Cereplast, Inc. (PINK:CERP) Takes a Tumble
Yesterday was a rainy day for Cereplast, Inc. (PINK:CERP), whose shares slipped 20% down to a close of $0.022 per share. The company has been slowly sliding downhill over the last few weeks but yesterday’s drop was the highest percentile step down.
CERP is a former NASDAQ company who is engaged in the business of producing bio-plastic materials using starch and algae resins. The company voluntarily stepped down from the NASDAQ exchange in order to be able to secure fast money. The move was brought about by CERP defaulting in its obligations to Wells Fargo and needing quick investor cash to cover those.
CERP is an enterprise that struggles to turn profitable but continues to fail in those efforts. The company logged net losses as follows:
- $7.4 million for 2010
- $14 million for 2011
- $16 million for Jan-Sep 2012
The company’s debt is stacking up fast despite the very respectable millions of revenues CERP logged in the past years. The company’s biggest problem seem to be reining in costs. For the first three quarters of 2012 CERP logged gross loss of over $1 million, before even factoring in expenses, due to the cost of goods sold outstripping gross sales more than twice. Revenue has shrunk significantly in 2012 as well, with gross sales up to Q3 twenty-six times lower than the same period in 2011.
The company is contemplating a reverse split in the 1:2 – 1:50 range, to be agreed upon in April. Plans for the April board and shareholder meeting include upping the authorized shares from 495 million to 2 billion as well.
The task of steering this ship around and sailing into calmer waters is a difficult one and its success is uncertain at best. To the company’s credit, ever since moving on the OTC exchange, the company has not really been pumped and only a few non-compensated emails mentioned it in passing, with no detectable organized pump campaigns.
