Dear Cereplast Shareholder:

Thank you for your ownership and investment in Cereplast. We are making great strides in executing our vision of building a strong business creating affordable and sustainable bioplastics products.

We are highly confident that bioplastics is a rapidly growing industry that could reach $20 billion a year by the year 2020. In anticipation of the growth expected in this industry, we had grown our staff to 70 and added the 105,000 square foot plant in Seymour, Indiana. The recent economic climate has been a challenge for Cereplast as well as many others on a personal and a corporate level. Corporations and consumers greatly cut back on spending, just as we reached significant production capacity. As a result of the challenges presented, we streamlined operations and reduced our negative cash flow from $1.2 million a month to less than $200,000 a month. We did this by reducing our footprint down to 25,000 square feet from 85,000 and headcount from 70 down to 24. We feel that we are now well positioned for growth and success.

Here are some of our recent accomplishments:

• A contract with Georgia Pacific’s Dixie Cups and Tableware division that calls for them to purchase up to several million dollars worth of resin a year in our Cereplast Compostables ® resins and we are exploring additional applications in both the Compostables ® and Hybrid ® resins. The customer had planned an initial shipping date in 2009, but like many companies in the current economic cycle; they have adjusted their plans and now expect us to start shipping on that contract in the current quarter and hopefully be in full blown in early 2010.

• Executed a contract with Dorel Juvenile Group, a $2 billion manufacturer of children’s health and grooming products, to manufacture children’s furniture made from our Hybrid ® resins to be distributed through Wal-Mart, Target & Baby’s R US stores across the United States. We expect revenues of approximately $1 million from this contract this year and believe this contract could grow to an estimated $10 to $15 million in annual sales in a few years.

• SOLO CUP one of the larger food serviceware companies in North America after several years of testing including market testing at Target is expanding a new line of Compostables cups made from our resins under the brand name “BARE”. Starting this month the cups can be found in Target stores all across the United States. It is another milestone for Cereplast.