(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

CEREPLAST, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON DECEMBER 7,21, 2012

The 2012 Annual Meeting of Stockholders (the “Annual Meeting”) of Cereplast, Inc. (the “Company”) will be held at the DoubleTree Hotel, 1985 East Grand Ave., El Segundo, CA 90245-5015, on Friday, December 21, 2012, at 9:00 a.m. Pacific Time, to consider the following proposals:

1.              To elect the five director nominees named in the Proxy Statement to hold office until the next annual meeting of stockholders;

2.              To ratify the appointment of HJ Associates & Consultants, LLP as the Company’s independent auditors for the fiscal year ending December 31, 2012;

3.              To approve the issuance of more than 20% of the Company’s issued and outstanding common stock at a price that is less than the greater of book or market value in accordance with a stock purchase agreement between the Company and Ironridge Technology Co., a division of Ironridge Global IV, Ltd., dated August 24, 2012;

4.              To approve a note purchase agreement between the Company and Hanover Holding I, LLC, dated October 15, 2012, as amended by the First Amendment thereto, effective November 13, 2012, and the issuance of more than 20% of the Company’s issued and outstanding common stock at a price that is less than the greater of book or market value in accordance therewith;

5.              To approve an exchange agreement with Magna Group LLC, dated October 15, 2012, as amended by the First Amendment thereto, effective November 13, 2012, and the issuance of more than 20% of the Company’s issued and outstanding common stock at a price that is less than the greater of book or market value in accordance therewith;

6.              To approve an amendment to the Articles of Incorporation of the Company to effect a reverse stock split of the Company’s common stock, at a ratio of not less than one-for-two and not greater than one-for-twenty, with the exact ratio to be set within such range in the discretion of the Board of Directors without further approval or authorization of the Company’s shareholders, provided that the Board of Directors determines to effect the reverse stock split and such amendment is filed with the Secretary of State of Nevada no later than one year from the date of the Annual Meeting; and

7.              To act on such other matters as may properly come before the meeting or any adjournment there.

BECAUSE OF THE SIGNIFICANCE OF THESE PROPOSALS TO THE COMPANY AND ITS STOCKHOLDERS, IT IS VITAL THAT EVERY STOCKHOLDER VOTES AT THE ANNUAL MEETING IN PERSON OR BY PROXY.

These proposals are fully set forth in the accompanying Proxy Statement, which you are urged to read thoroughly. For the reasons set forth in the Proxy Statement, your Board of Directors recommends a vote “FOR” Proposals 1 — 6. The Company intends to mail the Annual Report, Proxy Statement and Proxy Card enclosed with this notice on or about ,November 20, 2012 to all stockholders entitled to vote at the Annual Meeting. Only stockholders of record at the close of business on November 15, 2012 will be entitled to attend and vote at the meeting. A list of all stockholders entitled to vote at the Annual Meeting will be available at the principal office of the Company during usual business hours, for examination by any stockholder for any purpose germane to the Annual Meeting for 10 days prior to the date thereof. Stockholders are cordially invited to attend the Annual Meeting. However, whether or not you plan to attend the meeting in person, your shares should be represented and voted. After reading the enclosed Proxy Statement, please sign, date, and return promptly the enclosed Proxy in the accompanying postpaid envelope we have provided for your convenience to ensure that your shares will be represented. Alternatively, you may wish to provide your response by telephone or electronically through the Internet by following the instructions set out on the enclosed Proxy Card. If you do attend the meeting and wish to vote your shares personally, you may revoke your Proxy.

WHETHER OR NOT YOU PLAN ON ATTENDING THE MEETING IN PERSON, PLEASE VOTE AS PROMPTLY AS POSSIBLE TO ENSURE THAT YOUR VOTE IS COUNTED.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held December 21, 2012. The Proxy Statement and our 2011 Annual Report on Form 10-K/A are available at: http://viewproxy.com/cereplast/2012

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INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

Why am I receiving these materials?

The Company has delivered printed versions of these materials to you by mail, in connection with the Company’s solicitation of proxies for use at the Annual Meeting. These materials describe the proposals on which the Company would like you to vote and also give you information on these proposals so that you can make an informed decision.

What is included in these materials?

These materials include:

·    this Proxy Statement for the Annual Meeting;

·    the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2011; and

·    the Proxy Card or vote instruction form for the Annual Meeting.

What is the Proxy Card?

The Proxy Card enables you to appoint Frederic Scheer, our Chief Executive Officer and Chairman of the Board of Directors, as your representatives at the Annual Meeting. By completing and returning a Proxy Card, you are authorizing these individuals to vote your shares at the Annual Meeting in accordance with your instructions on the Proxy Card. This way, your shares will be voted whether or not you attend the Annual Meeting.

What is the purpose of the Annual Meeting?

At our Annual Meeting, stockholders will act upon the matters outlined in the Notice of Annual Meeting on the cover page of this Proxy Statement, including (i) the election of five persons named herein as nominees for directors of the Company, to hold office subject to the provisions of the Bylaws of the Company, until the next annual meeting of stockholders and until their successors are duly elected and qualified, (ii) ratification of the appointment of HJ Associates & Consultants, LLP as the Company’s independent auditors for the fiscal year ending December 31, 2012, (iii) approval of the issuance of more than 20% of the Company’s issued and outstanding common stock at a price that is less than the greater of book or market value in accordance with a stock purchase agreement between the Company and Ironridge Technology Co., a division of Ironridge Global IV, Ltd., dated August 24, 2012, (iv) approval of a note purchase agreement between the Company and Hanover Holding I, LLC, dated October 15, 2012, as amended by the First Amendment thereto, effective November 13, 2012, and the issuance of more than 20% of the Company’s issued and outstanding common stock at a price that is less than the greater of book or market value in accordance therewith, (v) approval of an exchange agreement with Magna Group LLC, dated October 15, 2012, as amended by the First Amendment thereto, effective November 13, 2012, and the issuance of more than 20% of the Company’s issued and outstanding common stock at a price that is less than the greater of book or market value in accordance therewith, and (vi) approval of an amendment to the Articles of Incorporation of the Company to effect a reverse stock split of the Company’s common stock, at a ratio of not less than one-for-two and not greater than one-for-twenty, with the exact ratio to be set within such range in the discretion of the Board of Directors without further approval or authorization of the Company’s shareholders, provided that the Board of Directors determines to effect the reverse stock split and such amendment is filed with the Secretary of State of Nevada no later than one year from the date of the Annual Meeting. In addition, management will report on the performance of the Company during fiscal year 2011 and respond to questions from stockholders.

What constitutes a quorum?

The presence at the meeting, in person or by proxy, of the holders of a majority of the number of shares of common stock issued and outstanding on the record date will constitute a quorum permitting the meeting to conduct its business. As of the record date, there were 34,342,167 shares of our common stock issued and outstanding. Thus, the presence of the holders of 17,171,084 issued and outstanding shares of common stock will be required to establish a quorum.

What is the difference between a stockholder of record and a beneficial owner of shares held in street name?

Most of our stockholders hold their shares in an account at a brokerage firm, bank or other nominee holder, rather than holding share certificates in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially in street name.

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Stockholder of Record

If on November 15, 2012, your shares were registered directly in your name with our transfer agent, Computershare, you are considered a stockholder of record with respect to those shares, and the Notice of Annual Meeting and Proxy Statement was sent directly to you by the Company. As the stockholder of record, you have the right to direct the voting of your shares by returning the Proxy Card to us. Whether or not you plan to attend the Annual Meeting, if you do not vote over the Internet, please complete, date, sign and return a Proxy Card to ensure that your vote is counted.

If on November 15, 2012, your shares were held in an account at a brokerage firm, bank, broker-dealer, or other nominee holder, then you are considered the beneficial owner of shares held in “street name,” and the Notice of Annual Meeting and Proxy Statement was forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to direct that organization on how to vote the shares held in your account. However, since you are not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you receive a valid proxy from the organization.

How do I vote?

Stockholders of Record. If you are a stockholder of record, you may vote by any of the following methods:

·               Via the Internet. You may vote by proxy via the Internet by following the instructions provided on the enclosed Proxy Card.

·               By Telephone. You may vote by calling the toll free number found on the Proxy Card.

·               By Mail. You may vote by completing, signing, dating and returning your Proxy Card in the pre-addressed, postage-paid envelope provided.

·               In Person. You may attend and vote at the Annual Meeting. The Company will give you a ballot when you arrive.

Beneficial Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in street name, you may vote by any of the following methods:

·               Via the Internet. You may vote by proxy via the Internet by following the instructions provided on the enclosed Proxy Card.

·               By Telephone. You may vote by proxy by calling the toll free number found on the vote instruction form.

·               By Mail. You may vote by proxy by filling out the vote instruction form and returning it in the pre-addressed, postage-paid envelope provided.

·               In Person. If you are a beneficial owner of shares held in street name and you wish to vote in person at the Annual Meeting, you must obtain a legal proxy from the organization that holds your shares.

Abstentions and broker non-votes

While the inspectors of election will treat shares represented by Proxies that reflect abstentions or include “broker non-votes” as shares that are present and entitled to vote for purposes of determining the presence of a quorum, abstentions or “broker non-votes” do not constitute a vote “for” or “against” any matter and thus will be disregarded in any calculation of “votes cast.” However, abstentions and “broker non-votes” will have the effect of a negative vote if an item requires the approval of a majority of a quorum or of a specified proportion of all issued and outstanding shares.

Brokers holding shares of record for customers generally are not entitled to vote on “non-routine” matters, unless they receive voting instructions from their customers. As used herein, “uninstructed shares” means shares held by a broker who has not received voting instructions from its customers on a proposal. A “broker non-vote” occurs when a nominee holding uninstructed shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that non-routine matter. In connection with the treatment of abstentions and broker non-votes, the proposed ratification of HJ Associates & Consultants, LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2012, and the reverse stock split, are considered “routine” matters. Accordingly, brokers are entitled to vote uninstructed shares with respect to these proposals.

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What happens if I do not give specific voting instructions?

Shareholders of Record. If you are a stockholder of record and you:

·               indicate when voting on the Internet or by telephone that you wish to vote as recommended by the Board of Directors, or

·               sign and return a Proxy Card without giving specific voting instructions,

then the proxy holder will vote your shares in the manner recommended by the Board of Directors on all matters presented in this proxy statement and as the proxy holder may determine in his discretion with respect to any other matters properly presented for a vote at the Annual Meeting.

Beneficial Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges, the organization that holds your shares may generally vote on routine matters, such as the ratification of HJ Associates & Consultants, LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2012, and the reverse stock split, but cannot vote on non-routine matters, such as the election of directors, approval of the issuance of more than 20% of the Company’s issued and outstanding common stock at a price that is less than the greater of book or market value in accordance with the stock purchase agreement between the Company and Ironridge Technology Co., a division of Ironridge Global IV, Ltd., dated August 24, 2012, approval of a note purchase agreement between the Company and Hanover Holding I, LLC, dated October 15, 2012, as amended by the First Amendment thereto, effective November 13, 2012, and the issuance of more than 20% of the Company’s issued and outstanding common stock at a price that is less than the greater of book or market value in accordance therewith, and approval of an exchange agreement with Magna Group LLC, dated October 15, 2012, as amended by the First Amendment thereto, effective November 13, 2012, and the issuance of more than 20% of the Company’s issued and outstanding common stock at a price that is less than the greater of book or market value in accordance therewith.

What are the Board’s recommendations?

The Board’s recommendation is set forth together with the description of each item in this Proxy Statement. In summary, the Board recommends a vote:

·                  for election of the five (5) directors nominated by the Company to hold office subject to the provisions of the Bylaws of the Company, until the next annual meeting of stockholders and until their successors are duly elected and qualified;

·                  for ratification of the appointment of HJ Associates & Consultants, LLP as the Company’s independent auditors for fiscal year 2012;

·                  for approval of the issuance of more than 20% of the Company’s issued and outstanding common stock at a price that is less than the greater of book or market value in accordance with a stock purchase agreement between the Company and Ironridge Technology Co., a division of Ironridge Global IV, Ltd., dated August 24, 2012,

·                  for approval of a note purchase agreement between the Company and Hanover Holding I, LLC, dated October 15, 2012, as amended by the First Amendment thereto, effective November 13, 2012, and the issuance of more than 20% of the Company’s issued and outstanding common stock at a price that is less than the greater of book or market value in accordance therewith;

·                  for approval of a an exchange agreement with Magna Group LLC, dated October 15, 2012, as amended by the First Amendment thereto, effective November 13, 2012, and the issuance of more than 20% of the Company’s issued and outstanding common stock at a price that is less than the greater of book or market value in accordance therewith; and

·                  for approval of an amendment to the Articles of Incorporation of the Company to effect a reverse stock split of the Company’s common stock, at a ratio of not less than one-for-two and not greater than one-for-twenty, with the exact ratio to be set within such range in the discretion of the Board of Directors without further approval or authorization of the Company’s shareholders, provided that the Board of Directors determines to effect the reverse stock split and such amendment is filed with the Secretary of State of Nevada no later than one year from the date of the Annual Meeting.

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MICHAEL OKADA , our Vice President, Chief Accounting Officer and Interim CFO since February, 2012, joined Cereplast as Vice President and Corporate Controller in April 2011. From June, 2009 through February, 2011, Mr. Okada served as Vice President, Finance and Corporate Controller of Mindspeed Technologies, Inc. (MSPD — NasdaqGS), a fabless semiconductor company based in Newport Beach, CA. Mr. Okada served as Interim Vice President of Financial Reporting from September, 2008 through April, 2009 of American Apparel, Inc. (APP — Amex), a publicly traded vertically integrated apparel company. Mr. Okada also served as Chief Financial Officer and Treasurer of ExtruMed, LLC, a medical device component manufacturer, from May, 2007 through August, 2008. Mr. Okada holds a Bachelor of Science degree in Accounting from Santa Clara University and is a Certified Public Accountant licensed in the state of California.

MARK BARTON, joined Cereplast as Senior Vice President, Operations in July 2008. Mr. Barton leads our global manufacturing operations. With over 25 years of successful plastic compounding industry experience, most recently as Vice President of Toray Resin Company, Mr. Barton has held a succession of resin manufacturing leadership positions. Under Mr. Barton’s leadership, Toray Resin’s engineering resin compounding operations became an industry leader, achieving registrations of ISO 9001/TS16949 for quality systems, ISO 14001 for environmental systems and receiving the Toray Industries, Presidents Award in 2006 for overall performance and achievement. Mr. Barton’s experience includes championing successful lean manufacturing and continuous improvement systems in resin compounding operations. Mr. Barton holds a Bachelor of Science degree in Management Science/Business Administration from Franklin University in Columbus, Ohio.

KELVIN OKAMOTO , our Senior Vice President and Chief Technology Officer since April, 2011, joined Cereplast as Senior Vice President of Research & Development in December, 2010. Dr. Okamoto brings 20 plus years of research and development experience in the plastics and packaging industries to his role as Chief Technology Officer. Prior to joining Cereplast, he served as Manager of Materials Engineering and Manager of Materials Engineering for Solo Cup Operating Corp. Dr. Okamoto’s career has included positions as an Intellectual Property Consultant, Chief Engineer at Taylor-Made-Adidas, Director of Intellectual Property at Trexel, Inc., Materials Development Manager at Pactiv, Group Leader-Structural Plastics Product Development and Research Chemist at Himont USA (presently Lyondell Basell) and Staff Chemist at GE Corporate Research and Development. Dr. Okamoto has been affiliated with the American Chemical Society, ASTM, National Association of Patent Practitioners and the Society of Plastic Engineers, where he has held a number of elected positions. Dr. Okamoto holds a Ph.D. in Chemistry from Cornell University and a Bachelor of Science degree in Chemistry from Stanford University.

Involvement in Certain Legal Proceedings

To our knowledge, during the last ten years, our executive officers have not been involved in any of the following events during the past ten years:

There are no material proceedings to which any executive officer of the Company is a party adverse to the Company or has a material interest adverse to the Company.

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ACTIONS TO BE TAKEN AT THE MEETING

PROPOSAL NO. 1

PROPOSAL FOR ELECTION OF FIVE DIRECTORS

At this year’s Annual Meeting, the Board of Directors proposes that the nominees listed below be elected to hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified. All of the nominees are currently serving as directors. All nominees have consented to being named in this Proxy Statement and to serve if elected.

Assuming a quorum is present, the five nominees receiving the highest number of affirmative votes of shares entitled to be voted for such persons will be elected as directors of the Company to hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified. Unless marked otherwise, proxies received will be voted “FOR” the election of the nominees named below. In the event that additional persons are nominated for election as directors, the proxy holders intend to vote all proxies received by them in such a manner as will ensure the election of the nominees listed below, and, in such event, the specific nominees to be voted for will be determined by the proxy holders.

Information With Respect to Director Nominees

Listed below are the nominees for election to our Board with information showing the principal occupation or employment of the nominees for director, the principal business of the corporation or other organization in which such occupation or employment is carried on, and such nominees’ business experience during the past five years. Such information has been furnished to the Company by the director nominees.

FREDERIC SCHEER , our CEO, Founder and Chairman of the Board of Directors, since Cereplast’s inception, became involved in the biodegradable plastics industry in 1994 through Montedison SpA, a large chemical conglomerate operating Novamont SpA, an Italian resin manufacturer and research company. Foreseeing that the demand for biodegradable products in North America would expand rapidly by the end of the decade, Mr. Scheer created the Biodegradable Products Institute (BPI), and this non-profit organization has quickly become the largest biodegradable association in the world, with more than 40 members, including BASF, DuPont, Georgia Pacific, NatureWorks, Dow and Eastman. Prior to his involvement in the biodegradable industry, Mr. Scheer was a merchant banker in Europe. He holds a Doctor of Laws from the University of Paris, a Masters Degree in Finance and Political Science from Institut d’Etudes Politiques, Paris, France. Mr. Scheer, a U.S. citizen, is fluent in French, Spanish, Italian and English.

Due to his knowledge of the bioplastic industry and the fact that Mr. Scheer is the founder of the Company, the Board of Director concluded that Mr. Scheer had all qualifications to be a member of the Board.

JACQUES VINCENT , Director and Chair of the Nominating and Corporate Governance Committee. Mr. Vincent has served as a Director of the Company since January 2008. Mr. Vincent was recently named vice chairman and advisor to the chairman and previously served as the vice chairman and chief operating officer at Groupe Danone. Mr. Vincent began his career with Danone in 1970 and has since held various financial and overall management positions within the company. Mr. Vincent is a graduate engineer of the Ecole Centrale, Paris, holds a bachelor’s degree in economics from Paris University and a Master’s of Science from Stanford University. In addition to Mr. Vincent’s position at Groupe Danone, he is the Chairman of Daniel Carasso Research Center and Ecole Normale Superieure de Lyon, and board member of Syngenta in Switzerland and Yakult Honsha in Japan.

Due to his knowledge of the Trade and marketing of food service items and dairy products around the world, the Board concluded that Mr. Vincent is qualified to serve as a Director. Mr. Vincent is also Chairman of the Nominating and Corporate Governance Committee.

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CRAIG PEUS, Director and Chair of the Compensation Committee. Mr. Peus was appointed as one of our directors effective September 29, 2010. Mr. Peus currently serves as the Chairman and Founder of One Simple Move Inc., a web-based relocation software company, a position he has held since June 2006. Mr. Peus also currently serves as an advisor to three operating companies providing general business advice. Mr. Peus has served as a Managing Director of Waveland Capital Group, Inc. a multi-service investment bank. From June 2003 through December 2009, Mr. Peus was the Managing Partner and Co-Founder of Blossom Street Capital Advisors, LLC, an investment banking firm and licensed broker/dealer. Mr. Peus has held executive level positions at Astera Care, LLC, MTS Health Partners, LP, KRS Kapital, LLC and was a financial analyst at Salomon Brothers, Inc. Mr. Peus received a Bachelor of Sciences Degree in Biological Sciences from Stanford University.

Due to his knowledge of the financial industry, the Board concluded that Mr. Peus is qualified to serve as a Director. Mr. Peus is also Chairman of the Compensation Committee.

FRANKLIN HUNT, Director and Chair of the Audit Committee. Mr. Hunt was appointed as one of our directors effective September 29, 2010. Mr. Hunt is the owner of Hunt Business Consulting, a company that provides consultation to companies regarding current requirements under GAAP and IFRS. Mr. Hunt served as a member of HJ &Associates, LLC from 1995 through May 2010. Mr. Hunt received a Bachelor of Science degree from Brigham Young University. He is a member of AICPA and UACPA and is a Certified Public Accountant licensed in the state of Utah.

Due to his experience in public accounting, the Board concluded that Mr. Hunt is qualified to serve as a Director. Mr. Hunt is also Chairman of the Audit Committee.

PAUL PELOSI, JR., Director. Mr. Pelosi was appointed as one of our directors effective February 24, 2012. Mr. Pelosi has 16 years of experience in advising emerging and Fortune 500 companies in the areas of finance, infrastructure, sustainability and public policy. Since October 2011, Mr. Pelosi has served as Director of Corporate Development at Petrus Capital Partners, LLC. Mr. Pelosi also served as Director of Investment Banking and M&A at WR Hambrecht from March 2009 through September 2011. Mr. Pelosi served as Senior Vice President of Business Development at InfoUSA, from February 2007 through March 2009. From January 2003 through January 2007, Mr. Pelosi was Manager and Originator in the New Construction Division at Bank of America Countrywide. Mr. Pelosi received a BA in History in 1991, and a JD/MBA with a specialization in International Business in 1995 from Georgetown University.

Due to his knowledge of the environmental issues in public policy, the Board concluded that Mr. Pelosi is qualified to serve as a Director.

Board Determination of Independence

Our Board of Directors has determined that Messrs. Vincent, Hunt, Peus and Pelosi, comprising a majority of the board of directors are currently “independent” as that term is defined under current listing standards of NASDAQ.

Required Vote

The election of the directors of the Company requires the affirmative vote of a plurality of the votes cast by stockholders, who are entitled to vote, present in person or represented by Proxy at the Annual Meeting, which will be the nominees receiving the largest number of votes, which may or may not constitute less than a majority.

RECOMMENDATION OF THE BOARD FOR PROPOSAL NO. 1:

THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF ALL THE NOMINEES DESCRIBED ABOVE.

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ACTIONS TO BE TAKEN AT THE MEETING (Continued)

PROPOSAL NO. 2

RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS

Our Board has appointed HJ Associates & Consultants, LLP (“HJ Associates”), to serve as our independent registered public accounting firm for the year ending December 31, 2012. HJ Associates has acted as our principal accountant since November, 2005 and served as our principal accountant for the year ending December 31, 2011.

The selection of our independent registered public accounting firm is not required to be submitted to a vote of our shareholders for ratification. However, Cereplast is submitting this matter to the shareholders as a matter of good corporate governance. Even if the appointment is ratified, the Board may, in its discretion, appoint a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of Cereplast and its shareholders. If the appointment is not ratified, the Board will consider its options.

A representative of HJ Associates is expected to be present at the Annual Meeting. He or she will have the opportunity to make a statement if desired and is expected to be available to respond to appropriate questions.

Our Audit Committee retains our independent registered public accounting firm and approves in advance all audit and non-audit services performed by this firm and any other auditing firms. Although management has the primary responsibility for the financial statements and the reporting process including the systems of internal control, the Audit Committee consults with management and our independent registered public accounting firm regarding the preparation of financial statements, the adoption and disclosure of our critical accounting estimates and generally oversees the relationship of the independent registered public accounting firm with Cereplast. The independent registered public accounting firm is responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, relating to their judgments as to the quality, not just the acceptability, of Cereplast’s accounting principles, and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards.

It is not the duty of the Audit Committee to determine that Cereplast’s financial statements and disclosures are complete and accurate and in accordance with generally accepted accounting principles or to plan or conduct audits. Those are the responsibilities of management and Cereplast’s independent registered public accounting firm. In giving its recommendation to the Board, the Audit Committee has relied on: (1) management’s representation that such financial statements have been prepared with integrity and objectivity and in conformity with GAAP; and (2) the report of Cereplast’s independent registered public accounting firm with respect to such financial statements.

The following table sets forth all fees we incurred in connection with professional services rendered by HJ Associates & Consultants, LLP during the years ended December 31, 2011, and 2010:

(1)                   All Other Fees include fees related to reviews and issuance of documents related to Registration Statements that we filed during the year.

The Audit Committee has adopted procedures for the pre-approval of audit and non-audit services rendered by our independent registered public accountants, HJ Associates & Consultants, LLP, up to specified amounts. Pre-approval may also be given as part of the audit committee’s approval of the scope of the engagement of the independent registered public accountants or on an individual explicit case-by-case basis before the independent registered public accountants are engaged to provide each service. The Audit Committee has determined that the provision of non-audit services is compatible with maintaining the principal accountant’s independence.

Required Vote

The ratification of the appointment of the Company’s independent auditors requires the receipt of the affirmative vote of the holders of a majority of the shares of the Company’s common stock present in person or by proxy and voting at the Annual Meeting.

RECOMMENDATION OF THE BOARD FOR PROPOSAL NO. 2:

THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF APPOINTMENT OF HJ ASSOCIATES & CONSULTANTS, LLP AS OUR INDEPENDENT AUDITORS FOR THE YEAR ENDED DECEMBER 31, 2012.

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Why the Company Needs Shareholder Approval

We are seeking shareholder approval in order to comply with Rule 5635 of the NASDAQ Stock Market and to satisfy one of the conditions under the Ironridge Purchase Agreement for additional sales of Series A Preferred Stock to Ironridge.

Rule 5635 of the NASDAQ Stock Market (“Rule 5635”) requires shareholder approval of a transaction other than a public offering involving the sale, issuance or potential issuance by an issuer of common stock (or securities convertible into or exercisable for common stock) at a price that is less than the greater of book or market value of the stock if the number of shares of common stock to be issued is or may be equal to 20% or more of the common stock, or 20% or more of the voting power, outstanding before the issuance.

Pursuant to the Ironridge Purchase Agreement and the Certificate of Designation, the Series A Preferred Stock may not be converted into common stock to the extent such conversion, aggregated with all other shares of common stock that may be issued upon conversion of the Series A Preferred Stock issued pursuant to the Ironridge Purchase Agreement, would result in the issuance of more than 19.999% of the amount of common stock of the Company issued and outstanding as of August 24, 2012, unless (a) the Company’s shareholders shall have approved the issuance of shares of common stock in excess of 20% of the amount of Common Stock of the Company issued and outstanding as of August 24, 2012, (b) Nasdaq has provided a waiver of Listing Rule 5635(d), or (c) the Company is no longer listed on the Nasdaq Stock Market. Because of this limitation on the conversion of the Series A Preferred Stock, we believe shareholder approval is not required, and is not being sought, for issuance of the Series A Preferred Stock.

As noted above, shareholder approval of the issuance of shares of common stock in excess of 20% of the amount of common stock issued and outstanding as of August 24, 2012 pursuant to the Ironridge Purchase Agreement is a condition for Subsequent Closings under the Ironridge Purchase Agreement. Accordingly, we are seeking such shareholder approval so that we may sell additional shares of Series A Preferred Stock under the Ironridge Purchase Agreement. If the Company fails to obtain such shareholder approval, we will be unable to sell additional shares of Series A Preferred Stock under the Ironridge Purchase Agreement. We anticipate that we will need to sell additional shares of Series A Preferred Stock under the Ironridge Purchase Agreement to obtain working capital to fund our operations over the next year. As of September 30, 2012, we had cash of $237,000 and working capital of $5,106,000.

Effect of Proposal on Current Shareholders

If this Proposal No. 3 is adopted, and we are able to satisfy the remaining conditions for sales of additional shares of Series A Preferred Stock under the Ironridge Purchase Agreement, we may sell up to 500 shares of Series A Preferred Stock (including 30 shares sold at the Initial Ironridge Closing) to Ironridge under the Ironridge Purchase Agreement, and up to a maximum of 20,000,000 shares of common stock would be issuable upon conversion of such 500 shares of Series A Preferred Stock. The issuance of such shares would result in significant dilution to our shareholders, and afford them a smaller percentage interest in the voting power, liquidation value and aggregate book value of the Company. Additionally, the sale or any resale of the common stock issued upon conversion of the Series A Preferred Stock issuable under the Ironridge Purchase Agreement could cause the market price of our common stock to decline.

Further Information.  The terms of the Ironridge Purchase Agreement, Registration Rights Agreement and Certificate of Designation are complex and only briefly summarized above. For further information, please refer to the descriptions contained in the Company’s Current Report on Form 8-K filed with the SEC on August 31, 2012, and the transaction documents filed as exhibits to such report. The discussion herein is qualified in its entirety by reference to such filed transaction documents.

Required Vote

Approval of the Ironridge Purchase Agreement and the issuance of more than 20% of the Company’s issued and outstanding common stock at a price that is less than the greater of book or market value in accordance therewith requires the receipt of the affirmative vote of the holders of a majority of the shares of the Company’s common stock present in person or by proxy and voting at the Annual Meeting.

RECOMMENDATION OF THE BOARD FOR PROPOSAL NO. 3:

THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE ISSUANCE OF MORE THAN 20% OF THE COMPANY’S ISSUED AND OUTSTANDING COMMON STOCK IN ACCORDANCE WITH THE STOCK PURCHASE AGREEMENT, DATED AUGUST 24, 2012

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ACTIONS TO BE TAKEN AT THE MEETING (Continued)

PROPOSAL NO. 4:

APPROVAL OF A NOTE PURCHASE AGREEMENT, DATED OCTOBER 15, 2012, AS AMENDED BY THE FIRST AMENDMENT THERETO, EFFECTIVE NOVEMBER 13, 2012, PURSUANT TO WHICH THE COMPANY MAY ISSUE MORE THAN 20% OF THE COMPANY’S ISSUED AND OUTSTANDING COMMON STOCK.

Terms of the Transaction

On October 15, 2012, the Company entered into a Note Purchase Agreement, and on November 13, 2012, the Company entered into the First Amendment thereto (as amended, 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 $800,000 of convertible promissory notes (the “Hanover Notes”). Subject to the terms and conditions set forth in the Hanover Purchase Agreement, the Hanover Notes will be sold in tranches of $100,000 through on or around February 15, 2013. The initial closing under the Hanvor Purchase Agreement, pursuant to which we sold to Hanover a Hanover Note in the amount of $100,000 (the “Initial Hanover Closing”) occurred on October 16, 2012. The Hanover Notes bear interest at the rate of 12% per annum and mature eight months after issuance. The Hanover Notes are convertible at the option of the holder at a price equal to 75% of the average of the three lowest volume weighted average prices during the ten consecutive trading day period immediately prior to the date of conversion. The Hanover Notes contain standard default provisions and provisions for adjustment for the conversion price in the event of subsequent equity sales.

Pursuant to the Hanover Purchase Agreement, the holders of the Hanover Notes will not have the right to receive more than such number of shares which together with such number of shares that may be issued by the Company pursuant to the Magna Notes issued pursuant to the Exchange Agreement (see Proposal No. 5) is 19.999% of the outstanding common stock of the Company as of October 15, 2012, unless the Company’s shareholders have approved the transactions contemplated by the Hanover Purchase Agreement, including the issuance of shares upon conversion of the Hanover Notes in excess of 20% of the Company’s outstanding common stock. In the event the Company fails to obtain such shareholder approval at its 2012 annual meeting of shareholders, Hanover will have the right to terminate the Hanover Purchase Agreement and its obligation to purchase additional Hanover Notes pursuant to the Hanover Purchase Agreement.

Why the Company Needs Shareholder Approval

We are seeking shareholder approval in order to comply with Rule 5635, so that we may continue to sell Hanover Notes under the Hanover Purchase Agreement, and so that Hanover may convert all of such Hanover Notes into common stock. As noted above, unless such shareholder approval is obtained, the holders of the Hanover Notes will not have the right to right to receive more than 19.999% of the outstanding common stock of the Company as of October 15, 2012. Further, as noted above, if such shareholder approval is not obtained at the 2012 Annual Meeting, Hanover will have the right to terminate the Hanover Purchase Agreement and its obligation to purchase additional Hanover Notes thereunder. We anticipate that we will need to sell additional Hanover Notes under the Hanover Purchase Agreement to obtain working capital to fund our operations over the next year. As of September 30, 2012, we had cash of $237,000 and working capital of $5,106,000.

Effect of Proposal on Current Shareholders

If this Proposal No. 4 is adopted, and we are able to satisfy the remaining conditions for sales of additional Hanover Notes under the Hanover Purchase Agreement, we may sell up to $800,000 of Hanover Notes (including $100,000 shares sold at the Initial Hanover Closing) to Hanover under the Hanover Purchase Agreement. As noted above, the Hanover Notes are convertible at the option of the holder at a price equal to 75% of the average of the three lowest volume weighted average prices during the ten consecutive trading day period immediately prior to the date of conversion. Based on the conversion price of $0.192725 as of October 16, 2012, up to a maximum of 4,150,992 shares of common stock would be issuable upon conversion of such $800,000 of Hanover Notes. The issuance of such shares would result in significant dilution to our shareholders, and afford them a smaller percentage interest in the voting power, liquidation value and aggregate book value of the Company. Additionally, the sale or any resale of the common stock issued upon conversion of the Hanover Notes issuable under the Hanover Purchase Agreement could cause the market price of our common stock to decline. As noted above, the conversion price of the Hanover Notes is continuously adjustable based on the market price of our common stock, which could result in an even greater number of shares issuable upon such conversion.

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In evaluating Proposal No. 4, shareholders should also consider the following risk factors:

If Proposal No. 4 is approved, as a result of the continuously adjustable conversion price feature of the Hanvoer Notes, our obligation to issue shares of common stock upon conversion of the Hanover Notes will be limitless, which will cause dilution to our existing stockholders.

Pursuant to the Hanover Purchase Agreement, we may sell to Hanover up to $800,000 in Hanover Notes, including $100,000 sold at the Initial Hanover Closing. The Hanover Notes are convertible to common stock at a conversion price equal to 75% of the average of the three lowest volume weighted average prices during the ten consecutive trading day period immediately prior to the date of conversion. If Proposal No. 4 is approved, our obligation to issue shares upon conversion of the Hanover Notes will be essentially limitless. The number of shares of common stock issuable upon conversion of the Hanover Notes will increase if the market price of our stock declines, which will cause dilution to our existing stockholders.

If Proposal No. 4 is approved, the continuously adjustable conversion price feature of the Hanover Notes may encourage investors to make short sales in our common stock, which could have a depressive effective on the price of our common stock, and make it more difficult for us to raise additional funds.

The downward pressure on the price of the common stock as holders of the Hanover Notes convert and sell material amounts of common stock could encourage short sales by investors. Short sales by investors could place further downward pressure on the price of the common stock. The holders of the Hanover Notes could sell common stock into the market in anticipation of covering the short sale by converting their securities, which could cause the further downward pressure on the stock price. In addition, not only the sale of shares issued upon conversion of Hanover Notes, but also the mere perception that these sales could occur, may adversely affect the market price of the common stock. Downward pressure on the price of our common stock from consecutive conversions could result in the holders converting the Hanover Notes into common stock at successively lower conversion rates, thereby causing a successively greater dilution of our stockholders, and causing a downward spiraling effect on the price of our common stock (a so-called “death spiral”). A lower price of our common stock would make it more difficult for us to raise additional funds.

Further Information.  The terms of the Hanover Purchase Agreement and Hanover Notes are complex and only briefly summarized above. For further information, please refer to the descriptions contained in the Company’s Current Reports on Form 8-K filed with the SEC on October 19, 2012 and November 15, 2012 and the transaction documents filed as exhibits to such report. The discussion herein is qualified in its entirety by reference to such filed transaction documents.

Required Vote

Approval of the Hanover Purchase Agreement and the issuance of more than 20% of the Company’s issued and outstanding common stock at a price that is less than the greater of book or market value in accordance therewith requires the receipt of the affirmative vote of the holders of a majority of the shares of the Company’s common stock present in person or by proxy and voting at the Annual Meeting.

RECOMMENDATION OF THE BOARD FOR PROPOSAL NO. 4:

THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE NOTE PURCHASE AGREEMENT, DATED OCTOBER 15, 2012, AS AMENDED BY THE FIRST AMENDMENT THERETO, EFFECTIVE NOVEMBER 13, 2012, PURSUANT TO WHICH THE COMPANY MAY ISSUE MORE THAN 20% OF THE COMPANY’S ISSUED AND OUTSTANDING COMMON STOCK

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ACTIONS TO BE TAKEN AT THE MEETING (Continued)

PROPOSAL NO. 5:

APPROVAL OF AN EXCHANGE AGREEMENT, DATED OCTOBER 15, 2012, AS AMENDED BY THE FIRST AMENDMENT THERETO, EFFECTIVE NOVEMBER 13, 2012, PURSUANT TO WHICH THE COMPANY MAY ISSUE MORE THAN 20% OF THE COMPANY’S ISSUED AND OUTSTANDING COMMON STOCK.

Terms of the Transaction

On October 15, 2012, the Company entered into an Exchange Agreement, and on November 13, 2012, the Company entered into the First Amendment thereto (as amended, the “Exchange Agreement”) with Magna Group LLC (“Magna”), pursuant to which the Company agreed to issue to Magna convertible notes (the “Magna Notes”), in the aggregate principal amount of up to $4,598,110, in exchange for an equal amount of participation interests in certain secured promissory notes (the “Secured Notes”) issued by the Company to Compass Horizon Funding Company, LLC (“Horizon”) to be acquired by Magna. Pursuant to a participation purchase agreement dated as of October 15, 2012 (the “Magna Purchase Agreement”), Magna agreed to acquire, in tranches through on or around February 15, 2013, participation interests in the Secured Notes from Horizon up to the maximum amount of the principal outstanding, together with accrued interest and fees. The initial closing under the Exchange Agreement, pursuant to which the Company issued a Magna Note in the amount of $500,000 in exchange for a participation interest in a Secured Note in the amount of $500,000 (the “Initial Magna Closing”), occurred on October 15, 2012.

The Magna Notes bear interest at the rate of 6% per annum and mature 12 months after the date of issuance. The Magna Notes are convertible at the option of the holder at a conversion price equal to 75% of the average of the three lowest volume weighted average prices during the ten consecutive trading day period immediately prior to the date of conversion. The Magna Notes contain standard default provisions and provisions for adjustment of the conversion price in the event of subsequent equity sales.

The holders of the Magna Notes will not have the right to receive more than such number of shares which together with such number of shares that may be issued by the Company pursuant to the Hanover Notes issued pursuant to the Hanover Purchase Agreement (see Proposal No. 4) is 19.999% of the outstanding common stock of the Company as of October 15, 2012, unless the Company’s shareholders have approved the transactions contemplated by the Exchange Agreement, including the issuance of shares upon conversion of the Magna Notes in excess of 20% of the Company’s outstanding common stock. Pursuant to the Magna Purchase Agreement, in the event the Company fails to obtain shareholder approval for the Exchange Agreement and the issuance of more than 20% of the Company’s issued and outstanding common stock thereunder at its 2012 annual meeting of shareholders, Magna will have the right to terminate the Magna Purchase Agreement and its obligation to purchase additional participation interests in the Secured Notes pursuant to the Magna Purchase Agreement. In the event that Magna terminates the Magna Purchase Agreement, the Company would not issue additional Magna Notes to Magna under the Exchange Agreement, because Magna would not be acquiring additional participation interests in the Secured Notes to exchange for such Magna Notes.

Hanover and Magna have identical ownership.

Why the Company Needs Shareholder Approval

We are seeking shareholder approval in order to comply with Rule 5635, so that we may continue to issue Magna Notes under the Exchange Agreement in exchange for participation interests in the Secured Notes, and so that Magna may convert all of such Magna Notes into common stock. As noted above, unless such shareholder approval is obtained, the holders of the Magna Notes will not have the right to receive more than 19.999% of the outstanding common stock of the Company as of October 15, 2012. Further, as noted above, if such shareholder approval is not obtained at the 2012 Annual Meeting, Magna will have the right to terminate the Magna Purchase Agreement and its obligation to purchase additional participation interests in the Secured Notes thereunder. Such termination would result in our not being able to issue additional Magna Notes under the Exchange Agreement.

Effect of Proposal on Current Shareholders

If this Proposal No. 5 is adopted, we may issue, in exchange for participation interests in the Secured Notes, up to $4,598,110 of Magna Notes (including $500,000 issued at the Initial Magna Closing) to Magna under the Exchange Agreement. As noted above, the Magna Notes are convertible at the option of the holder at a price equal to 75% of the average of the three lowest volume weighted average prices during the ten consecutive trading day period immediately prior to the date of conversion. Based on the conversion price of $0.192725 as of October 16, 2012, up to a maximum of 23,858,400 shares of common stock would be issuable upon conversion of such $4,598,110 of Magna Notes. The issuance of such shares would result in significant dilution to our shareholders, and afford them a smaller percentage interest in the voting power, liquidation value and aggregate book value of the Company. Additionally, the sale or any resale of the common stock issued upon conversion of the Magna Notes issuable under the Exchange Agreement could cause the market price of our common stock to decline. As noted above, the conversion price of the Magna Notes is continuously adjustable based on the market price of our common stock, which could result in an even greater number of shares issuable upon such conversion.

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In evaluating Proposal No. 5, shareholders should also consider the following risk factors:

If Proposal No. 5 is approved, as a result of the continuously adjustable conversion price feature of the Magna Notes, our obligation to issue shares of common stock upon conversion of the Magna Notes will be limitless, which will cause dilution to our existing stockholders.

Pursuant to the Exchange Agreement, we may issue to Magna up to $4,598,110 in Magna Notes, including $500,000 issued at the Initial Magna Closing. The Magna Notes are convertible to common stock at a conversion price equal to 75% of the average of the three lowest volume weighted average prices during the ten consecutive trading day period immediately prior to the date of conversion. If Proposal No. 5 is approved, our obligation to issue shares upon conversion of the Magna Notes will be essentially limitless. The number of shares of common stock issuable upon conversion of the Magna Notes will increase if the market price of our stock declines, which will cause dilution to our existing stockholders.

If Proposal No. 5 is approved, the continuously adjustable conversion price feature of the Magna Notes may encourage investors to make short sales in our common stock, which could have a depressive effective on the price of our common stock, and make it more difficult for us to raise additional funds.

The downward pressure on the price of the common stock as holders of the Magna Notes convert and sell material amounts of common stock could encourage short sales by investors. Short sales by investors could place further downward pressure on the price of the common stock. The holders of the Magna Notes could sell common stock into the market in anticipation of covering the short sale by converting their securities, which could cause the further downward pressure on the stock price. In addition, not only the sale of shares issued upon conversion of Magna Notes, but also the mere perception that these sales could occur, may adversely affect the market price of the common stock. Downward pressure on the price of our common stock from consecutive conversions could result in the holders converting the Magna Notes into common stock at successively lower conversion rates, thereby causing a successively greater dilution of our stockholders, and causing a downward spiraling effect on the price of our common stock (a so-called “death spiral”). A lower price of our common stock would make it more difficult for us to raise additional funds.

Further Information.  The terms of the Exchange Agreement and the Magna Notes are complex and only briefly summarized above. For further information, please refer to the descriptions contained in the Company’s Current Reports on Form 8-K filed with the SEC on October 19, 2012 and November 15, 2012 and the transaction documents filed as exhibits to such report. The discussion herein is qualified in its entirety by reference to such filed transaction documents.

Required Vote

Approval of the Exchange Agreement and the issuance of more than 20% of the Company’s issued and outstanding common stock at a price that is less than the greater of book or market value in accordance therewith requires the receipt of the affirmative vote of the holders of a majority of the shares of the Company’s common stock present in person or by proxy and voting at the Annual Meeting.

RECOMMENDATION OF THE BOARD FOR PROPOSAL NO. 5:

THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE EXCHANGE AGREEMENT, DATED OCTOBER 15, 2012, AS AMENDED BY THE FIRST AMENDMENT THERETO, EFFECTIVE NOVEMBER 13, 2012, PURSUANT TO WHICH THE COMPANY MAY ISSUE MORE THAN 20% OF THE COMPANY’S ISSUED AND OUTSTANDING COMMON STOCK

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ACTIONS TO BE TAKEN AT THE MEETING (Continued)

PROPOSAL NO. 6

APPROVAL OF REVERSE STOCK SPLIT

The Board of Directors is recommending that the Company’s shareholders approve an amendment to the Company’s Articles of Incorporation to effect a reverse stock split of our issued and outstanding common stock (the “Reverse Stock Split”), as described below.

The form of the amendment to the Company’s Articles of Incorporation to effect a reverse stock split of our issued and outstanding common stock will be substantially as set forth on Appendix A. Approval of the proposal would permit (but not require) our Board of Directors to effect a reverse stock split of our issued and outstanding common stock by a ratio of not less than one-for-two and not more than one-for-twenty, with the exact ratio to be set at a whole number within this range as determined by our Board of Directors in its sole discretion, provided that the Board of Directors determines to effect the Reverse Stock Split and such amendment is filed with the Secretary of State of Nevada no later than one year after the date of our Annual Meeting. We believe that enabling our Board of Directors to set the ratio within the stated range will provide us with the flexibility to implement the Reverse Stock Split in a manner designed to maximize the anticipated benefits for our stockholders. In determining a ratio, if any, following the receipt of stockholder approval, our Board of Directors may consider, among other things, factors such as:

·                               the historical trading price and trading volume of our common stock;

·                               the number of shares of our common stock outstanding;

·                               the then-prevailing trading price and trading volume of our common stock and the anticipated impact of the Reverse Stock Split on the trading market for our common stock;

·                               the anticipated impact of a particular ratio on our ability to reduce administrative and transactional costs; and

·                               prevailing general market and economic conditions.

Our Board of Directors reserves the right to elect to abandon the Reverse Stock Split, including any or all proposed reverse stock split ratios, if it determines, in its sole discretion, that the Reverse Stock Split is no longer in the best interests of the Company and its stockholders.

Depending on the ratio for the Reverse Stock Split determined by our Board of Directors, no less than two and no more than twenty shares of existing common stock, as determined by our Board of Directors, will be combined into one share of common stock. Any fractional shares will be rounded up to the next whole number. The amendment to our Articles of Incorporation to effect a reverse stock split, if any, will include only the reverse split ratio determined by our Board of Directors to be in the best interests of our stockholders and all of the other proposed amendments at different ratios will be abandoned.

Background and Reasons for the Reverse Stock Split; Potential Consequences of the Reverse Stock Split

On May 1, 2012, the Company received notice from NASDAQ that the Company’s securities do not meet NASDAQ’s Listing Rule 5550(a)(2) minimum bid price requirement, which requires the bid price of the Company’s common stock to be at least $1.00 per share. The Company has until November 1, 2012 to regain compliance with the minimum bid price rule, unless it is able to obtain an extension of the deadline to regain compliance.

The primary purpose of the Reverse Stock Split is to increase the market price of our common stock so that we can meet the minimum bid price rule requirements of NASDAQ. As of November 13, 2012, the last reported closing price of the Company’s common stock was $0.09. A delisting of the Company’s common stock may materially and adversely affect a holder’s ability to dispose of, or to obtain accurate quotations as to the market value, of, the common stock. In addition, any delisting may cause the common stock to be subject to “penny stock” regulations promulgated by the Securities and Exchange Commission. Under such regulations, broker-dealers are required to, among other things, comply with disclosure and special suitability determinations prior to the sale of shares of common stock. If the Company’s common stock becomes subject to these regulations, the market price of the common stock and the liquidity thereof could be materially and adversely affected. Reducing the number of outstanding shares of our common stock should, absent other factors, increase the per share market price of our common stock, although we cannot provide any assurance that our minimum bid price would remain following the Reverse Stock Split over the minimum bid price requirement of any such stock exchange. In addition to increasing the market price of our common stock, the Reverse Stock Split would also reduce certain of our costs, as discussed below. Accordingly, for these and other reasons discussed below, we believe that approval of the Reverse Stock Split is in the Company’s and our stockholders’ best interests.

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Appendix A

Certificate of Amendment to Articles of Incorporation

For Nevada Profit Corporations

(Pursuant to NRS 78.385 and 78.390 · After Issuance of Stock)

1. Name of corporation:

Cereplast, Inc.

2. The articles have been amended as follows: (provide article numbers, if available)

Upon the filing of this certificate of amendment, the corporation shall effect a one-for-            reverse split whereby each share of Common Stock, par value $0.001 per share shall, without any action on the part of the holder, become and be converted into             shares of common stock, par value $0.001 per share. In connection with the reverse split, no fractional shares shall be issued. In lieu of fractional shares, each holder who would otherwise be entitled to receive fractional shares of new Common Stock, will, upon surrender of the certificates representing shares of old Common Stock, receive such additional fractional share as will result in the holder having a whole number of shares.

3. The vote by which the stockholders holding shares in the corporation entitling them to exercise a least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation have voted in favor of the amendment is: greater than 50%

4.   Effective date of filing: (optional)

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