1324759--3/31/2009--Cereplast

related topics

{customer, product, revenue}

{property, intellectual, protect}

{product, liability, claim}

{stock, price, share}

{stock, price, operating}

{regulation, government, change}

{condition, economic, financial}

{product, market, service}

{operation, natural, condition}

{personnel, key, retain}

{acquisition, growth, future}

{cost, regulation, environmental}

{regulation, change, law}

We have only recently commenced industrial scale production of our bio-based resins and it is possible that some of our bio-based resins or plastic products made with our bio-based resins may not perform as well as other resins or traditional plastics. We may not be successful in protecting our intellectual property and proprietary rights and may be required to expend significant amounts of money and time in attempting to protect these rights. If we are unable to protect our intellectual property and proprietary rights, our competitive position in the market could suffer. Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information. Management and affiliates own enough shares to have a substantial impact on shareholder vote which could cause us to take action that may not be in the best interest of all shareholders. Given our limited resources, we may not effectively manage our growth. Established product manufacturers could improve the ability to recycle their existing products or develop new environmentally preferable products which could render our technology less competitive. Many potential competitors who have greater resources and experience than we do may develop products and technologies that compete with ours. We rely on prime grade polylactic acid ( PLA ) supplied from NatureWorks, LLC in manufacturing some of our Compostables resins. If we lose NatureWorks, LLC as a supplier, the price of these resins may increase or the introduction and market acceptance of these resins may be delayed and our results of operations could be materially adversely affected. Fluctuations in the costs of our raw materials and competitive products could have an adverse effect on our results of operations and financial condition. During the year ended December 31, 2008, we had one significant customer that accounted for 54% of total sales. The loss of this customer could adversely affect our short-term sales and profitability. Our operations are subject to regulation by the U.S. Food and Drug Administration. Regulatory changes applicable to us, or the products in our end-use markets, could adversely affect our financial condition and results of operations. We may be liable for damages based on product liability claims brought against our customers in our end-use markets. Loss of key personnel or our inability to attract and retain new qualified personnel could hurt our business and inhibit our ability to operate and grow successfully. We currently manufacture our bio-based resins at a 55,000 square foot facility in Hawthorne, California. Full or partial loss of use of this facility could materially impair our business. Disruptions or delay in the commencement of continuous operation of our new Seymour bioplastic production facility could materially and adversely affect our results of operations. Downturns in general economic conditions could adversely affect our profitability. Risks related to our stock Our common stock is subject to the Penny Stock rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

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1324759--3/31/2009--Cereplast_Inc