bioplastics which are used as substitutes for traditional plastics in all major converting processes−such as injection molding, thermoforming, blow molding and extrusions−at a pricing structure that is competitive with traditional plastics. On the cutting-edge of biobased plastic material development, Cereplast now offers resins to meet a variety of customer demands. Cereplast Compostables® resins are ideally suited for single-use applications where high biobased content and compostability are advantageous, especially in the food service industry. Cereplast Sustainables® resins combine high biobased content with the durability and endurance of traditional plastic, making them ideal for applications in industries such as automotive, consumer electronics and packaging. Learn more at www.cereplast.com. You may also visit the Cereplast social networking pages at Facebook.com/Cereplast, Twitter.com/Cereplast and Youtube.com/Cereplastinc.
The Cereplast, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=9567
Safe Harbor Statement
Matters discussed in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words "anticipate," "believe," "estimate," "may," "intend," "expect" and similar expressions identify such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties. These include, but are not limited to, risks and uncertainties associated with: the impact of economic, competitive and other factors affecting the Company and its operations, markets, product, and distributor performance, the impact on the national and local economies resulting from terrorist actions, and U.S. actions subsequently; and other factors detailed in reports filed by the Company.
| CEREPLAST, INC. | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (unaudited, in thousands, except per share data) | ||||
| Three Months Ended | Nine Months Ended | |||
| September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2011 | |
| Gross Product Sales | $ 481 | $ 5,414 | $ 786 | $ 20,849 |
| Sales Discounts, Returns and Allowances | (4) | (45) | (16) | (628) |
| Net Sales | 477 | 5,369 | 770 | 20,221 |
| Cost of Goods Sold | 910 | 4,475 | 2,093 | 17,701 |
| Gross Profit (Loss) | (433) | 894 | (1,323) | 2,520 |
| Operating Expenses: | ||||
| Research and Development | 115 | 280 | 371 | 789 |
| Selling, General and Administrative | 6,410 | 3,689 | 9,286 | 8,457 |
| Total Operating Expenses | 6,525 | 3,969 | 9,657 | 9,246 |
| Operating Loss | (6,958) | (3,075) | (10,980) | (6,726) |
| Debt Extinguishment Costs | — | — | (427) | — |
| Loss on Derivative Liability | 47 | — | (52) | — |
| Interest and Other Income | — | — | 18 | — |
| Interest Expense | (3,057) | (513) | (4,834) | (999) |
| Loss Before Provision for Income Taxes | (9,968) | (3,588) | (16,275) | (7,725) |
| Provision for Income Taxes | — | — | — | — |
| Net Loss | $ (9,968) | $ (3,588) | $ (16,275) | $ (7,725) |
| Net Loss Per Share—Basic and Diluted | $ (0.40) | $ (0.23) | $ (0.77) | $ (0.50) |
| Weighted Average Common Shares Outstanding—Basic and Diluted | 24,739,449 | 15,777,793 | 21,242,115 | 15,470,324 |
| CEREPLAST, INC. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (in thousands, except shares data) | ||
| September 30, 2012 | December 31, 2011 | |
| (Unaudited) | ||
| ASSETS | ||
| Current Assets | ||
| Cash | $237 | $3,940 |
| Accounts Receivable, Net | 7,293 | 14,744 |
| Inventory, Net | 5,424 | 4,406 |
| Prepaid Expenses and Other Current Assets | 1,136 | 966 |
| Total Current Assets | 14,090 | 24,056 |
| Property and Equipment | ||
| Property and Equipment | 13,836 | 13,752 |
| Accumulated Depreciation and Amortization | (3,668) | (3,151) |
| Property and Equipment, Net | 10,168 | 10,601 |
| Other Assets | ||
| Restricted Cash | 43 | 43 |
| Deferred Loan Costs | 867 | 1,321 |
| Intangible Assets, Net | 248 | 183 |
| Deposits | 47 | 47 |
| Total Other Assets | 1,205 | 1,594 |
| Total Assets | $25,463 | $36,251 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current Liabilities | ||
| Accounts Payable | $1,134 | $1,813 |
| Accrued Expenses | 3,049 | 2,760 |
| Capital Leases, Current Portion | 77 | 73 |
| Loan Payable, Current Portion | 4,023 | 1,855 |
| Convertible Subordinated Notes, Current Portion | 357 | — |
| Derivative Liability | 344 | — |
| Total Current Liabilities | 8,984 | 6,501 |
| Long-Term Liabilities | ||
| Loan Payable | 4,423 | 7,307 |
| Convertible Subordinated Notes | 8,532 | 12,500 |
| Capital Leases, Long-Term | 191 | 245 |
| Total Long-Term Liabilities | 13,146 | 20,052 |
| Total Liabilities | 22,130 | 26,553 |
| Shareholders' Equity | ||
| Preferred Stock, $0.001 par value; 5,000,000 shares authorized; 73 and 0 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively | — | — |
| Common Stock, $0.001 par value; 495,000,000 shares authorized; 28,989,829 and 18,933,139 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively | 29 | 19 |
| Additional Paid in Capital | 76,398 | 66,524 |
| Accumulated Deficit | (73,210) | (56,935) |
| Accumulated Other Comprehensive Income | 112 | 86 |
| 3,329 | 9,694 | |
| Noncontrolling Interests | 4 | 4 |
| Total Equity | 3,333 | 9,698 |
| Total Liabilities and Shareholders' Equity | $25,463 | $36,251 |
| CEREPLAST, INC. | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (unaudited, in thousands, except shares data) | ||
| Nine Months Ended | ||
| September 30, 2012 | September 30, 2011 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net Loss | $ (16,275) | $ (7,725) |
| Adjustment to Reconcile Net Loss to Net Cash Used in Operating Activities | ||
| Depreciation and Amortization | 536 | 694 |
| Allowance for Doubtful Accounts | 5,082 | 1,780 |
| Common Stock Issued for Services, Salaries and Wages | 160 | 874 |
| Amortization of Loan Discount | 3,223 | 57 |
| Impairment of Intangible Assets | — | 64 |
| Extinguishment of Convertible Debt | 368 | — |
| Loss on Derivative Liability | 52 | — |
| Changes in Operating Assets and Liabilities | ||
| Accounts Receivable | 537 | (15,609) |
| Deferred Loan Costs | 458 | 223 |
| Inventory | 814 | (2,095) |
| Deposits | — | (35) |
| Prepaid Expenses | (171) | (1,514) |
| Accounts Payable | 659 | 269 |
| Accrued Expenses | 288 | 864 |
| NET CASH USED IN OPERATING ACTIVITIES | (4,269) | (22,153) |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchase of Property and Equipment, and Intangibles | (180) | (1,290) |
| Proceeds from Sale of Equipment | 15 | — |
| NET CASH USED IN INVESTING ACTIVITIES | (165) | (1,290 ) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Payments on Capital Leases | (50) | (13) |
| Proceeds from Capital Leases | — | 96 |
| Noncontrolling Interest Activities | — | 4 |
| Payments made on Notes Payable | (603) | — |
| Proceeds from Loan Payable, Net of Loan Costs | — | 2,500 |
| Proceeds from Convertible Notes, Net of Issuance Costs | 600 | 11,225 |
| Proceeds from Issuance of Common Stock and Subscriptions, Net of Issuance Costs | 400 | 11,363 |
| Proceeds from Issuance of Preferred Stock, Net of Issuance Costs | 400 | — |
| NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES | 747 | 25,175 |
| FOREIGN CURRENCY TRANSLATION | (15) | (93) |
| NET INCREASE (DECREASE) IN CASH | (3,702) | 1,639 |
| CASH, BEGINNING OF PERIOD | 3,940 | 2,391 |
| CASH, END OF PERIOD | $ 237 | $ 4,030 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
| Cash Paid During the Year For: | ||
| Interest | $ 460 | $ 417 |
| Income Taxes | $ — | $ — |
| SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS | ||