CPC OF AMERICA INC - FORM 10-K

Attached files

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EX-31.2 - CERTIFICATION - CPC OF AMERICA INC	cpc_10k-ex3102.htm
EX-31.1 - CERTIFICATION - CPC OF AMERICA INC	cpc_10k-ex3101.htm
EX-32.1 - CERTIFICATION - CPC OF AMERICA INC	cpc_10k-ex3201.htm
EX-32.2 - CERTIFICATION - CPC OF AMERICA INC	cpc_10k-ex3202.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission file number 0-24053

CPC of America, Inc.

(Name of registrant as specified in its charter)

Nevada		11-3320709
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


5348 Vegas Drive, #89 Las Vegas, Nevada		89108
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (702) 952-9650

Securities registered pursuant to Section 12(b) of the Act:

Title of each class to be so registered		Name of each exchange on which each class is to be registered
None		N/A

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.0005 par value

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of the Act).

	Large accelerated filer o	Accelerated filer o
	Non-accelerated filer o	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, computed by reference to the price at which the common equity was last sold or the average bid and asked price of such common equity, as of June 30, 2009 was approximately $22,243,464.

The number of shares of the common stock outstanding as of April 13, 2010 was 9,537,051.

DOCUMENTS INCORPORATED BY REFERENCE. NONE

PART I

ITEM 1. BUSINESS.

Unless otherwise indicated, all references to our company include our wholly-owned subsidiaries, Med Enclosure, LLC, a Nevada limited liability company, and CPCA2000, Inc., a Nevada corporation.

Overview

CPC of America, Inc. was formed under the laws of the State of Nevada on April 11, 1996 to develop and acquire cardiology medical devices, therapeutic devices and disposable products. To date, we have completed the development of an external counterpulsation device for the treatment of coronary artery disease known as the CPCA 2000. In March 2003, we received FDA clearance to market the CPCA 2000 counterpulsation unit as a Class III medical device. In addition, through our wholly-owned subsidiary, Med Enclosure, LLC, we are engaged in the business of developing a patented internal puncture closing device known as "MedClose." As of the date of this report, we have not commenced revenue producing operations. Our operations to date have predominately consisted of the design and development of our MedClose device and our counterpulsation units, and the raising of capital.

During 2003 and 2004, we pursued the potential sale of CPCA 2000, Inc., our subsidiary that owns our counterpulsation technologies and products. Based on the analysis and inquiries by our investment banker, along with our own internal inquiries and analysis, we concluded that there was not sufficient interest in the acquisition of CPCA 2000, Inc. or our counterpulsation technologies due to declines in the amount of reimbursable patient costs for counterpulsation treatments under the Medicare program. Between 2002 and 2005, the amount of reimbursable patient costs for counterpulsation treatments under Medicare declined by approximately 30%. The decline in coverage has had a material negative impact on projected profitability of operations based on our counterpulsation technologies and products.

At the present time, we have no intention of commencing operations based on our counterpulsation technologies, and we are no longer pursuing the potential sale of CPCA 2000, Inc. While we believe that our counterpulsation technologies continue to retain value, we do not believe we will be able to negotiate a sale of CPCA 2000, Inc. or its counterpulsation technologies that will result in a meaningful return to us or our shareholders until such time as the reimbursable patient costs for counterpulsation treatments under the Medicare program are significantly increased. We have historically charged to expense all research and development costs and expenses associated with our counterpulsation technologies. As of December 31, 2009, we had no assets on our consolidated balance sheet relating to our counterpulsation products or technologies, other than trademarks of less than $700.

Our executive offices are located at 5348 Vegas Drive, #89, Las Vegas, Nevada 89108 and our telephone number is (702) 952-9650.

General

CPC of America is engaged in the business of developing and acquiring cardiology therapeutic and disposable devices and products as well as the manufacture and distribution of these devices and products. We are currently engaged in the development of the MedClose internal puncture closure device. MedClose utilizes any approved biological or synthetic sealants to close puncture wounds following surgical procedures utilizing arterial puncture access.

MedClose is in the development stage and has not been approved for sale in the United States or any foreign jurisdiction. We expect to commence revenue producing operations subject to US or foreign regulatory approval of the MedClose device. As of the date of this report, we believe that we are likely to receive foreign regulatory approval of the MedClose device sooner than US approval, and we intend to focus our development efforts on the approval of the MedClose device in the European Union. We intend to submit an application for a CE mark for the MedClose product, as a delivery system consisting of the MedClose device coupled with our proprietary sealant. CE mark approval is the principal requirement for commercial sale of the MedClose device in the European Union. The filing of our application for a CE mark and the regulatory approval of the MedClose in the European Union is subject to our receipt of additional capital. Until we receive additional capital, we cannot continue progress on the CE mark application.

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We also intend to continue our development of a proprietary synthetic sealant suitable for use in connection with the MedClose device. In March 2009, we entered into a product development agreement with Dr. Olex Hnojewyj, a holder of 13 patents in the field of vascular closure and other medical devices, pursuant to which Dr. Hnojewyj had been retained by us to develop a synthetic sealant on our behalf suitable for utilization with the MedClose device. We have developed a synthetic compound, and in May 2009, we filed our first patent for a synthetic sealant for specific application for the MedClose device. We conducted animal testing of the sealant during April 2009 and have successfully completed animal testing to date, subject only to the completion of Good Laboratory Practices (GLP) animal testing and animal biocompatibility testing. However, our pursuit of the GLP and biocompatibility testing is subject to our receipt of additional capital.

Currently our focus is to acquire the necessary working capital from the issuance of debt instruments or the sale of our securities. However, there can be no assurance we will be able to obtain the required additional working capital on commercially reasonable terms or at all.

Internal Puncture Closure Device: "Medclose"

The MedClose is a vascular closure system medical device that is designed to seal arterial puncture sites in patients who have undergone diagnostic or interventional surgical procedures utilizing access via an arterial puncture site. The MedClose consists of a catheter system that is our proprietary product and utilizes any approved biologic or synthetic sealants. The MedClose is designed to enhance manual compression by delivering the biological or synthetic sealant through our proprietary catheter delivery system, resulting in an elastic coagulum that is fully absorbed into the body within 10 to 14 days. The MedClose is designed to significantly reduce the time to hemostasis (the stoppage of bleeding), thereby accelerating the patient's post-operative recovery and reducing the amount of time spent by post-operative professionals. The MedClose applications and usage capabilities are intended for angiographic and interventional procedures, six to nine french in size, in the coronary, peripheral, cerebral and carotid applications, including cardiac diagnostic and interventional cardiology procedures as well as interventional radiology and carotid stenting procedures. We hold three patents for both the instrument and the technique used in connection with MedClose, and have two additional patents pending.

We believe that the MedClose device offers a superior alternative to manual compression technique, which is used in approximately 60% of both US and world procedures for both cardiac diagnostic and interventional procedures. We believe that a major advantage of MedClose is that it requires no sutures and leaves no foreign matter or residue in the artery, thereby reducing the risk of an embolism resulting from residual material left in the artery. In addition, we believe that MedClose will significantly reduce the recovery time of patients following catheterization procedures. Physicians traditionally have used sutures and manual compression and other commercial closure devices to close puncture wounds following catheterization procedures. Using sutures requires direct pressure to be applied to the wound for up to 45 minutes (typically applied by a nurse or orderly) and a recovery time of up to 12 hours, during which the patient remains still to avoid hemorrhaging. MedClose, by contrast, eliminates the need for direct pressure to be applied to the wound and reduces the recovery time following the procedure to less than two hours. As a result, MedClose reduces the need for patients to remain completely immobile following the catheterization procedure and limits the recovery time and discomfort associated with the catheterization procedures. In addition, unlike other closure devices which generally do not allow for re-entry of a closed puncture wound, the MedClose device allows for safe and effective re-entry of the closed puncture wound within a short timeframe.

The MedClose is not presently available for general human use. Extensive animal studies of the MedClose device were successfully completed in 2002 through 2004 and provided to the FDA. We conducted limited human clinical trials, involving 16 enrolled subjects, of the MedClose device in the United States from August to October 2006, and we expect to resume human clinical trials in the United States subject to the FDA’s approval of our pending investigational device exemption, of which there can be no assurance. In the fourth quarter of 2006, we commenced human clinical investigations in Canada, with the knowledge and concurrence of the Canadian regulatory authorities. We conducted human clinical trials, involving 44 enrolled subjects, of the MedClose device in Canada from October 2006 to August 2007. Based on the experiences and input of the clinical investigators, we voluntarily suspended human clinical trials in Canada in August 2007 due to changes in the third party vendor’s sealant formula which was disclosed in a May 2009 FDA warning letter to that third party.

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On November 30, 2007, we submitted to the FDA an investigational device exemption, or IDE, application to clinically investigate the MedClose device in the U.S. Absent an effective exemption from the IDE regulations or a finding that the device is a non-significant, low risk device, compliance with the FDA’s IDE regulations is required before a medical device product can proceed to the last phase of the FDA regulatory process, human testing of the device. In December 2007, the FDA responded to our IDE application with a disapproval letter. We have since filed three IDE supplements to address deficiencies cited by the FDA and the third of these was submitted on September 5, 2008. In October 2008, the FDA responded to our September 2008 IDE supplement with a disapproval letter citing two remaining deficiencies, both of which related to the third party biological sealant we originally used in the application of the MedClose device. Upon receipt of sufficient capital resources we will commence with completing the necessary requirements to amend the IDE with substituting our proprietary synthetic sealant for the original biologic sealant obtained from the vender. With that substitution, we anticipate a transfer back to CDRH from CBER since synthetic sealants are determined to be medical devices and not biological like the fibrin sealant.

Upon receipt of additional capital, we expect to commence clinical trial testing of the MedClose device utilizing the synthetic sealant formula in multiple European locations.

Between November 2001 and February 2008, we relied upon BioMed Research, Inc., an unaffiliated medical project management firm located in Tampa, Florida, as our contract product development and regulatory compliance managers for the MedClose device. Beginning in February 2008, we outsourced the activities of BioMed Research to separate independent contractors who now provide to us contract research, development, engineering, manufacturing, regulatory compliance and project management with regard to the MedClose.

We intend to analyze our options for moving forward with the commercial exploitation of the MedClose, including licensing or sale of the product and our manufacturing, marketing and sale of the product directly. If we pursue the manufacturing or marketing of the MedClose product, we will, in all likelihood require significant additional capital. In that event we will endeavor to acquire the necessary working capital from the sale of our securities. However, there can be no assurance we will be able to obtain the required additional working capital on commercially reasonable terms or at all.

We expect to commence revenue producing operations subject to our receipt of US and/or foreign regulatory approvals of MedClose. As of the date of this report, we believe that we are likely to receive foreign regulatory approval of the MedClose device sooner than US approval, and we are currently focusing our development efforts on the approval of the MedClose device in the European Union. The filing of our application for a CE mark and the regulatory approval of the MedClose in the European Union is subject to our receipt of additional capital. Until we receive additional capital, we cannot continue progress on the CE mark application.

Marketing and Distribution

Subject to regulatory approval of the MedClose device, we intend to market the MedClose, primarily to hospitals and their procedure performing physicians through country, region and international distribution agreements. We have no distribution agreements currently in place.

We intend to offer our products to potential customers through a marketing campaign consisting of medical meetings, tradeshows, symposiums, key researchers and users of the technology, public relations, media relations and personal selling efforts by our distributors. We intend to generate publicity for MedClose through press conferences, television forums, demonstrations and press releases to trade and professional publications which will be designed to raise awareness of MedClose and its puncture internal closure device among both industry leaders and the general public.

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Government Regulation and Supervision

United States

Clinical testing, manufacturing and distribution of the MedClose are subject to regulation by numerous governmental authorities, principally the Food and Drug Administration (FDA), and corresponding state and foreign regulatory agencies. Pursuant to the Federal Food, Drug, and Cosmetic Act, and the regulations promulgated thereunder, the FDA regulates activities relating to the clinical testing, manufacturing, labeling, distribution and promotion of medical devices. Under the Medical Device Amendments of 1976, the FDA has the authority and responsibility to classify medical devices into one of three classes (i.e., Class I, II, or III), on the basis of the regulatory controls necessary to provide reasonable assurance of device safety and effectiveness. Class I devices are subject to compliance with "general controls," including for example, labeling, possible premarket notification, adherence to good manufacturing practices and certain record keeping and reporting requirements. Class II devices are subject to compliance with Class I "general controls" as well as special controls and/or performance standards established by the FDA. Class III devices are subject to compliance with Class I "general controls" and possible special controls/performance standards as well as premarket approval by the FDA to provide reasonable assurance of safety and effectiveness. Class III devices generally include life-sustaining, life-supporting and/or implantable devices, new devices, or devices which have been found to be substantially equivalent to Class III in commercial distribution for which the FDA has not yet required premarket approval. The MedClose presently is considered by the FDA to be subject to premarket approval as a Class III device.

Before a Class III medical device can be introduced into the market for commercial distribution, the manufacturer generally must obtain FDA clearance through either a 510(k) premarket notification or through a premarket approval application. Although Class III devices normally require FDA approval through the premarket approval process, we believe that it may be possible to receive FDA clearance pursuant to a 510(k) notification for MedClose as well. Because puncture closure devices are already on the market, newer versions, similar to the MedClose, have been permitted to be marketed pursuant to the 510(k) notification procedure. However, there is no assurance that we will be eligible to utilize the 510(k) notification process in the future or that the FDA will not in the future require us to submit a premarket approval application, which would be a more costly, lengthy and uncertain approval process.

Generally, the 510(k) notification clearance order is expected to be granted within 90 days from the date of submission, but it can take from 12 to 36 months or longer from submission of the 510(k) notification to obtain the clearance order. The FDA may determine that a proposed device is not substantially equivalent to a legally marketed device or that additional data is needed before a substantial equivalence determination can be made. A determination that a device is not substantially equivalent to a device already on the market, or a request for additional data, could delay the market introduction of our products and could have a material adverse effect on our business, financial condition and results of operations. For any of our devices that are cleared through the 510(k) notification process, modifications or enhancements that could significantly affect the safety or effectiveness of the device or that constitute a major change to the intended use of the device will require a new 510(k) notification. There can be no assurance that we will obtain a clearance order within the above time frames, if at all, for MedClose or any other device for which we may file a 510(k) notification.

Further, once FDA clearance or approval is obtained, our devices will be subject to pervasive and continuing regulation by the FDA, including various record keeping requirements and the requirement to report to the FDA certain experiences with the use of the device. We are also subject to inspection on a routine basis for compliance with the FDA's good manufacturing practice regulations. These regulations impose explicit procedural and documentation requirements upon us and the companies which we contract to manufacture our devices.

International

The European Union has adopted rules which require that medical products receive the right to affix the CE mark, an international symbol of adherence to quality assurance standards and compliance with applicable European medical device directives. As part of the CE mark compliance, manufacturers are required to comply with the European quality systems standards. We have commenced the process for applying for the CE mark approval for our MedClose device and certification of our quality system. The filing of our application for a CE mark and the regulatory approval of the MedClose in the European Union is subject to our receipt of additional capital. Until we receive additional capital, we cannot continue progress on the CE mark application.

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International sales of our MedClose device will be subject to the regulatory requirements of each country in which we sell. These requirements vary from country to country but generally are less stringent than those in the United States. We have not obtained regulatory approval to sell our MedClose device in any foreign jurisdiction.

Competition

We have several competitors that manufacture and market puncture closure devices, including St. Jude Medical, Johnson & Johnson, Abbot Laboratories, Vascular Solutions and Access Controls, and there are several other companies that market competing products that are in the nature of wound devices. St. Jude, Johnson & Johnson, Abbott Laboratories, Vascular Solutions and Access Control, each market a FDA approved combination vascular closure system. Vascular Solutions’ product uses a biologic sealant that is made from human plasma. Access Controls’ closure system utilizes a synthetic sealant technology. Our competitors’ combination vascular closure systems are limited to vascular closure devices for femoral artery punctures, whereas the MedClose is designed for a wide array of vascular closures applications. In addition, each of our competitors’ products is limited to their proprietary sealants whereas the MedClose device is designed as a delivery system that can utilize any approved biological or synthetic sealant.

Although a human clinical trial investigation of the MedClose device has not been completed, based on an interim analysis of 60 trials on enrolled subjects who have undergone treatment using the MedClose device, we believe our device has competitive advantages over our competitors’ products because our product is superior in delivery of arterial site closures on the basis of safety, variability, shortened time in conducting repuncture post procedures and cost effectiveness. However, all of our competitors have greater marketing and financial resources than we do and, accordingly, there can be no assurance that we will be able to compete effectively, if at all.

Patents and Trademarks

We hold three patents from the U.S. Patent and Trademark Office for the MedClose device and procedure and we have filed two additional patents pending. We also have two registered trademarks in the United States and registrations in Argentina, India, Madrid Protocol, Mexico, New Zealand, Pakistan, Taiwan, and pending applications in Brazil, Canada, and Venezuela for the name MedClose. In May 2009, we submitted a patent application for our proprietary synthetic sealant. In September 2002, we received three patents from the U.S. Patent and Trademark Office on our CPCA 2000 counterpulsation unit. At present, we have submitted domestic and international applications to patent the CPCA 2000 and our counterpulsation technology and have been granted patents in Ireland and the United Kingdom and have received a trademark on the name "CPCA 2000” and its logo in the United States.

Our ability to compete successfully depends, in part, on our ability to protect the proprietary technology contained in our products. We rely upon a combination of patent, trade secret and trademark laws, together with non-disclosure agreements, to establish and protect proprietary rights in our proprietary devices and technologies, as well as our trade names and other similar property. We also enter into confidentiality agreements with our employees, manufacturers, consultants and suppliers, and limit access to and distribution of our proprietary information. However, these measures only afford us limited protection, as there can be no assurance that any steps taken by us to protect these proprietary rights will be adequate to prevent misappropriation of our technology or the independent development by others of similar technology. In addition, although we believe that there currently are no infringement claims against us and no grounds for the assertion of such claims, the cost of responding to any claim could be significant.

Research and Development

Since inception through December 31, 2009, our research and development expenses have amounted to approximately $23,362,461, including $1,736,427 and $1,986,790 spent on research and development in 2009 and 2008, respectively. At present, none of these research and development expenses have been borne by customers, as we have not begun to market or sell our products and services.

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Employees

As of the date of this report, we employ two persons consisting of our chief executive officer, who is considered a full-time employee, and chief financial officer. We contract with various consultants and professionals to provide services to us including engineering, software, testing, regulatory, quality control, quality certifications, commercial applications/approvals, product development, medical and clinical affairs, clinical trials, clinical research, data management, data analysis, and statistical analysis on a project by project basis.

Financial Information About Geographic Area

During the last three fiscal years, all of our assets and rights have been located in the United States.

Available Information

Our Internet address is http://www.cpcmeddevices.com. The information on or accessible through our website is not part of this report. We make available, free of charge, through our Internet website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. These documents are also publicly available free of charge at the SEC’s website at www.sec.gov.

ITEM 1A. RISK FACTORS.

We make written and oral statements from time to time regarding our business and prospects, such as projections of future performance, statements of management's plans and objectives, forecasts of market trends, and other matters that are forward-looking statements. Statements containing the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimates," "projects," "believes," "expects," "anticipates," "intends," "target," "goal," "plans," "objective," "should" or similar expressions identify forward-looking statements, which may appear in documents, reports, filings with the SEC, news releases, written or oral presentations made by officers or other representatives made by us to analysts, stockholders, investors, news organizations and others.

Our future results, including results related to forward-looking statements, involve a number of risks and uncertainties. No assurance can be given that the results reflected in any forward-looking statements will be achieved. Any forward-looking statement made by or on behalf of us speaks only as of the date on which such statement is made. Our forward-looking statements are based upon assumptions that are sometimes based upon estimates, data, communications and other information from suppliers, government agencies and other sources that may be subject to revision. Except as required by law, we do not undertake any obligation to update or keep current either (i) any forward-looking statement to reflect events or circumstances arising after the date of such statement, or (ii) the important factors that could cause our future results to differ materially from historical results or trends, results anticipated or planned by us, or which are reflected from time to time in any forward-looking statement which may be made by or on behalf of us.

In addition to other matters identified or described by us from time to time in filings with the SEC, there are several important factors that could cause our future results to differ materially from historical results or trends, results anticipated or planned by us, or results that are reflected from time to time in any forward-looking statement that may be made by or on behalf of us. Some of these important factors, but not necessarily all important factors, include the following:

We have not commenced revenue producing operations and, as a result, there is a limited amount of information about us on which to make an investment decision. We were incorporated in 1996 and to date have not generated any revenues from operations. To date, our activities have included the market analysis and development of our counterpulsation units and MedClose device, and the raising of development and working capital. As a result of the absence of any operating history or revenues, there is a limited amount of information about us on which to make an investment decision. There can be no assurance that we will achieve a significant level of operations and, if so, that such operations can be conducted on a profitable basis.

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We will require additional capital in the future in order to further develop or market our products, but we do not have any commitments to obtain such capital and we cannot assure you that we will be able to obtain adequate capital as and when required. As of December 31, 2009, we had a working capital deficit of ($3,910,063), which includes accrued dividends of $3,326,077 payable on our outstanding shares of Series C, Series D and Series E preferred stock as of such date. In September 2007, we commenced a private placement of our Series E Preferred Stock, and since December 31, 2007, we have sold 566,203 shares of Series E Preferred shares for the gross proceeds of $3,397,219. We believe that we will require a minimum of $3 million of additional working capital in order to fund our proposed operations over the 12 months following the date of this report, assuming we do not receive requests for a substantial amount of dividend payments in cash. In the event we receive substantial requests for dividend payments in cash or we encounter a material amount of unexpected expenses, we may require in excess of $3 million additional capital over the next 12 months. We will seek to obtain additional working capital through the sale of our securities or the issuance of debt instruments. However, we have no agreements or understandings with any third parties at this time for our receipt of such working capital. Consequently, there can be no assurance we will be able to access capital as and when needed or, if so, that the terms of any available financing will be subject to commercially reasonable terms.

The report of our independent registered public accounting firm for the fiscal year ended December 31, 2009 states that due to our working capital deficiency at December 31, 2009 there is a substantial doubt about our ability to continue as a going concern.

We have issued over time multiple series of preferred stock, which as of December 31, 2009 have accrued dividends in the aggregate amount of $3,326,077. Our board of directors has the authority to issue up to 5,000,000 shares of preferred stock and to determine the price, rights, preferences and privileges of those shares without any further vote or action by our stockholders. As of December 31, 2009, we had issued five series of preferred shares (Series A through E), of which all of the Series A and Series B shares had been converted into common shares as of such date and 271,721 shares of Series C Preferred Stock, 594,227 of Series D Preferred Stock and 590,537 of Series E Preferred Stock were issued and outstanding as of such date.

As of December 31, 2009, our outstanding shares of preferred stock had accrued dividends of $3,326,077. Our Series C and Series D preferred stock both have a 5% annual dividend payable in cash or shares of our common stock, at the option of the holder. Our Series E preferred stock has a 10% annual dividend payable in cash or shares of our common stock, at the option of our company. Dividends on our outstanding shares of preferred stock are only payable at the time those shares are converted into shares of our common stock. To date, all dividends to the holders of our Series C and D preferred shares have been paid in common shares. However, there can be no assurance that our Series C and D preferred share holders will continue to elect to receive dividends in common shares instead of cash. As of December 31, 2009, we had cash and cash equivalents of $5,583 and a working capital deficit of ($3,910,063). In the event the holders of a significant number of our Series C and D preferred shares convert their preferred shares and in doing so elect to take their dividends in cash, our working capital will be materially adversely affected.

We may not be able to compete effectively or competitive pressures faced by us may materially adversely affect our business, financial condition, and results of operations. We expect to face significant competition in connection with the marketing of our MedClose puncture closing device. We have had several competitors that manufacture and market puncture closure devices, such as St Jude Medical, Johnson & Johnson, Abbott Laboratories, Vascular Solutions, Inc. and Access Controls. All of our competitors have greater marketing and financial resources than us and, accordingly, there can be no assurance that we will be able to compete effectively or that competitive pressures faced by us will not materially adversely affect our business, financial condition, and results of operations.

We have limited management and staff and will be dependent for the foreseeable future upon consultants and partnering arrangements. At the present time, we have two employees, including our two executive officers. We have developed an operating strategy that is based on our engagement of various consultants and professionals to provide services to us including engineering, software, testing, regulatory, quality control, quality certifications, commercial applications/approvals, product development, medical and clinical affairs, clinical trials, clinical research, data management, data analysis, and statistical analysis on a project by project basis. Our dependence on third party consultants and service providers creates a number of risks, including but not limited to:

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	●	the possibility that such third parties may not be available to us as and when needed; and

	●	the risk that we may not be able to properly control the timing and quality of work conducted with respect to our projects.

If we experience significant delays in obtaining the services of such third parties or poor performance by such parties, our results of operations and stock price will be materially adversely affected.

We may not be able to protect our proprietary rights and we may incur significant costs in attempting to do so. Our success and ability to compete are dependent to a significant degree on our proprietary technology. We rely on a combination of patent, trade secret and trademark laws, as well as confidentiality and licensing agreements to protect our proprietary rights. However, it may be possible for a third party to copy or otherwise obtain and use our proprietary information without authorization or to develop similar technology independently. In addition, litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others, or to defend against claims of infringement or invalidity. Such litigation, whether successful or unsuccessful, could result in substantial costs and diversions of resources, either of which could have a material adverse affect on our business, financial condition or operating results.

The commercialization of our MedClose device will require US and foreign regulatory approvals, of which there can be no assurance. The development, testing and eventual sale of our MedClose device are subject to extensive regulation by numerous state and federal governmental authorities in the US, such as the FDA, as well as by certain foreign countries, including some in the European Union. Currently, we are required in the US and in foreign countries to obtain approval from those countries' regulatory authorities before we can market and sell our MedClose device in those countries. Obtaining regulatory approval is costly and may take many years, and after it is obtained, it remains costly to maintain. The FDA and foreign regulatory agencies have substantial discretion to terminate clinical trials, require additional testing, delay or withhold registration and marketing approval and mandate product withdrawals. In addition, later discovery of unknown problems with our products or manufacturing processes could result in restrictions on our products and manufacturing processes, including potential withdrawal of the products from the market. If regulatory authorities determine that we have violated regulations or if they restrict, suspend or revoke our prior approvals, they could prohibit us from manufacturing or selling our MedClose device until we comply, or indefinitely.

The success of our MedClose device will depend upon strong relationships with physicians. If we fail to establish and maintain strong working relationships with physicians, we may not be successful in developing and marketing our MedClose device. The research, development, marketing and sales of medical products generally, including our MedClose vascular closure device, is dependent upon our maintaining working relationships with physicians. We rely on these professionals to provide us with considerable knowledge and experience regarding our products. We will also depend on physicians to assist us in marketing our products and gaining acceptance of our products in the medical community, as researchers, marketing consultants, product consultants, inventors and as public speakers. If we are unable to establish and maintain our strong relationships with these professionals and continue to receive their advice and input, the development and marketing of our products could suffer, which could have a material adverse effect on our financial condition and results of operations.

Our business and results of operations may be seriously harmed by changes in third-party reimbursement policies. We could be seriously harmed by changes in reimbursement policies of governmental or private healthcare payors, particularly to the extent any changes affect reimbursement for catheterization procedures in which our products are used. Failure by physicians, hospitals and other users of our products to obtain sufficient reimbursement from healthcare payors for procedures in which our products are used or adverse changes in governmental and private third-party payors’ policies toward reimbursement for such procedures would seriously harm our business. In the United States, healthcare providers, including hospitals and clinics that purchase medical devices such as our products, generally rely on third-party payors, principally federal Medicare, state Medicaid and private health insurance plans, to reimburse all or part of the cost of catheterization procedures. Any changes in this reimbursement system could seriously harm our business. In international markets, acceptance of our products is dependent in part upon the availability of reimbursement within prevailing healthcare payment systems. Reimbursement and healthcare payment systems in international markets vary significantly by country. Our failure to receive international reimbursement approvals could have a negative impact on market acceptance of our products in the markets in which these approvals are sought. The 2010 Healthcare Reform Bill requires medical devices companies to pay approximately 2.3% of sales of medical devices as an additional tax to fund the healthcare deficiencies shortfall.

-8-

The market for our stock is limited and may not provide investors with either liquidity or a market based valuation of our common stock. Our common stock is quoted on the OTC Bulletin Board market under the symbol "CPCF.OB". As of March 31, 2010, the last reported sale price of our common stock as quoted by the OTCBB was $0.85 per share. However, we consider our common stock to be "thinly traded" and any last reported sale prices may not be a true market-based valuation of the common stock. Also, the present volume of trading in our common stock may not provide investors sufficient liquidity in the event they wish to sell their common shares. There can be no assurance that an active market for our common stock will develop. In addition, the stock market in general, and early stage public companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies. If we are unable to develop a market for our common shares, you may not be able to sell your common shares at prices you consider to be fair or at times that are convenient for you, or at all.

We have issued over time multiple series of preferred stock, each of which has rights senior to our common stock including the right to be paid approximately $14.7 million of liquidation preferences. Our board of directors has the authority to issue up to 5,000,000 shares of preferred stock and to determine the price, rights, preferences and privileges of those shares without any further vote or action by our stockholders. As of December 31, 2009, we had issued five series of preferred shares (Series A through E), of which all of the Series A and Series B shares had been converted into common shares as of such date and 271,721 shares of Series C Preferred Stock, 594,227 of Series D Preferred Stock and 590,537 of Series E Preferred Stock were issued and outstanding as of such date. In the event of the liquidation, dissolution or winding up of our corporation, each holder of our preferred shares shall be paid, prior to any payments to the holders of our common stock, a liquidation preference, plus all accrued and unpaid dividends. The Series C, Series D and Series E preferred shares are to be paid a liquidation preference of $8.90 per share, $9.15 per share and $6.00 per share, respectively. The aggregate amount of liquidation preferences, plus accrued dividends, as of December 31, 2009 was $14,724,793. Any additional preferred stock issued by our board of directors may contain similar liquidation preferences and other rights and preferences adverse to the voting power and other rights of the holders of common stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

Our executive offices are located in Las Vegas, Nevada and through December 31, 2009 we also maintained warehouse space in Sarasota, Florida. Beginning January 1, 2010, the Florida space is no longer being utilized. Both facilities were leased by us on a month to month basis.

ITEM 3. LEGAL PROCEEDINGS.

We are not currently involved in any material legal proceedings, and we are not aware of any material legal proceedings pending or threatened against us. We are also not aware of any material legal proceedings involving any of our directors, officers, or affiliates or any owner of record or beneficially or more than 5% of any class of our voting securities.

-9-

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

Our common stock is quoted by the OTC Bulletin Board under the symbol "CPCF.OB" Set forth below are high and low bid prices for our common stock for each quarter during the two most recent fiscal years ended. We consider our common stock to be thinly traded and that any reported bid or sale prices may not be a true market-based valuation of the common stock.

Quarter Ended	High		Low

March 31, 2008	$	8.90	$	4.00
June 30, 2008	$	9.75	$	7.25
September 30, 2008	$	8.50	$	5.50
December 31, 2008	$	6.00	$	2.05

March 31, 2009	$	1.91	$	4.75
June 30, 2009	$	1.80	$	4.50
September 30, 2009	$	1.80	$	2.95
December 31, 2009	$	0.77	$	2.15

Holders

As of April 2, 2010, there were 238 record holders of our common stock.

Dividends

We have not paid any cash dividends on our common stock since our inception and do not contemplate paying dividends in the foreseeable future. It is anticipated that earnings, if any, will be retained for the operation of our business. Pursuant to our certificates of designations, holders of shares of our Series C preferred stock and Series D preferred stock are entitled to dividends at a rate of 5% per annum, payable at the option of the holders, in either cash or shares of common stock. In addition, the holders of our Series E preferred stock are entitled to dividends at the rate of 10% per annum, payable at our option, in cash or common stock. Dividends on preferred stock are only payable at the time the preferred shares are converted into shares of common stock. During 2009, we paid no cash dividends on the shares of our preferred stock.

-10-

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth certain information as of December 31, 2009 concerning our equity compensation plans:

Plan Category	Number of Common Shares to Be Issued Upon Exercise of Outstanding Options	Weighted-Average Exercise Price of Outstanding Options	Number of Common Shares Remaining Available for Issuance

Equity compensation plans approved by shareholders	200,000	$4.75	2,560,534

Equity compensation plans not approved by shareholders (1)	1,653,907	$7.90	N/A

(1) Represents shares of 1,553,907 common stock issuable to CTM Group, Inc. and 100,000 common stock issuable to Rod A. Shipman pursuant to option agreements entered into in April 2008. The options vest immediately and expire on or before April 24, 2013. If exercised, these shares represent $13,065,865 in capital to the Company.

Sales of Unregistered Securities

During the fiscal year ended December 31, 2009, we sold 19,500 shares of Series E Preferred Stock to 2 accredited investors for the gross proceeds of $117,000. In addition, we issued 10,000 shares of Series E Preferred Stock to our chief financial officer in lieu of $60,000 of salary, and 9,334 to our directors in lieu of $56,000 in director compensation. The offer and sale of our Series E Preferred Stock is being made pursuant to an exemption under Section 4(2) of the Securities Act of 1933, as amended (“1933 Act”) and Rule 506 thereunder. All sales are being made to “accredited investors, as defined under Rule 501(a) under the 1933 Act. The Series E preferred shares are being sold by our executive officers and there is no underwriter involved in the issuance. The shares of Series E Preferred Stock have not been, and will not be, registered under the 1933 Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

In addition, during the fiscal year ended December 31, 2009, we issued 109,048 shares of common stock upon the conversion of 16,854 shares of our Series C Preferred Stock, 30,056 shares of our Series D Preferred Stock and related accrued dividends, by the holders of such preferred shares. We also issued 111,905 shares of common stock for services valued at $289,000. The shares of common stock issued upon the conversion of our Series C and D Preferred Stock and for services were issued pursuant to an exemption under Section 4(2) of the 1933 Act and Rule 506 thereunder.

We also issued 29,404 shares of common stock upon the exercise of a like number of options. The options were exercised in exchange for $216,559 in consulting services and $15,732 in rent.

-11-

ITEM 6. SELECTED FINANCIAL DATA.

Not applicable

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

General

To date, our activities have included the market analysis and development of our MedClose device and counterpulsation units and the raising of development and working capital. We have developed and prepared for market our counterpulsation units, including a stand-alone unit known as the CPCA 2000. In March 2003, we received FDA clearance to market the CPCA 2000 counterpulsation unit as a Class III medical device. We are also engaged in the business of developing a patented internal puncture closure device known as "MedClose". We have not commenced revenue producing operations.

During 2003 and 2004, we pursued the potential sale of CPCA 2000, Inc., our subsidiary that owns our counterpulsation technologies and products. Based on the analysis and inquiries by our investment banker, along with our own internal inquiries and analysis, we are of the opinion that there is not sufficient interest in the acquisition of CPCA 2000, Inc. or our counterpulsation technologies at this time due to declines in the amount of reimbursable patient costs for counterpulsation treatments under the Medicare program. Between 2002 and 2005, the amount of reimbursable patient costs for counterpulsation treatments under Medicare declined by approximately 30%. The decline in coverage has had a material negative impact on projected profitability of operations based on our counterpulsation technologies and products.

The MedClose is a medical device that is designed to seal arterial puncture sites in patients who have undergone diagnostic or interventional catheterization procedures. It utilizes a proprietary catheter system that is designed to enhance manual compression by delivering a biologic or synthetic sealant which forms an elastic coagulum that is fully resorbed within 10 to 14 days. The MedClose is designed to significantly reduce the time to hemostasis (the stoppage of bleeding), thereby accelerating the patient's post-operative recovery and reducing the amount of time spent by post-operative professionals. The MedClose applications and usage capabilities are intended for cardiac diagnostic and interventional cardiology procedures as well as interventional radiological and proposed carotid stenting procedures. As of the date of this report, MedClose is not available for commercial distribution. We hold three patents for both the instrument and the technique used in connection with MedClose, and two additional patents pending.

We intend to analyze our options for moving forward with the commercial exploitation of the MedClose, including licensing or sale of the product and our manufacture, marketing and sale of the product directly. If we pursue the manufacture or marketing of the MedClose product, we will, in all likelihood require significant additional capital. In that event we will endeavor to acquire the necessary working capital from the sale of our securities. However, there can be no assurance we will be able to obtain the required additional working capital on commercially reasonable terms or at all.

We expect to commence revenue producing operations subject to US and/or foreign regulatory approval of the MedClose device. As of the date of this report, we believe that we are likely to receive foreign regulatory approval of the MedClose device sooner than US approval and we intend to focus our development efforts on the approval of the MedClose device in the European Union. We intend to submit an application for a CE mark for the MedClose product, as a delivery system consisting of the MedClose device coupled with our proprietary sealant. CE mark approval is the principal requirement for commercial sale of the MedClose device in the European Union. The filing of our application for a CE mark and the regulatory approval of the MedClose in the European Union is subject to our receipt of additional capital. Until we receive additional capital, however, we cannot continue progress on the CE mark application.

-12-

We also intend to continue our development of a proprietary synthetic sealant suitable for use in connection with the MedClose device. In March 2009, we entered into a product development with Dr. Olex Hnojewyj, a holder of 13 patents in the field of vascular closure and other medical devices, pursuant to which Dr. Hnojewyj had been retained by us to develop a synthetic sealant on our behalf suitable for utilization with the MedClose device. We have developed a synthetic compound, and in May 2009, we filed our first patent for a synthetic sealant for specific application for the MedClose device. We conducted animal testing of the sealant during April 2009 and have successfully completed animal testing to date, subject only to the completion of Good Laboratory Practices (GLP) animal testing and animal biocompatibility testing. However, our pursuit of the GLP and biocompatibility testing is subject to our receipt of additional capital.

Upon receipt of additional capital, we expect to commence clinical trial testing of the MedClose device utilizing the synthetic sealant formula in multiple European locations. Upon successful completion of the European clinical trials utilizing our proprietary synthetic sealant, we intend to respond to the FDA’s outstanding comments on our pending application for an investigational device exemption for the MedClose. We also intend to pursue an ISO 13485 certification of our records and procedures relating to our development and the proposed manufacturing of our MedClose device and proprietary sealant.

We do not expect to purchase or sell significant plant or equipment during 2010, nor do we expect a significant change in the number of our employees during the year.

In order to meet our general working capital requirements and to fund the commercial exploitation of the MedClose, in September 2007, we commenced a private placement of our Series E Preferred Stock. We are offering 1,666,667 shares of our Series E Preferred Stock, at $6.00 per share. As of April 2, 2010, we have sold 566,203 shares of Series E Preferred shares for the gross proceeds of $3,397,220 and issued an additional 17,500 shares in lieu of $105,000 of salary to our chief financial officer and 9,334 shares in lieu of $56,000 in director compensation. The Series E Preferred stock has no voting rights and has a 10% annual dividend payable in cash or common stock at our option. Each Series E Preferred share was convertible into our common shares at a conversion price of $6.00 per share until August 31, 2008, when the conversion price was adjusted to the lower of 75% of the average last sale price of the common stock for the 30 trading days immediately preceding such date on any stock exchange or $4.50 per share; provided that the conversion price could not be adjusted to an amount below $3.92 per share. At August 31, 2008, the conversion price was deemed to be $4.50 per share. Subsequently, our board of directors approved an amendment to the Series E Preferred Stock to set the conversion price at $3.92 per share, and in June 2009 our board approved a further amendment to reduce the conversion price to $2.75 per share. The shares of Series E Preferred Stock have not been, and will not be, registered under the 1933 Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. The Series E preferred shares are being sold by our executive officers and the proceeds of the offering are expected to be used for clinical trials, regulatory compliance, manufacturing and marketing relating to the MedClose device, and working capital.

Results of Operations

Revenue. We have generated no revenue to date and do not expect to generate revenue until we have received commercial regulatory approval of our MedClose device in various countries and markets.

Research and Development. During the 2009 fiscal year, we incurred $1,736,427 of research and development expenses compared to $1,986,790 during fiscal 2008. Research and development expenses relate to our ongoing development and testing of our internal puncture closure device and technique known as "MedClose." Our research and development costs were lower in 2009 than in 2008 due to capital constraints. Overall, we continued work on obtaining regulatory approval in Europe with the use of proceeds from the Series E Preferred share offering described above. Engineering and development costs increased by $128,338 in 2009, offset by a decrease in consulting fees of approximately $378,701 as a result of the expiration of our consulting agreement with CTM Group in April 2009. Subject to our receipt of additional capital, we expect our research and development costs to increase as we get further into human trials and proceed towards the submission of applications for CE Mark/European commercial approval and eventually a FDA pre-market approval thereafter.

-13-

General and Administrative. During fiscal 2009, we incurred $1,153,300 of general and administrative expenses, compared to administrative expenses of $9,168,935 in fiscal 2008, a decrease of $8,015,635. The decrease consisted primarily of a decrease of $7,712,616 in stock option expenses since no options were granted in 2009, plus decreases of $254,295 in legal fees, $27,231 in accounting fees and $36,903 in professional fees as we cut expenses to conserve cash and $94,676 as a result of the expiration of our consulting agreement with CTM Group in April 2009. These decreases were offset by increases of $60,000 in officers’ salaries as a result of hiring a chief financial officer in July 2008, and director compensation of $56,000.

Financial Condition

As of December 31, 2009, we had a working capital deficit of ($3,910,063), which includes accrued dividends of $3,326,077 payable on our outstanding shares of Series C, Series D and Series E preferred stock as of such date. Our Series C and Series D preferred stock both have a 5% annual dividend payable in cash or shares of our common stock, at the option of the holder. Those dividends are convertible into our common shares at the rate of $3.57 per share in the case of the Series C preferred stock and $6.86 per share in the case of the Series D preferred stock. Our Series E preferred stock has a 10% annual dividend payable in cash or shares of our common stock, at the option of our company. The dividends on Series E preferred stock are convertible into our common shares at the rate of $2.75 per share. Dividends on our outstanding shares of preferred stock are only payable at the time those shares are converted into shares of our common stock. To date, all dividends to the holders of our Series C and D preferred shares have been paid in common shares. However, there can be no assurance that our Series C and D preferred share holders will continue to elect to receive dividends in common shares instead of cash.

Commencing in July 2009, we began to curtail product development and testing due to limited working capital, and at December 31, 2009 these activities have ceased until we obtain additional working capital. We believe that we will require a minimum of $3 million of additional working capital in order to fund our proposed operations over the 12 months following the date of this report, assuming we do not receive requests for a substantial amount of dividend payments in cash. In the event we receive substantial requests for dividend payments in cash or we encounter a material amount of unexpected expenses, we may require in excess of $3 million additional capital over the next 12 months. We will seek to obtain additional working capital through the sale of our securities or issuance of debt instruments. However, we have no agreements or understandings with any third parties at this time for our receipt of such working capital. Consequently, there can be no assurance we will be able to access to capital as and when needed or, if so, that the terms of any available financing will be subject to commercially reasonable terms. During the year ended December 31, 2009, we borrowed $47,717 from an officer of the Company to pay certain expenses. At December 31, 2009 this loan was unsecured. In March 2010, this loan was converted to a 20% convertible debenture with terms as described below.

In 2010 we have received $244,217 from convertible debt agreements. These loans are due two years from the date of issuance, bear interest at rates from 20 – 30% per annum and are convertible into shares of our common stock at a rate equal to the closing price of our stock on the date of issuance.

As noted above, we are currently analyzing our options for moving forward with the commercial exploitation of the MedClose, including licensing or sale of the product and our manufacturing, marketing and sale of the product directly. If we pursue the direct manufacturing and marketing of the MedClose product, we will require significant additional capital in order to (i) complete clinical trials and regulatory approvals in Europe, North America and other designated foreign markets; (ii) commence manufacturing of the device; and (iii) commence marketing and sales of the device, including the development of a internal infrastructure necessary to support manufacturing and marketing.

-14-

We will endeavor to raise additional funds through the sale of our Series E preferred shares, convertible debt agreements and any other available financing sources in order to meet our general working capital requirements and to fund the commercial exploitation of the MedClose. However, there are no agreements or understandings with any third parties at this time for our receipt of additional working capital and there can be no assurance that such funds will be available on commercially reasonable terms, if at all. If we are unable to access additional capital on a timely basis, we will be unable to expand or continue our development of the MedClose device and our operating results will be adversely affected.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet financing arrangements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:

Not applicable

-15-

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets at December 31, 2009 and 2008	F-2
Consolidated Statements of Operations for the two years ended December 31, 2009 and cumulative from inception (April 11, 1996) to December 31, 2009	F-3
Consolidated Statements of Shareholders' Equity (Deficit) from inception (April 11, 1996) to December 31, 2009	F-4
Consolidated Statements of Cash Flows for the two years ended December 31, 2009 and cumulative from inception (April 11, 1996) to December 31, 2009	F-10
Notes to Consolidated Financial Statements	F-12

-16-

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

CPC of America, Inc.

We have audited the accompanying consolidated balance sheets of CPC of America, Inc. and subsidiaries (a development stage company) (the “Company”) as of December 31, 2009 and 2008, and the related consolidated statements of operations, shareholders’ equity (deficit) and cash flows for each of the years in the two year period ended December 31, 2009 and for the period from inception (April 11, 1996) to December 31, 2009. The Company’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company had a net capital deficiency at December 31, 2009, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also included in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of CPC of America, Inc. as of December 31, 2009 and 2008, and the results of its operations and cash flows for each of the years in the two year period ended December 31, 2009 and for the period from inception (April 11, 1996) to December 31, 2009 in conformity with accounting principles generally accepted in the United States of America.

/s/ CACCIAMATTA ACCOUNTANCY CORPORATION

Santa Ana, California

April 15, 2010

F-1

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Consolidated Balance Sheets

	December 31,
	2009			2008
ASSETS
Current assets
Cash and equivalents	$	5,583		$	1,480,506
Prepaid expenses		93,933			112,416

Total current assets		99,516			1,592,922

Patents, net of accumulated amortization of $326,853 in 2009 and $281,333 in 2008		230,647			276,167

Trademark, net of accumulated amortization of $5,544 in 2009 and $5,128 in 2008		688			1,104
TOTAL ASSETS	$	330,851		$	1,870,193
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Loan from officer	$	47,717		$	-
Accounts payable		343,977			167,789
Accrued payroll and related taxes		291,808			274,575
Accrued dividends payable		3,326,077			2,715,584
Total current liabilities		4,009,579			3,157,948

Commitments and contingencies		-			-

Shareholders' deficit
Convertible preferred stock, 5,000,000 shares authorized, $.001 par value,
Series C - 271,721 and 288,575 shares issued and outstanding
at December 31, 2009 and 2008, respectively		272			288
Series D - 594,227 and 624,283 shares issued and outstanding
at December 31, 2009 and 2008, respectively		594			624
Series E - 590,537 and 551,703 shares issued and outstanding
at December 31, 2009 and 2008, respectively		590			552
Common stock, 20,000,000 shares authorized, $.0005 par value,
9,537,051 and 9,286,694 shares issued and outstanding at
December 31, 2009 and 2008, respectively		4,769			4,643
Additional paid-in capital - preferred		16,622,353			15,096,629
Additional paid-in capital - common		30,578,607			29,144,025
Deficit accumulated during the development stage		(50,885,913	)		(45,534,516	)
Total shareholders' deficit		(3,678,728	)		(1,287,755	)
TOTAL LIABILITIES & SHAREHOLDERS' DEFICIT	$	330,851		$	1,870,193

The accompanying notes are an integral part of these consolidated financial statements.

F-2

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Consolidated Statements of Operations

							Cumulative
							from inception
							(April 11, 1996)
	Year ended December 31,						to December 31,
	2009			2008			2009
Costs and expenses:
Research and development - related party	$	173,247		$	551,948		$	10,016,111
Research and development - other		1,563,180			1,434,842			13,346,350
		1,736,427			1,986,790			23,362,461
General and administrative - related party		59,044			152,269			1,781,577
General and administrative - other		1,094,256			9,016,666			17,601,599
		1,153,300			9,168,935			19,383,176

Operating loss		(2,889,727	)		(11,155,725	)		(42,745,637	)

Other income (expense):
Interest expense		-			-			(8,954	)
Interest income		2,496			24,034			332,588
Increase in cash surrender value of insurance		-			-			790,910

		2,496			24,034			1,114,544

Net loss	$	(2,887,231	)	$	(11,131,691	)	$	(41,631,093	)

Loss per share calculation:
Net loss	$	(2,887,231	)	$	(11,131,691	)
Beneficial conversion feature		(2,464,166	)		(2,459,959	)
Preferred dividend		(746,449	)		(637,465	)
Numerator	$	(6,097,846	)	$	(14,229,115	)

Basic and diluted weighted average number
of common shares outstanding - Denominator		9,433,757			9,244,602

Basic and diluted net loss per share	$	(0.65	)	$	(1.54	)

Maximum number of common shares (not included in denominator of diluted loss per share calculation due to their anti-dilutive nature) attributable to exercise/conversion of:
Outstanding options		1,853,907			3,777,505
Preferred stock		2,758,435			2,287,701

The accompanying notes are an integral part of these consolidated financial statements.

F-3

CPC OF AMERICA, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Shareholders' Equity (Deficit)
From inception (April 11, 1996) to December 31, 2009


	Preferred Stock						Common Stock					Deficit
	Series C		Series D		Series E					Additional	Additional	Accumulated	Total
	Number		Number		Number		Number		Stock	Paid-in	Paid-in	During the	Shareholders'
	of Shares	Total	of Shares	Total	of Shares	Total	of Shares	Total	Option Costs	Capital- Common	Capital- Preferred	Development Stage	Equity (Deficit)

Balance, December 31, 2007	288,575	$ 288	629,109	$ 629	-	$ -	9,124,499	$ 4,562	$ -	$ 20,438,782	$ 10,008,612	$(31,942,866)	$ (1,489,993)
Exercise of options	-	-	-	-	-	-	154,150	77	-	592,502	-	-	592,579
Conversion of
preferred stock and accrued dividends into common shares	-	-	(4,826)	(5)	-	-	8,045	4	-	55,159	(44,145)	-	11,013
Valuation of
beneficial conversion feature on Series E Preferred	-	-	-	-	-	-	-	-	-	-	2,459,959	(2,459,959)	-
Issuance of preferred stock for cash	-	-	-	-	551,703	552	-	-	-	-	3,309,668	-	3,310,220
Preferred stock dividend	-	-	-	-	-	-	-	-	-	-	(637,465)		(637,465)
Stock option costs	-	-	-	-	-	-	-	-	-	7,712,616	-	-	7,712,616
Contribution of officer's salary	-	-	-	-	-	-	-	-	-	344,966	-	-	344,966
Net loss	-	-	-	-	-	-	-	-	-	-	-	(11,131,691)	(11,131,691)
Balance, December 31, 2008	288,575	288	624,283	624	551,703	552	9,286,694	4,643	-	29,144,025	15,096,629	(45,534,516)	(1,287,755)
Exercise of options	-	-	-	-	-	-	29,404	15	-	232,276	-	-	232,291
Conversion of preferred stock and accrued dividends into common shares	(16,854)	(16)	(30,056)	(30)	-	-	109,048	55	-	560,900	(424,954)	-	135,955
Issuance of preferred stock	-	-	-	-	38,834	38	-	-	-	-	232,961	-	232,999
Issuance of common stock	-	-	-	-	-	-	111,905	56	-	288,944	-	-	289,000
Valuation of beneficial conversion feature on Series E Preferred	-	-	-	-	-	-	-	-	-	-	2,464,166	(2,464,166)	-
Preferred stock dividend	-	-	-	-	-	-	-	-	-	-	(746,449)	-	(746,449)
Contribution of officer's salary	-	-	-	-	-	-	-	-	-	352,462	-	-	352,462
Net loss	-	-	-	-	-	-	-	-	-	-	-	(2,884,231)	(2,887,231)
Balance, December 31, 2009	271,721	$ 272	594,227	$ 594	590,537	$ 590	9,537,051	$ 4,769	$ -	$ 30,578,607	$ 16,622,353	$(50,885,913)	$ (3,678,728)

The accompanying notes are an integral part of these consolidated financial statements.

F-4

CPC OF AMERICA, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Shareholders' Equity (Deficit)
From inception (April 11, 1996) to December 31, 2009

	Preferred Stock																				Common Stock											Deficit
	Series A				Series B				Series C						Series D												Additional		Additional			Accumulated			Total
	Number				Number				Number						Number						Number				Stock		Paid-in		Paid-in			During the			Shareholders'
	of Shares		Total		of Shares		Total		of Shares			Total			of Shares			Total			of Shares		Total		Option Costs		Capital- Common		Capital- Preferred			Development Stage			Equity (Deficit)


Balance, December 31, 2002		-	$	-		-	$	-		341,204		$	341			110,627		$	111			5,625,658	$	2,812	$	-	$	6,966,327	$	5,812,695		$	(11,834,306	)	$	947,980
Exercise of options		-		-		-		-		-			-			-			-			775,117		388		-		1,351,807		-			-			1,352,195
Conversion of preferred
stock and accrued dividends into common shares		-		-		-		-		(26,786	)		(27	)		-			-			73,800		37		-		263,034		(244,973	)		-			18,071
Valuation of beneficial
conversion feature on Series D Preferred		-		-		-		-		-			-			-			-			-		-		-		-		2,161,694			(2,161,694	)		-
Issuance of preferred stock for cash		-		-		-		-		-			-			708,709			709			-		-		-		-		6,484,373			-			6,485,082
Preferred stock dividend		-		-		-		-		-			-			-			-			-		-		-		-		(390,289	)					(390,289	)
Net loss for 2003		-		-		-		-		-			-			-			-			-		-		-		-		-			(2,759,466	)		(2,759,466	)
Balance, December 31, 2003		-		-		-		-		314,418			314			819,336			820			6,474,575		3,237		-		8,581,168		13,823,500			(16,755,466	)		5,653,573
Exercise of options		-		-		-		-		-			-			-			-			460,775		230		-		1,082,034		-			-			1,082,264
Conversion of preferred
stock and accrued dividends into common shares		-		-		-		-		(11,236	)		(11	)		(27,873	)		(28	)		70,918		36		-		383,428		(354,961	)		-			28,464
Preferred stock dividend		-		-		-		-		-			-			-			-			-		-		-		-		(478,594	)					(478,594	)
Stock option costs		-		-		-		-		-			-			-			-			-		-		-		4,527,784		-			-			4,527,784
Net loss for 2004		-		-		-		-		-			-			-			-			-		-		-		-		-			(8,314,255	)		(8,314,255	)
Balance, December 31, 2004		-		-		-		-		303,182			303			791,463			792			7,006,268		3,503		-		14,574,414		12,989,945			(25,069,721	)		2,499,236
Exercise of options		-		-		-		-		-			-			-			-			470,393		235		-		777,724		-			-			777,959
Conversion of preferred
stock and accrued dividends into common shares		-		-		-		-		(6,180	)		(6	)		(106,922	)		(107	)		176,405		88		-		1,150,457		(1,033,109	)		-			117,323
Preferred stock dividend		-		-		-		-		-			-			-			-			-		-		-		-		(501,921	)					(501,921	)
Issuance of common stock for patent		-		-		-		-		-			-			-			-			4,000		2		-		153,998		-			-			154,000
Net loss for 2005		-		-		-		-		-			-			-			-			-		-		-		-		-			(1,625,516	)		(1,625,516	)
Balance, December 31, 2005		-		-		-		-		297,002			297			684,541			685			7,657,066		3,828		-		16,656,593		11,454,915			(26,695,237	)		1,421,081
Exercise of options		-		-		-		-		-			-			-			-			732,699		367		-		1,187,471		-			-			1,187,838
Conversion of preferred
stock and accrued dividends into common shares		-		-		-		-		(5,618	)		(6	)		(28,418	)		(28	)		60,219		30		-		358,881		(309,966	)		-			48,911
Preferred stock dividend		-		-		-		-		-			-			-			-			-		-		-		-		(430,176	)		-			(430,176	)
Stock option costs		-		-		-		-		-			-			-			-			-		-		-		264,297		-			-			264,297
Expenses paid by officer/shareholder		-		-		-		-		-			-			-			-			-		-		-		61,252		-			-			61,252
Net loss for 2006		-		-		-		-		-			-			-			-			-		-		-		-		-			(2,811,855	)		(2,811,855	)
Balance, December 31, 2006		-		-		-		-		291,384			291			656,123			657			8,449,984		4,225		-		18,528,494		10,714,773			(29,507,092	)		(258,652	)
Exercise of options		-		-		-		-		-			-			-			-			621,551		311		-		1,553,566		-			-			1,553,877
Conversion of preferred
stock and accrued dividends into common shares		-		-		-		-		(2,809	)		(3	)		(27,014	)		(28	)		52,964		26		-		333,659		(272,117	)		-			61,537
Preferred stock dividend		-		-		-		-		-			-			-			-			-		-		-		-		(434,044	)		-			(434,044	)
Stock option costs		-		-		-		-		-			-			-			-			-		-		-		23,063		-			-			23,063
Net loss for 2007		-		-		-		-		-			-			-			-			-		-		-		-		-			(2,435,774	)		(2,435,774	)
Balance, December 31, 2007		-	$	-		-	$	-		288,575		$	288			629,109		$	629			9,124,499	$	4,562	$	-	$	20,438,782	$	10,008,612		$	(31,942,866	)	$	(1,489,993	)

The accompanying notes are an integral part of these consolidated financial statements.

F-5

CPC OF AMERICA, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Shareholders' Equity (Deficit)
From inception (April 11, 1996) to December 31, 2009

	Preferred Stock																				Common Stock															Deficit
	Series A				Series B						Series C						Series D													Additional			Additional			Accumulated			Total
	Number				Number						Number						Number				Number						Stock			Paid-in			Paid-in			During the			Shareholders'
	of Shares		Total		of Shares			Total			of Shares			Total			of Shares		Total		of Shares			Total			Option Costs			Captial- Common			Captial- Preferred			Development Stage			Equity (Deficit)

Balance, December 31, 2001		-	$	-		71,429		$	71			95,123		$	95			-	$	-		5,627,484		$	2,815		$	(35,000	)	$	6,004,709		$	2,229,297		$	(7,251,211	)	$	950,776
Exercise of options		-		-		-			-			-			-			-		-		282,480			140			-			317,650			-			-			317,790
Conversion of preferred
stock and accrued dividends into common shares		-		-		(71,429	)		(71	)		(18,576	)		(19	)		-		-		241,627			120			-			790,205			(783,495	)		-			6,740
Valuation of beneficial
conversion feature on Series C & D Preferred		-		-		-			-			-			-			-		-		-			-			-			-			1,122,521			(1,122,521	)		-
Cancellations of shares		-		-		-			-									-		-		(535,933	)		(268	)		-			(199,732	)		-			-			(200,000	)
Issuance of preferred stock for cash		-		-		-			-			264,657			265			110,627		111		-			-			-						3,367,233			-			3,367,609
Amortization of stock option costs		-		-		-			-			-			-			-		-		-			-			35,000			-			-			-			35,000
Preferred stock dividend		-		-		-			-			-			-			-		-		-			-			-			-			(122,861	)					(122,861	)
Purchase of Med Enclosure Stock		-		-		-			-			-			-			-		-		10,000			5			-			53,495			-			-			53,500
Net loss for 2002		-		-		-			-			-			-			-		-		-			-			-			-			-			(3,460,574	)		(3,460,574	)
Balance, December 31, 2002		-	$	-		-		$	-			341,204		$	341			110,627	$	111		5,625,658		$	2,812		$	-		$	6,966,327		$	5,812,695		$	(11,834,306	)	$	947,980

The accompanying notes are an integral part of these consolidated financial statements.

F-6

CPC OF AMERICA, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Shareholders' Equity (Deficit)
From inception (April 11, 1996) to December 31, 2009

	Preferred Stock																				Common Stock												Deficit
	Series A						Series B						Series C				Series D											Additional		Additional			Accumulated			Total
	Number						Number						Number				Number				Number				Stock			Paid-in		Paid-in			During the			Shareholders'
	of Shares			Total			of Shares			Total			of Shares		Total		of Shares		Total		of Shares		Total		Option Costs			Captial- Common		Captial- Preferred			Development Stage			Equity (Deficit)

Balance, December 31, 2000		8,824		$	9			71,429		$	71			-	$	-		-	$	-		4,836,763	$	2,420	$	(175,000	)	$	4,234,460	$	907,320		$	(4,668,871	)	$	300,409
Exercise of options		-			-			-			-			-		-		-		-		360,394		180		-			413,483		-			-			413,663
Issuance of common stock for services		-			-			-			-			-		-		-		-		100,000		50		-			255,450		-			-			255,500
Issuance of preferred stock for cash		-			-			113,715			114			95,123		95		-		-		-		-		-			-		1,841,392			-			1,841,601
Valuation of beneficial conversion
feature on Series B Preferred		-			-			-			-			-		-		-		-		-		-		-			-		331,636			(331,636	)		-
Valuation of beneficial conversion
feature on Series C Preferred		-			-			-			-			-		-		-		-		-		-		-			-		282,233			(282,233	)		-
Conversion of preferred
stock and accrued dividends into common shares		(8,824	)		(9	)		(113,715	)		(114	)		-		-		-		-		330,327		165		-			1,081,316		(1,069,887	)					11,471
Preferred stock dividend		-			-			-			-			-		-		-		-		-		-		-			-		(63,397	)					(63,397	)
Issuance of common stock
options for services		-			-			-			-			-		-		-		-		-		-		-			20,000		-			-			20,000
Amortization of stock option costs		-			-			-			-			-		-		-		-		-		-		140,000			-		-			-			140,000
Net loss for 2001		-			-			-			-			-		-		-		-		-		-		-			-		-			(1,968,471	)		(1,968,471	)

Balance, December 31, 2001		-		$	-			71,429		$	71			95,123	$	95		-	$	-		5,627,484	$	2,815	$	(35,000	)	$	6,004,709	$	2,229,297		$	(7,251,211	)	$	950,776

The accompanying notes are an integral part of these consolidated financial statements.

F-7

CPC OF AMERICA, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Shareholders' Equity (Deficit)
From inception (April 11, 1996) to December 31, 2009

	Preferred Stock																		Common Stock														Deficit
	Series A						Series B				Series C				Series D													Additional		Additional			Accumulated			Total
	Number						Number				Number				Number				Number						Stock			Paid-in		Paid-in			During the			Shareholders'
	of Shares			Total			of Shares		Total		of Shares		Total		of Shares		Total		of Shares			Total			Option Costs			Captial- Common		Captial- Preferred			Development Stage			Equity (Deficit)

Balance, December 31, 1999		79,293		$	79			-	$	-		-	$	-		-	$	-		4,124,060		$	2,062		$	-		$	1,797,178	$	872,682		$	(2,711,302	)	$	(39,301	)
Exercise of warrants		-			-			-		-		-		-		-		-		365,500			183			-			639,442		-			-			639,625
Exercise of options		-			-			-		-		-		-		-		-		223,832			113			-			258,528		-			-			258,641
Issuance of preferred stock for cash		-			-			71,429		71		-		-		-		-		-			-			-			-		624,929			-			625,000
Valuation of beneficial conversion
feature on Series B Preferred		-			-			-		-		-		-		-		-		-			-			-			-		208,125			(208,125	)		-
Conversion of Series A Preferred
into common shares		(70,469	)		(70	)		-		-		-		-		-		-		131,996			66			-			624,659		(598,930	)		-			25,725
Beneficial conversion feature on
Series A Preferred shares		-			-			-		-		-		-		-		-		-			-			-			199,486		(199,486	)		-			-
Settlement of lawsuit		-			-			-		-		-		-		-		-		33,333			17			-			199,983		-			-			200,000
Purchase of patent		-			-			-		-		-		-		-		-		47,042			24			-			235,184		-			-			235,208
Stock option costs		-			-			-		-		-		-		-		-		-			-			(280,000	)		280,000		-			-			-
Amortization of stock option costs		-			-			-		-		-		-		-		-		-			-			105,000			-		-			-			105,000
Cancellation of common shares		-			-			-		-		-		-		-		-		(89,000	)		(45	)		-			-		-			-			(45	)
Net loss for 2000		-			-			-		-		-		-		-		-		-			-			-			-		-			(1,749,444	)		(1,749,444	)

Balance, December 31, 2000		8,824		$	9			71,429	$	71		-	$	-		-	$	-		4,836,763		$	2,420		$	(175,000	)	$	4,234,460	$	907,320		$	(4,668,871	)	$	300,409

The accompanying notes are an integral part of these consolidated financial statements.

F-8

CPC OF AMERICA, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Shareholders' Equity (Deficit)
From inception (April 11, 1996) to December 31, 2009

	Preferred Stock								Common Stock								Additional		Additional			Deficit Accumulated			Total
	Series A				Series B										Stock		Paid-in		Paid-in			During the			Shareholders'
	Number of Shares		Total		Number of Shares		Total		Number of Shares			Total			Option Costs		Capital- Common		Capital- Preferred			Development Stage			Equity(Deficit)

Initial capitalization		-	$	-		-	$	-		2,400,000		$	1,200		$	-	$	-	$	-		$	-		$	1,200
Issuance of common stock for a note		-		-		-		-		300,000			150			-		-		-			-			150
Issuance of common stock for cash		-		-		-		-		100,000			50			-		4,950		-			-			5,000
Issuance of common stock for services		-		-		-		-		764,000			382			-		37,818		-			-			38,200
Net loss for 1996		-		-		-		-		-			-			-		-		-			(59,079	)		(59,079	)
Balance, December 31, 1996		-		-		-		-		3,564,000			1,782			-		42,768		-			(59,079	)		(14,529	)
Exercise of options		-		-		-		-		26,666			13			-		29,987		-			-			30,000
Issuance of common stock for cash
and conversion of note payable ($77,000)		-		-		-		-		640,000			320			-		927,680		-			-			928,000
Net loss for 1997		-		-		-		-		-			-			-		-		-			(457,829	)		(457,829	)
Balance, December 31, 1997		-		-		-		-		4,230,666			2,115			-		1,000,435		-			(516,908	)		485,642
Exercise of options		-		-		-		-		57,000			29			-		114,971		-			-			115,000
Issuance of common stock for cash		-		-		-		-		40,000			20			-		57,980		-			-			58,000
Issuance of preferred stock for cash		8,824		9		-		-		-			-			-		-		74,991			-			75,000
Valuation of beneficial conversion
feature on Series A Preferred		-		-		-		-		-			-			-		-		25,000			(25,000	)		-
Contribution of officer's salary		-		-		-		-		-			-			-		80,000		-			-			80,000
Net loss for 1998		-		-		-		-		-			-			-		-		-			(640,580	)		(640,580	)
Balance, December 31, 1998		8,824		9		-		-		4,327,666			2,164			-		1,253,386		99,991			(1,182,488	)		173,062
Exercise of warrants		-		-		-		-		209,490			105			-		366,503		-			-			366,608
Exercise of options		-		-		-		-		146,904			73			-		177,289		-			-			177,362
Issuance of preferred stock for cash		70,469		70		-		-		-			-			-		-		598,930			-			599,000
Preferred stock dividend		-		-		-		-		-			-			-		-		(25,725	)		-			(25,725	)
Valuation of beneficial conversion
feature on Series A Preferred		-		-		-		-		-			-			-		-		199,486			(199,486	)		-
Repurchase of common shares		-		-		-		-		(560,000	)		(280	)		-		-		-						(280	)
Net loss for 1999		-		-		-		-		-			-			-		-		-			(1,329,328	)		(1,329,328	)
Balance, December 31, 1999		79,293	$	79		-	$	-		4,124,060		$	2,062		$	-	$	1,797,178	$	872,682		$	(2,711,302	)	$	(39,301	)

The accompanying notes are an integral part of these consolidated financial statements.

F-9

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Consolidated Statements of Cash Flows

							Cumulative
							from inception
							(April 11, 1996)
	Year ended December 31,						to December 31,
	2009			2008			2009
Cash flows from operating activities:
Net loss	$	(2,887,231	)	$	(11,131,691	)	$	(41,631,093	)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization		45,936			45,936			365,049
Contribution of officer's salary/expenses paid by officer		352,462			344,966			838,680
Issuance of common stock and options for services		521,291			8,015,747			17,348,575
Issuance of preferred stock for services		115,999			30,000			145,999
Changes in operating assets and liabilities
Decrease (increase) in other assets		18,483			727,035			(40,160	)
Increase (decrease) in accounts and other payable		176,188			144,789			345,153
(Decrease) increase in accrued expenses		17,232			(196,815	)		479,534
Net cash used by operating activities		(1,639,640	)		(2,020,033	)		(22,148,263	)

Cash flows from investing activities:
Purchase of patent		-			-			(114,795	)
Redemption of cash surrender value of life insurance		-			-			790,910
Increase in cash surrender value of life insurance		-			-			(790,910	)
Capital expenditures		-			-			(148,016	)
Net cash used by investing activities		-			-			(262,811	)

Cash flows from financing activities:
Proceeds from shareholder notes		47,717			-			564,917
Payments on note payable to shareholder		-			-			(102,017	)
Exercise of options and warrants		-			-			4,853,421
Issuance of preferred stock		117,000			3,280,220			16,390,512
Issuance of common stock		-			-			915,200
Dividends		-			-			(5,051	)
Cancellation of common stock		-			-			(200,325	)
Net cash provided by financing activities		164,717			3,280,220			22,416,657

Net increase (decrease) in cash		(1,474,923	)		1,260,187			5,583
Cash, beginning of period		1,480,506			220,319			-
Cash, end of period	$	5,583		$	1,480,506		$	5,583

The accompanying notes are an integral part of these consolidated financial statements.

F-10

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Consolidated Statements of Cash Flows (continued)

					Cumulative
					from inception
					(April 11, 1996)
	Year ended December 31,				to December 31,
	2009		2008		2009
Non-cash investing and financing activities:
Issuance of common stock for note receivable	$	-	$	-	$	150
Debt to equity conversion	$	-	$	289,448	$	422,033
Acquisition of minority interest	$	-	$	-	$	33,250
Sale of Tercero - elimination of goodwill	$	-	$	-	$	(40,000	)
Preferred dividends accrued	$	746,449	$	637,465	$	3,227,376
Conversion of preferred stock and preferred dividends
paid through issuance of common stock	$	560,955	$	55,163	$	1,089,070
Acquisition of Med Enclosures for note payable	$	-	$	-	$	250,000
Acquisition of patent paid by issuance of common stock	$	-	$	-	$	288,708
Settlement of lawsuit by issuance of common stock	$	-	$	-	$	200,000
Valuation of beneficial conversion features	$	2,464,166	$	2,459,959	$	9,254,820

The accompanying notes are an integral part of these consolidated financial statements.

F-11

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Consolidated Financial Statements

December 31, 2009

1. Organization and summary of significant accounting policies

Organization

CPC of America, Inc., a Nevada corporation (“CPC” or the “Company”), was formed on April 11, 1996 and is classified as a development stage company because its principal activities involve obtaining capital and rights to certain technology, and conducting research and development activities.

Nature of Operations

CPC aims to design, develop and commercialize innovative medical devices that deliver improved therapeutic options for vascular closure and enhance the quality of patient care in endovascular procedures.

Current efforts focus on developing MedCloseTM, an investigational-stage vascular closure system (VCS) that is intended to rapidly seal the femoral arterial puncture site following diagnostic or interventional catheterization procedures.

Liquidity and management’s plans

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has not generated any revenues from operations and there is no assurance that the Company will generate revenues in the future. The Company’s ability to generate revenue primarily depends on its success in completing development and obtaining regulatory approvals for the commercialization of its MedClose vascular closure system. The Company incurred a net loss of ($2,887,231) during the year ended December 31, 2009. Also, the Company had a cash balance of $5,583, a working capital deficit of ($3,910,063) and a shareholders’ deficit of ($3,678,728) at December 31, 2009.

The Company will require a minimum of $3 million of additional working capital in order to fund its proposed operations over the next 12 months, assuming that Series C, D and E shareholders do not make requests for a substantial amount of dividend payments in cash. In the event the Company receives substantial requests for dividend payments in cash or encounter a material amount of unexpected expenses, additional working capital in excess of $3 million may be required. Management plans to continue to seek sources of financing on favorable terms; however, there are no assurances that any such financing can be obtained on favorable terms, if at all. Management expects to monitor and control the Company’s operating costs until cash is available through financing or operating activities. There are no assurances that the Company will be successful in achieving these plans. The Company anticipates that losses will continue until such time, if ever, as the Company is able to generate sufficient revenues to support its operations.

F-12

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Consolidated Financial Statements

December 31, 2009

1. Organization and summary of significant accounting policies (continued)

Principles of consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. At December 31, 2009, the only active subsidiary is Med Enclosures, LLC (“MED”).

Cash and equivalents, short-term investments and other cash flow statement supplemental information

The Company considers all liquid investments with an original maturity of three months or less that are readily convertible into cash to be cash equivalents. The Company places its cash equivalents with high credit quality financial institutions. Accounts at banks are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000, and amounts at brokerage affiliates of the banks are insured by the Securities Investor Protection Corporation (SIPC) up to $500,000. At December 31, 2009, the Company had no balances in excess of insured limits. The Company performs ongoing evaluations of these institutions to limit its concentration of risk exposure. Management believes this risk is not significant due to the financial strength of the financial institutions utilized by the Company.

No income taxes have been paid since inception. Payments of $8,954 for interest have been made since inception, none of which was paid in 2008 or 2009.

Patents and trademarks

Patents and trademarks are stated at cost and amortized using the straight line method over their economic useful life, which is estimated at fifteen years. Amortization expense was $45,936 in 2009 and 2008.

Equipment

Depreciation expense is provided over the estimated useful life of 5 years using straight line and accelerated methods. All remaining equipment was disposed of in 2007.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Reclassifications

Certain items in the 2008 financial statements have been reclassified to conform to the 2009 presentation.

F-13

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Consolidated Financial Statements

December 31, 2009

1. Organization and summary of significant accounting policies (continued)

Intangibles and long-lived assets

Long-lived assets are reviewed annually for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment is necessary when the undiscounted cash flows estimated to be generated by the asset are less than the carrying amount of the asset. As of December 31, 2009, the Company expects these assets to be fully recoverable.

	2009		2008
Patents
Gross carrying amount	$	557,500	$	557,500
Accumulated amortization	$	326,853	$	281,333
Amortization expense	$	45,520	$	45,520

Trademark
Gross carrying amount	$	6,232	$	6,232
Accumulated amortization	$	5,544	$	5,128
Amortization expense	$	416	$	416

Amortization of intangibles is expected to be approximately $46,000 in each of the next five years. Both patents and the trademark are being amortized over 15 years.

Income taxes

The Company reports certain expenses differently for financial and tax reporting purposes and, accordingly, provides for the related deferred taxes. Income taxes are accounted for under the liability method in accordance with ASC 740, Income Taxes. Tax returns are subject to examination by taxing authorities and the returns for years 2005 – 2008 are still open.

Research and development costs

Costs and expenses that can be clearly identified as research and development are charged to expense as incurred in accordance with ASC 730, Research and Development.

Basic and diluted net loss per share

Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. For 2009 and 2008 all common stock equivalents were anti-dilutive.

F-14

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Consolidated Financial Statements

December 31, 2009

1. Organization and summary of significant accounting policies (continued)

Share-based payments

Compensation costs for all share-based awards to employees are measured based on the grant date fair value of those awards and recognized over the period during which the employee is required to perform service in exchange for the award (generally over the vesting period of the award). The Company has no awards with market or performance conditions. Excess tax benefits will be recognized as an addition to additional paid-in-capital.

Share-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. As share-based compensation expense recognized for the years ended December 31, 2009 and 2008 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Professional standards require forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Based on our historical experience, our forfeitures were expected to be 50% on grants after April 2008 and zero prior to that time.

Total share-based compensation expenses recognized for the years ended December 31, 2009 and 2008 were $0 and $7,712,616, respectively, and are included in general and administrative expenses. The incremental share-based compensation caused our net loss to increase by the same amounts. It also caused the basic and diluted loss per share to increase by $.00 and $.83 in the years ended December 31, 2009 and 2008, respectively.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

	2008

Risk free interest rate	2.5% - 2.875%
Volatility	66% - 68%
Term	5 years
Expected dividend yield	none

Since we have a net operating loss carryforward as of December 31, 2009, no excess tax benefits for the tax deductions related to share-based awards were recognized in the consolidated statement of operations. Additionally, no incremental tax benefits were recognized from stock options exercised in the years ended December 31, 2009 and 2008.

F-15

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Consolidated Financial Statements

December 31, 2009

1. Organization and summary of significant accounting policies (continued)

Recent accounting pronouncements

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No.161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB statement No.133” (ASC 815). This standard requires enhanced disclosures about an entity's derivative and hedging activities and thereby improves the transparency of financial reporting. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after November 15, 2008, with early application encouraged. As such, the Company adopted these provisions at the beginning of the fiscal year ending December 31, 2009 and adoption had no impact on these financial statements.

In May 2008, the FASB issued SFAS No. 163, "Accounting for Financial Guarantee Insurance Contracts, an interpretation of FASB Statement No. 60" (ASC 460). This standard interprets and amends existing accounting pronouncements to clarify their application to the financial guarantee insurance contracts included within the scope of that Statement. The standard is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years. As such, the Company adopted these provisions at the beginning of the fiscal year ended December 31, 2009 and adoption had no impact on these financial statements.

In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" (ASC 450). This standard establishes principles and requirements for subsequent events, and is effective for interim or annual financial periods ending after June 15, 2009. As such, the Company adopted this standard in the second quarter with no significant effect on the Company's consolidated financial statements.

In June 2009, the FASB issued SFAS No. 166 "Accounting for Transfers of Financial Assets-an amendment of FASB Statement No. 140"(ASC 860). This standard improves the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor's continuing involvement, if any, in transferred financial assets. The standard is effective as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. As such, the Company is required to adopt this standard in the year ended December 31, 2010. The Company is evaluating the impact the adoption of this standard will have on its consolidated financial statements.

F-16

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Consolidated Financial Statements

December 31, 2009

1. Organization and summary of significant accounting policies (continued)

Recent accounting pronouncements (continued)

In June 2009, the FASB issued SFAS No. 167 "Amendments to FASB Interpretation No. 46(R)" (ASC 810) . This standard improves financial reporting by enterprises involved with variable interest entities and is effective as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. As such, the Company is required to adopt this standard in the year ended December 31, 2010. The Company is evaluating the impact the adoption of this standard will have on its consolidated financial statements.

In June 2009, the FASB issued SFAS No. 168, "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles" (ASC 105). This standard establishes the FASB Accounting Standards Codification as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles, and is effective for financial statements issued for interim and annual periods ending after September 15, 2009. As such, the Company adopted this standard in the third quarter with no material effect on its financial statements.

In August 2009, the FASB issued Accounting Standards Update No. 2009-05 (ASU 2009-05), “Fair Value Measurements and Disclosures (Topic 820) – Measuring Liabilities at Fair Value.” ASU 2009-05 amends Subtopic 820-10, “Fair Value Measurements and Disclosures – Overall,” and provides clarification for the fair value measurement of liabilities. ASU 2009-05 is effective for the first reporting period including interim period beginning after issuance. The Company does not expect the adoption of ASU 2009-05 to have a material impact on its consolidated financial statements.

In September 2009, the FASB issued the FASB Accounting Standards Update No. 2009-08 “Earnings Per Share – Amendments to Section 260-10-S99”, which represents technical corrections to topic 260-10-S99, Earnings per share, based on EITF Topic D-53, Computation of Earnings Per Share for a Period that includes a Redemption or an Induced Conversion of a Portion of a Class of Preferred Stock and EITF Topic D-42, The Effect of the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock . The Company does not expect the adoption of this update to have a material impact on its consolidated financial statements.

F-17

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Consolidated Financial Statements

December 31, 2009

1. Organization and summary of significant accounting policies (continued)

Recent accounting pronouncements (continued)

In January 2010, the FASB issued the FASB Accounting Standards Update No. 2010-01, Accounting for Distributions to Shareholders with Components of Stock and Cash. The amendments in this update clarify that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings Per Share). The amendments in this update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis. The Company adopted this standard and has determined the standard does not have material effect on our consolidated financial statements.

2. Shareholders’ equity (deficit)

Series A preferred stock

In November 1998, the Company commenced the private placement sale of Series A preferred stock at $8.50 per share. The Company sold 79,293 shares for proceeds of $674,000. The Series A preferred stock had no voting rights but had a 5% annual dividend payable in cash or common stock and had a conversion price of $4.70 per share. On December 31, 1999, a dividend of $25,725 was paid by issuing 5,474 shares of the Company’s common stock. During 2000 and 2001 all 79,923 Series A shares and related accrued dividends of $1,563 were converted into 143,737 common shares. Additional accrued dividends of $3,750 were paid in cash during 2001.

Series B preferred stock

In April 2000, the Company commenced the private placement sale of Series B preferred stock at $8.75 per share. The Company sold 185,144 shares for proceeds of $1,620,010. The Company recorded a beneficial conversion feature totaling $208,125 in 2000 and $331,636 in 2001 at the date of issuance. The Series B preferred stock had no voting rights but had a 5% annual dividend payable in cash or common stock and was convertible into common stock at a conversion price of $3.20 per share. During 2001 and 2002 all 185,144 Series B shares and related accrued dividends of $9,908 were converted into 509,350 common shares. Additional accrued dividends of $53,125 were paid in cash during 2002.

F-18

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Consolidated Financial Statements

December 31, 2009

2. Shareholders’ equity (deficit) (continued)

Series C preferred stock

In October 2001, the Company commenced the private placement sale of Series C preferred stock at $8.90 per share. The Company sold 359,780 shares for proceeds of $3,202,042. The Company recorded a beneficial conversion feature totaling $1,067,337 at the date of issuance. The Series C preferred stock has no voting rights and has a 5% annual dividend payable in cash or common stock. Each Series C share was convertible into one common share until June 30, 2002, when the conversion price was adjusted to the lower of $6.68 or 75% of the average last sale price of the common stock for the 30 trading days immediately preceding such date as reported on any stock exchange, according to the terms of the original agreement. At June 30, 2002, the conversion price was adjusted to $3.57 per share. Accrued dividends of $933,289 on the 271,721 shares outstanding at December 31, 2009 remain unpaid.

Series D preferred stock

In November 2002, the Company commenced the private placement sale of Series D preferred stock at $9.15 per share. The Company sold 819,336 shares for proceeds of $7,496,924. The Company recorded a beneficial conversion feature totaling $2,499,111 at the date of issuance. The Series D preferred stock has no voting rights and has a 5% annual dividend payable in cash or common stock. Each Series D share was convertible into one common share until June 30, 2003, when the conversion price was adjusted to the lower of $6.86 or 75% of the average last sale price of the common stock for the 30 trading days immediately preceding such date as reported on any stock exchange, according to the terms of the original agreement. Based on the last prices over the applicable period, no adjustment was made to the conversion price and it remains fixed at $6.86 per share. Accrued dividends of $1,828,087 on the 594,227 outstanding shares remain unpaid at December 31, 2009.

Conversions of Series C and Series D preferred stock have occurred as follows:

	# of				# of				# of
	Series C		Accrued		Series D		Accrued		Common
	Shares		Dividends		Shares		Dividends		Shares
Year	Converted		Converted		Converted		Converted		Issued
2002		18,576	$	6,625		-	$	-		46,314
2003		26,786	$	18,071		-	$	-		73,800
2004		11,236	$	11,758		27,873	$	16,706		70,918
2005		6,180	$	9,500		106,922	$	107,823		176,405
2006		5,618	$	9,520		28,418	$	39,390		60,219
2007		2,809	$	7,137		27,014	$	54,000		55,964
2008		-	$	-		4,826	$	11,013		8,045
2009		16,854	$	53,011		30,056	$	82,944		109,048
Totals		88,059	$	115,622		225,109	$	311,876		600,713

F-19

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Consolidated Financial Statements

December 31, 2009

2. Shareholders’ equity (deficit) (continued)

Series E preferred stock

In September 2007, the Company commenced the private placement sale of Series E preferred stock at $19.75 per share. The Series E preferred stock has no voting rights and has a 10% annual dividend payable in cash or common stock at the option of the Company. Each Series E share was convertible into one common share until August 31, 2008, when the conversion price would have been adjusted to the lower of $14.80 or 75% of the average last sale price of the common stock for the 30 trading days immediately preceding such date on any stock exchange; provided that the conversion price would not have been adjusted to an amount below $13.00 per share. At December 31, 2007, the Company had not sold any of these shares, and on January 16, 2008, the terms of the Series E private placement were amended to reduce the share price to $6.00. Each Series E share was convertible into one common share until August 31, 2008, when the conversion price was adjusted to the lower of $4.50 or 75% of the average last sale price of the common stock for the 30 trading days immediately preceding such date on any stock exchange; provided that the conversion price shall not be adjusted to an amount below $3.92 per share. The conversion price on August 31, 2008 was $4.50 per share. The board of directors subsequently adjusted the conversion to $3.92 to be effective December 31, 2008. During the year ended December 31, 2008, the Company issued 546,703 shares of Series E preferred shares for cash proceeds of $3,280,220, and another 5,000 shares in payment of $30,000 of the CFO’s salary. A beneficial conversion feature totaling $2,459,959 has been recorded in accordance with guidance issued by the FASB’s Emerging Issues Task Force regarding Accounting for Convertible Securities with a Beneficial Conversion Feature or Contingently Adjustable Conversion Ratios. The Company recognized and measured the embedded beneficial conversion feature by allocating a portion of the proceeds equal to the intrinsic value of the embedded beneficial conversion feature to additional paid-in capital. Intrinsic value was calculated as the difference between the conversion price and the fair value of the common stock into which the preferred stock is convertible, multiplied by the number of shares into which the preferred stock is convertible. During the year ended December 31, 2009, the Company issued 10,000 shares of Series E preferred shares in lieu of $60,000 in salary to its CFO, and 9,334 shares of Series E preferred shares in lieu of director compensation of $56,000. In addition, 19,500 shares of Series E preferred shares were issued for $117,000 in cash. On June 25, 2009 the conversion price was further reduced to $2.75. A beneficial conversion feature totaling $2,464,166 was recorded to reflect the reduction in conversion price and for the Series E shares issued. As of December 31, 2009, the outstanding number of shares of Series E preferred stock was 590,537 and the amount of accrued dividends was $564,701.

F-20

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Consolidated Financial Statements

December 31, 2009

2. Shareholders’ equity (deficit) (continued)

Common stock

See discussion above for common share issuances upon conversion of preferred shares. Also, see discussion below for issuance of common shares upon exercise of stock options.

During 2009, the Company issued 111,905 shares of common stock for services valued at $289,000. Of the total, 62,674 shares were issued in accordance with terms of a development agreement, 30,000 shares were issued for a consulting agreement and 19,231 shares were issued for legal services. Of the $289,000, $225,000 is included in research and development expense, $13,040 is included in general and administrative expense and the remaining $50,960 is included in prepaid expenses in the accompanying financial statements.

In January 2005, the Company purchased the final 7.7% of MED for 4,000 common shares valued at $154,000.

In October 2002, the Company purchased an additional 7% interest in MED for 10,000 common shares valued at $53,500.

In 2001, a total of 75,000 common shares were issued to the Company’s directors and an additional 25,000 common shares were issued to the Company’s strategic consultant.

In March 2002, 33,333 common shares were returned for cancellation as part of a lawsuit settlement. In August and November 2002, 502,600 common shares were returned for cancellation as part of the settlement with former consultants of the Company.

In June 1998, the Company effected a two-for-one stock split, decreasing the par value to $.0005 per share. The number of authorized shares remained at 20,000,000. All share information reported in these financial statements has been adjusted to reflect the two-for-one stock split.

In March 1997, the Company commenced the private placement sale of 35 units at $29,000 per unit. Each unit consisted of 20,000 shares of common stock and warrants to purchase 40,000 shares of common stock exercisable at $1.75 per share from February 10, 1999 until December 31, 2000. The Company sold 34 units, including 3 units in conversion of a note payable. An investor converted a note with a balance of $70,000 and related accrued interest of $7,000 into three units, and the Company received $10,000 cash for the balance. No value was allocated to the warrants because the exercise price was above market price at the time of issuance. During 1999, warrants to purchase 209,490 common shares were exercised and at December 31, 2000 the remaining balance of warrants expired.

F-21

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Consolidated Financial Statements

December 31, 2009

2. Shareholders’ equity (deficit) (continued)

Common stock (continued)

In December 1996, the Company issued 4,000 shares of common stock to its attorney for payment of $200 in legal fees. In October 1996, the Company issued 760,000 shares of common stock to related parties in payment of $38,000 in consulting fees rendered in 1996.

In May 1996, the Company sold to its founders 2,400,000 shares of common stock for $.0005 cash per share and 300,000 shares for a $150 note receivable. In September 1996, the Company sold 100,000 shares of common stock for $.05 cash per share to one of its founders.

At December 31, 2009 and 2008, the number of shares of common stock issued and outstanding was 9,537,051 and 9,286,694, respectively.

If all preferred stock, related dividends, and options outstanding at December 31, 2009 were converted to common stock, the total number of shares outstanding would be 14,882,649.

Stock options

The Company has granted options to purchase its common stock. The option prices at the time of grant were at or above the fair value of the Company’s common stock. The following information applies to all options outstanding at December 31, 2009:

						Weighted				Weighted
				Average		average				average
Exercise		Options		remaining		exercise		Number		exercise
Price		Outstanding		life (years)		price		exercisable		price

$	4.45		100,000		3.75	$	4.45		100,000	$	4.45
$	5.05		100,000		3.11	$	5.05		100,000	$	5.05
$	7.90		1,653,907		3.33	$	7.90		1,653,907	$	7.90

The following information applies to employee options outstanding at December 31, 2009:

						Weighted				Weighted
				Average		average				average
Exercise		Options		remaining		exercise		Number		exercise
Price		Outstanding		life (years)		price		exercisable		price

$	7.90		100,000		3.33	$	7.90		100,000	$	7.90
$	4.45		50,000		3.75	$	4.45		50,000	$	4.45

F-22

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Consolidated Financial Statements

December 31, 2009

2. Shareholders’ equity (deficit) (continued)

Stock options (continued)

A summary of stock option activity since inception follows:

	Number of			Exercise
	Options			Price		Expiration
Inception (April 11, 1996)		-			-		-
Granted		4,420,000		$	1.125 - 1.25		1997 - 2006
Outstanding at December 31, 1996		4,420,000		$	1.125 - 1.25		1997 - 2006
Exercised		(26,666	)	$	1.125
Expired		(200,000	)	$	1.18
Outstanding at December 31, 1997		4,193,334		$	1.125 - 1.25		2006
Granted		4,152,000		$	1.25 - 9.00		2008
Exercised		(57,000	)	$	1.125 - 2.50
Canceled		(1,173,334	)	$	1.125
Outstanding at December 31, 1998		7,115,000		$	1.125 - 9.00		2003 - 2008
Granted		25,000		$	5.50		2004
Exercised		(146,904	)	$	1.125 - 2.50
Canceled		(490,000	)	$	1.125
Outstanding at December 31, 1999		6,503,096		$	1.125 - 9.00		2003 - 2008
Granted		175,000		$	5.00 - $5.75		2004 - 2005
Exercised		(223,832	)	$	1.125 - 2.50
Outstanding at December 31, 2000		6,454,264		$	1.125 - 9.00		2003 - 2008
Granted		15,800		$	2.50		2004
Exercised		(360,394	)	$	1.125 - 2.50
Outstanding at December 31, 2001		6,109,670		$	1.125 - 9.00		2003 - 2008
Exercised		(282,480	)	$	1.125
Canceled		(100,000	)	$	5.50
Outstanding at December 31, 2002		5,727,190		$	1.125 - 9.00		2003 - 2008
Exercised		(775,117	)	$	1.125 - 9.00
Canceled		(10,000	)	$	8.00
Outstanding at December 31, 2003		4,942,073		$	1.125 - 5.75		2004 - 2008
Granted		550,000		$	29.12		2009
Exercised		(460,775	)	$	1.125 - 5.75
Outstanding at December 31, 2004		5,031,298		$	1.125 - 29.12		2006-2009
Exercised		(470,393	)	$	1.125 - 2.50
Outstanding at December 31, 2005		4,560,905		$	1.125 - 29.12		2006-2009
Granted		200,000		$	30.00		2009
Exercised		(732,699	)	$	1.125 - 2.50
Outstanding at December 31, 2006		4,028,206		$	2.50 - 30.00		2008-2009

F-23

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Consolidated Financial Statements

December 31, 2009

2. Shareholders’ equity (deficit) (continued)

Stock options (continued)

	Number of			Exercise
	Options			Price		Expiration
Outstanding at December 31, 2006		4,028,206		$	2.50 - 30.00		2008 - 2009
Exercised		(621,551	)	$	2.50		2008
Outstanding at December 31, 2007		3,406,655		$	2.50 - 30.00		2008 - 2009
Granted		3,390,876		$	4.45 - 7.90		2013
Exercised		(154,150	)	$	2.50 - 7.90		2008 - 2013
Canceled/Expired		(2,865,876	)	$	2.50 - 30.00		2008 - 2009
Outstanding at December 31, 2008		3,777,505		$	4.45 - 30.00		2009 - 2013
Exercised		(29,404	)	$	7.90		2013
Canceled/Expired		(1,894,194	)	$	7.90 - 30.00		2009 - 2013
Outstanding at December 31, 2009		1,853,907		$	4.45 - 7.90		2013

Exercisable at December 31, 2009		1,853,907		$	4.45 - 7.90		2013

The aggregate intrinsic value was zero on all outstanding options at December 31, 2009, since the Company’s stock was trading at a lower value than any of the options granted. At December 31, 2009, all compensation costs have been recognized and all remaining options are vested.

In February 2008, 100,000 options were granted: 50,000 to each of the two outside board members at an exercise price of $5.05 for services performed. The options vest immediately and expire on February 11, 2013. In April 2008, 3,190,876 options were granted: 1,607,565 to the Company’s CEO and 1,583,311 to the Company’s strategic consultant at an exercise price of $7.90 for services performed. The options vest immediately and expire on or before April 24, 2013. In October 2008, 100,000 options were granted: 50,000 to each of the two board members appointed to the board in 2008 at an exercise price of $4.45 for services performed. The options vest immediately and expire on October 8, 2013. The fair value of these options was determined to be $7,712,616, which was included in general and administrative expenses in the accompanying 2008 statement of operations. In November 2009, the Company’s CEO forfeited 1,469,194 stock options.

In October 2006, 200,000 options were granted: 50,000 to each of the three board members and 50,000 to the Company’s strategic consultant at an exercise price of $30.00 for services performed. The options vest immediately and expire on October 12, 2009. The fair value of these options was determined to be $204,237, which was included in general and administrative expenses in the accompanying 2006 statement of operations. In May 2008, the Company’s CEO (one of the board members mentioned above) cancelled his 50,000 options.

F-24

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Consolidated Financial Statements

December 31, 2009

2. Shareholders’ equity (deficit) (continued)

Stock options (continued)

In October 2004, 275,000 options were granted to a consultant at an exercise price of $29.12 for services performed. The options vest immediately and expired on October 11, 2009. The fair value of these options was calculated using the Black-Scholes option pricing model and was determined to be $3,117,034, which was included in the accompanying 2004 statement of operations.

Also in October 2004, 275,000 options were granted to the Company’s CEO at an exercise price of $29.12 for services performed. The options vest immediately and expire on October 11, 2009. The fair value of these options was calculated as the difference between the exercise price and $34.25, the selling price of Company’s stock at the grant date. A total expense of $1,410,750 is included in the accompanying 2004 statement of operations. In May 2008, the Company’s CEO cancelled his 275,000 options.

In April 2001, 15,800 options were granted to a consultant at an exercise price of $2.50 for services performed. The fair value of these options was calculated using the Black-Scholes option-pricing model and was determined to be $20,000.

During 2000, 175,000 options were granted to two consultants at exercise prices of $5.00 and $5.75. The fair value of these options was calculated using the Black-Scholes option pricing model and was determined to be $280,000. The services provided by these consultants were to be performed over two years. The cost of $280,000 is being amortized over two years. During 2002 and 2001, $35,000 and $140,000 were charged to expense and recorded in the statement of operations, respectively. In 2002, 100,000 of these options were cancelled due to non-performance. The fair value of the options issued to non-employees during 1999 and 1998 was determined to be minimal.

Of the $232,291 in options exercised during 2009, $216,559 was for consulting services for the Company’s strategic consultant and $15,732 was for rent from the same consultant.

Of the $592,579 in options exercised during 2008, $289,448 was in lieu of a cash repayment of debt from the Company’s CEO, which is included in the caption “debt to equity conversion” in the statement of cash flows. In addition, the CEO elected not to receive cash for a portion of the compensation from his employment contract; instead he exercised options in the amount of $303,131.

If all options outstanding at December 31, 2009 were exercised, the Company would receive $14,015,865 in capital.

F-25

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Consolidated Financial Statements

December 31, 2009

3. Income taxes

The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting and tax bases of its assets and liabilities. At December 31, 2009 the Company has an estimated net operating loss carryforward for federal tax purposes of approximately $28,900,000, which, if unused to offset future taxable income, will begin to expire in 2012 and continue through 2030. The Company had deferred tax assets of approximately $10,100,000 and $9,100,000 at December 31, 2009 and 2008, respectively, relating to its net operating loss. A 100% valuation allowance, which increased by $1,000,000 in 2009, has been recognized to offset the entire related deferred tax asset due to the uncertainty of realizing the benefit.

4. Commitments and contingencies

Consulting agreements

In January 1997, the Company entered into a consulting agreement with its strategic consultant, CTM Group, Inc. (a related party), for five years at $5,000 per month. The agreement was amended in November 1997 to increase the fees to $8,000 per month, in April 1998 to increase the fees to $10,000 per month and extend the term of the agreement for an additional five years and in April 1999 to provide for increases in compensation based on increases in the consumer price index in the preceding year. Base compensation was $19,250 per month in 2002 and $18,333 per month in 2001. In 2003, the agreement was amended; accordingly, base monthly compensation was $31,797 plus a bonus of $175,000. For 2004, base monthly compensation was $30,323, plus a cash bonus of $58,344 and 275,000 in stock options valued at $3,117,034 (see note 2). The agreement was amended again in 2005 to provide for increases in annual compensation as follows: to $570,194 effective as of January 1, 2005; to $627,213 effective as of January 1, 2006; and to $698,934 effective as of January 1, 2007. The 2005 amendment also required the consultant to be personally responsible for travel, entertainment or other business expenses incurred by the consultant in connection with the performance of his duties on behalf of the Company. The expiration date for this agreement was April 23, 2009, subject to automatic renewals for additional five year periods unless either party elects not to renew the agreement.

In addition, options to purchase 2,000,000 shares of common stock at $2.50 per share were also granted under the April 1998 amendment. The options vested and became exercisable in ten equal installments of 200,000 shares each year starting at the grant date. The unexercised options of 1,258,565 expired on April 22, 2008.

In early 2009, CTM Group, Inc. and its strategic consultant notified the Company that it would not seek to renew the consulting contract and the agreement expired on April 23, 2009.

F-26

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Consolidated Financial Statements

December 31, 2009

4. Commitments and contingencies (continued)

Employment agreement - CEO

In April 1998, the Company entered into a ten-year employment agreement with its CEO. The agreement provided for a base salary of $10,000 per month beginning May 1998. In December 1998, the CEO elected to contribute his accrued salary of $80,000 to the Company. The agreement was amended in April 1999 to provide for increases in compensation based on increases in the consumer price index in the preceding year. Base monthly compensation was $18,333 in 2001 and $19,250 in 2002. In 2003, the agreement was amended; accordingly, base monthly compensation was $31,797 plus a bonus of $175,000. For 2004, base monthly compensation was $30,323, plus a cash bonus of $58,344 and 275,000 in stock options (see note 2). The agreement was amended again in 2005 to provide for increases in annual compensation as follows: to $570,194 effective as of January 1, 2005; to $627,213 effective as of January 1, 2006; and to $698,934 effective as of January 1, 2007. The 2005 amendment also required the CEO to be personally responsible for travel, entertainment or other business expenses incurred by the CEO in connection with the performance of his duties on behalf of the Company. The expiration date for this agreement was April 23, 2009, subject to automatic renewals for additional five year periods unless either party elects not to renew the agreement. Since neither party elected not to renew the agreement, this employment agreement was renewed on April 23, 2009 for an additional five years. The new expiration date is April 23, 2014. The Company has not made timely payments to its CEO. Due to this breach of the agreement by the Company, the CEO has agreed to, but not finalized, a salary of $175,000 plus expenses, benefits, and reimbursement of related Company expenses effective April 23, 2009. In the fourth quarter of 2009, the Company’s CEO forgave $352,462 in salary in 2009 to make his salary of $175,000 effective as of April 23, 2009.

In addition, options to purchase 2,000,000 shares of common stock at $2.50 per share were granted under the April 1998 agreement. The options vest and become exercisable in ten equal installments of 200,000 shares each year starting at the grant date. The unexercised options of 1,282,565 expired on April 22, 2008.

Employment agreement - CFO

Effective July 1, 2008, the Company entered into a three year employment agreement with its CFO. The agreement provides for a base salary of $5,000 per month beginning July 2008. In addition the Company shall issue to the CFO 30,000 shares of the Company’s Series E Preferred Stock to vest ratably over the term of the agreement. The agreement also requires the CFO to be personally responsible for travel, entertainment or other business expenses incurred by the CFO in connection with the performance of her duties on behalf of the Company. The Company has not made timely payments to its CFO. Due to this breach of contract by the Company, the CFO has agreed to an amendment of this employment agreement. Effective January 1, 2010, base salary will be $10,000 per month plus expenses, benefits and reimbursement of related Company expenses.

F-27

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Consolidated Financial Statements

December 31, 2009

4. Commitments and contingencies (continued)

Royalty agreements

In July 2000, the Company entered into royalty agreements with its CEO and its strategic consultant granting each of them royalties equal to .75% on net sales of certain MED products as defined. In July 2001, these agreements were amended to increase the royalties to 1.5% of net sales of certain MED products as defined. In October 2004, the agreements were amended again. Pursuant to that amendment, in the event of a change in control of either MED or CPC of America, MED will be obligated to pay the CEO and the strategic consultant each minimum royalty payments of $4,000,000 per year. On May 13, 2008, the Company’s CEO and its strategic consultant cancelled these royalty agreements.

Office lease

The Company leases its Sarasota, Florida office space under a one-year lease at $1,190 per month from a related party. The lease expired November 30, 2005 and was on a month-to-month basis through December 31, 2009, at which time the lease was cancelled. Actual rent expense was $15,732 in 2009 and $14,280 in 2008.

5. Related party transactions

The Company has a consulting agreement with its strategic consultant, a related party (see note 4). The Company has also entered into various agreements with its strategic consultant for the research and development of additional applications of the Company’s proprietary intellectual properties and for office rent. The Company incurred expenses under these agreements as follows:

	Year ended December 31,				Cumulative
	2009		2008		from inception

Research and development:
Consulting	$	173,247	$	551,948	$	6,309,233
Expense reimbursements		-		-		152,001
Engineering development		-		-		3,554,877
Total R&D to related parties		173,247		551,948		10,016,111

General and administrative:
Consulting		43,312		137,989		1,553,816
Rent		15,732		14,280		113,972
Expense reimbursements		-		-		113,789
		59,044		152,269		1,781,577

Total expenses to related parties	$	232,291	$	704,217	$	11,797,688

F-28

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Consolidated Financial Statements

December 31, 2009

6. Subsequent events

Events subsequent to December 31, 2009, have been evaluated through April 15, 2010, the date these financial statements were issued, to determine whether they should be disclosed to keep the financial statements from being misleading. During this period, the Company issued $244,217 in convertible debt agreements. The debt bears interest at rates from 20% to 30% per annum and is due two years from the date the cash is received and is convertible into the Company’s common stock at a rate equal to the closing price of the Company’s stock on the day the cash is received. Management found no other subsequent events that should be disclosed.

F-29

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Management's Report on Internal Control over Financial Reporting

Our management, including our principal executive and principal financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f), and 15d-15(f) under the Securities Exchange Act of 1934). As defined by the SEC, internal control over financial reporting is a process designed by, or under the supervision of, a company's principal executive and principal financial officers and effected by the company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. However, because of the inherent limitations in all control systems, we believe that no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated our internal control over financial reporting as of December 31, 2009 based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2009.

During the fiscal quarter ended December 31, 2009, there were no changes in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) designed to ensure that information we are required to disclose in the reports we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the rules of the SEC. These disclosure controls and procedures are designed and maintained by or under the supervision of our chief executive officer and chief financial officer, as required by the rules of the SEC. Our chief executive officer and chief financial officer are responsible for evaluating the effectiveness of the disclosure controls and procedures. Based on their evaluation of our disclosure controls and procedures as of the end of the period covered by this report, our chief executive officer and chief financial officer believe that our disclosure controls and procedures were effective as of December 31, 2009.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) or Rule15d-15(d) promulgated under the Exchange Act that occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

Not applicable.

-17-

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

The names, ages and biographical information of each of our directors and executive officers as of December 31, 2009 are set forth below.

Name	Director Since	Age	Position Held

Rod A. Shipman	1996	59	President and Chief Executive Officer

Marcia J. Hein	2008	51	Treasurer and Chief Financial Officer

Rafe Cohen	1998	62	Director

William C. Lievense	1996	62	Director

Ronald Cenko	2008	46	Director

Set forth below is a summary of our executive officers’ and directors’ business experience. The experience and background of each of our directors, as summarized above, were significant factors in his previously being nominated as a director of the Company.

Rod A. Shipman. Mr. Shipman has served as our president and chief executive officer since January 1997, and has served as our corporate secretary since July 1997. Mr. Shipman also served as our chief financial officer and treasurer from September 2000 to July 2008. Mr. Shipman has served as member of our board of directors since our inception in May 1996. Mr. Shipman has over 30 years of experience in the medical industry with various public and private medical suppliers and medical providers. Mr. Shipman received a Bachelor of Science degree in Business Administration from Pepperdine University in Malibu, California and a Masters degree in Public and Health Care Administration from the University of San Francisco in San Francisco, California.

Marcia J. Hein. Ms. Hein has served as our chief financial officer and treasurer, and a member of our board of directors, since July 2008. Ms. Hein has served as the owner and manager of Marcia J. Hein, CPA, an accounting firm located in Fort Collins, Colorado, since October 2003. Prior to that, Ms. Hein was a partner in Cacciamatta Accountancy Corp., a registered independent public accounting firm located in Irvine, California, from October 1994 to October 2003. Ms. Hein is licensed as a certified public accountant in the states of Colorado and California. Ms. Hein holds a Bachelor of Science in accounting from Western Kentucky University.

Rafe Cohen. Mr. Cohen has served as a member of our board of directors since July 1998, and served as our treasurer from July 1998 to September 2000. For the past five years, Mr. Cohen has served as president of Galaxy Theaters. Mr. Cohen is licensed as a certified public accountant by the state of California. Mr. Cohen received a Masters Degree in Business Taxation from the University of Southern California in 1976, and a Masters Degree in Finance from the University of California, Los Angeles in 1972.

William C. Lievense. Mr. Lievense has served as a member of our board of directors since October 1996. From 2004 until his retirement in 2009, Mr. Lievense was employed by Triad Hospitals, Inc. as the chief executive officer of its hospital in Jonesboro, Arkansas. Mr. Lievense was the president and chief executive officer of Columbia/Doctors Hospital of Sarasota, Florida, and its predecessor, Galen Health Care Corporation from 1993 to his retirement in January 2000. Mr. Lievense has over 25 years of experience in the medical industry, including extensive experience with the operation of hospitals. Mr. Lievense received a Bachelor of Arts degree in Sociology from Alma College in Alma, Michigan and received a Masters degree in Business Administration from the University of Louisville, Kentucky.

-18-

Ronald Cenko. Mr. Cenko has served as a member of our board of directors since October 2008. Mr. Cenko also has served as vice president and chief financial officer of Siena Health Ventures, a private equity sponsored multi-state provider of outpatient rehabilitation services, since May of 2007. From July 2006 through May 2007, Mr. Cenko was chief financial officer for Upstream Rehabilitation, Inc, a private equity sponsored multi-state provider of outpatient rehabilitation services. From March 1996 to July 2006, Mr. Cenko was chief financial officer of Physical Rehabilitation Network, a private equity sponsored regional provider of outpatient rehabilitation services, which was acquired by Upstream Rehabilitation, Inc. in March 2004. Mr. Cenko is licensed as a certified public accountant in the state of California and is a graduate of the University of Michigan Business School with a BBA in finance and accounting.

Family Relationships

There are no family relationships among our directors and executive officers.

Involvement in Certain Legal Proceedings

None of our directors or executive officers has, during the past ten years:

●	Had any petition under the federal bankruptcy laws or any state insolvency law filed by or against, or had a receiver, fiscal agent, or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
●	Been convicted in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
●	Been the subject of any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
	i.	Acting as s futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
	ii.	Engaging in any type of business practice; or
	iii.	Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws;
●	Been the subject of any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any federal or state authority barring, suspending, or otherwise limiting for more than 60 days the right of such person to engage in any activity described in (i.) above, or to be associated with persons engaged in any such activity;
●	Been found by a court of competent jurisdiction in a civil action or by the SEC to have violated any federal or state securities law, where the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated; or
●	Been found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, where the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended, or vacated.
●	Been subject or, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
	i.	Any federal or state securities or commodities law or regulation; or
	ii.	Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
	iii.	Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
●	Been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

-19-

Code of Ethics

We have adopted a code of ethics that applies to the principal executive officer and principal financial and accounting officer. We will provide to any person without charge, upon request, a copy of our code of ethics. Requests may be directed to our executive offices at 5348 Vegas Drive, #89, Las Vegas, Nevada 89108; Attention: Investor Relations.

Section 16(a) Beneficial Ownership Reporting Compliance

Rules adopted by the SEC under Section 16(a) of the Securities Exchange Act of 1934, or the Exchange Act, require our officers and directors, and persons who own more than 10% of the issued and outstanding shares of our equity securities, to file reports of their ownership, and changes in ownership, of such securities with the SEC on Forms 3, 4 or 5, as appropriate. Such persons are required by the regulations of the SEC to furnish us with copies of all forms they file pursuant to Section 16(a).

Based solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished to us during our most recent fiscal year, and any written representations provided to us, we believe that all of the officers, directors, and owners of more than ten percent of the outstanding shares of our common stock complied with Section 16(a) of the Exchange Act for the year ended December 31, 2009.

Recommendation of Nominees to the Board

There were no changes to the procedures by which our stockholders may recommend nominees to our board of directors.

Diversity

Our Board of Directors does not currently consider diversity in identifying director nominees, and we do not currently have a policy regarding diversity on the Board.

Audit Committee; Financial Expert

We do not have a separately designated standing audit committee or a committee performing similar functions. We do, however, consider Mr. Cenko, one of our directors, a financial expert.

-20-

ITEM 11. EXECUTIVE COMPENSATION

The following summary compensation table indicates the cash and non-cash compensation earned during the years ended December 31, 2009 and 2008 by (i) our Chief Executive Officer (principal executive officer), and (ii) our Chief Financial Officer.

Name and Principal Position	Year	Salary ($)				Bonus ($)		Stock Awards ($)				Option Awards ($)(1)			Non- Equity Incentive Plan Compen- sation ($)		Non- qualified Deferred Compen- sation Earnings ($)		All Other Comp- ensation ($)		Total ($)
Rod A. Shipman, CEO	2009		337,473	(2)			―		―				―			―		―		―		337,473
	2008		689,935	(3)			―		―				7,351,666	(9)		―		―		―		8,041,601
Marcia Hein, CFO (10)	2009		60,000	(4)	(5)		―		73,000	(6)	(7)		―			―		―		―		133,000
	2008		30,000	(5)			―		30,000	(6)			126,961	(8)		―		―		―		186,961

(1)	The dollar amounts in this column reflect the dollar amount recognized for financial statement reporting purposes for the fiscal years ended December 31, 2009 and 2008, in accordance with generally accepted accounting principles. Assumptions used in the calculation of this amount are included in footnote (1) to our audited financial statements for the fiscal years ended December 31, 2009 and 2008.

(2)	Of the $337,473 in salary for 2009, $119,266 was paid in cash, and $218,207 was accrued as of December 31, 2009. Mr. Shipman was personally responsible for the payment of and not entitled to seek reimbursement from CPC for any travel, entertainment, or other business expenses he incurred in connection with the performance of his duties on behalf of CPC. In addition, during the reported periods, Mr. Shipman received no benefits from us and paid all routine office expenses, including postage, courier, phone and supplies without reimbursement from us.

(3)	Of the $689,935 in salary earned in 2008, $151,565 was paid via offset against the exercise price payable by Mr. Shipman on his option exercises during 2008, $344,966 was forgiven by Mr. Shipman, $20,920 was paid in cash, and $172,484 was accrued as of December 31, 2008. The amount accrued at December 31, 2008 was paid in the first quarter of 2009. Mr. Shipman was personally responsible for the payment of and not entitled to seek reimbursement from CPC for any travel, entertainment, or other business expenses he incurred in connection with the performance of his duties on behalf of CPC. In addition, during the reported periods, Mr. Shipman received no benefits from us and paid all routine office expenses, including postage, courier, phone and supplies without reimbursement from us.

(4)	Of the $60,000 in salary earned in 2009, $15,000 was paid in cash, and $45,000 was accrued as of December 31, 2009.

(5)	Ms. Hein was personally responsible for the payment of and not entitled to seek reimbursement from CPC for any travel, entertainment, or other business expenses she incurred in connection with the performance of her duties on behalf of CPC. In addition, during the reported periods, Ms. Hein received no benefits from us and paid all routine office expenses, including postage, courier, phone and supplies without reimbursement from us.

(6)	Pursuant to her employment agreement, Ms. Hein was granted 30,000 shares of our Series E Preferred Stock, of which 10,000 shares vested ($60,000) in 2009 and 5,000 shares vested ($30,000) in 2008 and the balance will be issued in 30 equal monthly installments, subject to Ms. Hein’s continued employment.

(7)	In May 2009, Ms. Hein was granted 2,167 shares of our Series E Preferred Stock for total compensation of $13,000.

(8)	In October 2008, Ms. Hein was granted options to purchase 50,000 shares of common stock which have an exercise price of $4.45 per share and which vest and became exercisable immediately and expire October 8, 2013.

(9)	In April 2008, Mr. Shipman was granted options to purchase 1,607,565 shares of common stock which have an exercise price of $7.90 per share and which vest and became exercisable immediately and expire April 25, 2013. In 2009, Mr. Shipman voluntarily cancelled 1,469,194 of these options

(10)	Ms. Hein was hired as the Chief Financial Officer on July 1, 2008

-21-

Employment Agreements

The employment agreements with our CEO and CFO are disclosed in note 4 to the accompanying financial statements.

Outstanding Equity Awards at Fiscal Year-End

Option Awards

Stock Awards

Name

Number of

Securities

Underlying

Unexercised

Options (#)

Exercisable

Number of

Securities

Underlying

Unexercised

Options (#)

Unexercisable

Equity

Incentive

Plan

Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options (#)

Option

Exercise

Price ($)

Option

Expiration

Date

Number

ofShares

or Units

of Stock

That

HaveNot

Vested

(#)

Market

Value of

Shares or

Units of

Stock That

Have Not

Vested ($)

Equity

Incentive

Plan

Awards:

Number of

Unearned

Shares,

Units,or

Other

Rights

That

Have Not

Vested (#)

Equity

Incentive

Plan Awards:

Market or

Payout

Value of

Unearned

Shares, Units,

or Other

Rights That

Have Not

Vested (#)

Rod A. Shipman

100,000

(1)

7.90

4/24/13

―

Marcia Hein

50,000

(2)

4.45

10/08/13

―

(1)	On April 25, 2008, we granted Mr. Shipman options to purchase 1,607,565 shares of common stock which vest and became exercisable immediately. The exercise price was $7.90 and the options expire April 24, 2013. Mr. Shipman exercised 38,371 of these shares in lieu of salary in 2008, and cancelled 1,469,194 of the options in 2009.
(2)	On October 8, 2008, we granted Ms. Hein options to purchase 50,000 shares of common which vest and became exercisable immediately.

Director Compensation Table

Name	Fees Earned or Paid in Cash ($) (b)	Stock Awards ($) (c)	Option Awards ($) (d)	Non-Equity Incentive Plan Compensation ($) (e)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (f)	All Other Compensation ($) (g)	Total ($) (h)
Rafe Cohen	--	15,000	-	--	--	--	15,000
William Lievense	--	13,000	-	--	--	--	13,000
Ronald Cenko	--	15,000	-	--	--	--	15,000
Marcia Hein	--	13,000	-	--	--	--	13,000

Prior to March 2009, we did not pay any regular fees to our independent directors, however in January 2009 the compensation committee of our board of directors engaged an independent compensation consulting firm, Pure Compensation, LLC, to advise the committee on matters of executive and director compensation. In March 2009, our compensation committee recommended to our full board of directors, based on the analysis and input of Pure Compensation, LLC, that each independent director by be paid an annual fee of $10,000, with an additional annual fee of $2,000 payable to each of our committee chairpersons at that time. All independent directors also receive reimbursement for all out of pocket expenses incurred with their attendance of board and committee meetings. Mr. Shipman rejected his $12,000 in compensation and asked that it be divided equally among the remaining directors. Each director agreed to receive his or her compensation in our Series E preferred stock; consequently Mr. Cohen and Mr. Cenko received 2,500 shares of Series E Preferred Stock each and Mr. Lievense and Ms. Hein received 2,167 shares of Series E Preferred Stock each.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The table below sets forth the beneficial ownership of our common stock, as of April 2, 2010, by:

	●	All of our directors and executive officers, individually;

	●	All of our directors and executive officers, as a group; and

	●	All persons who beneficially owned more than 5% of our outstanding common stock.

The beneficial ownership of each person was calculated based on 9,537,051 shares of our common stock outstanding as of April 2, 2010, according to the record ownership listings as of that date, the beneficial ownership reports filed by 5% beneficial owners with the SEC and the verifications we solicited and received from each director and executive officer. The SEC has defined “beneficial ownership” to mean more than ownership in the usual sense. For example, a person has beneficial ownership of a share not only if he owns it in the usual sense, but also if he has the power to vote, sell or otherwise dispose of the share. Beneficial ownership also includes the number of shares that a person has the right to acquire within 60 days of April 2, 2010, pursuant to the exercise of options or warrants or the conversion of notes, debentures or other indebtedness, but excludes stock appreciation rights. Two or more persons might count as beneficial owners of the same share. Unless otherwise noted, the address of the following persons listed below is c/o CPC of America, 5348 Vegas Drive, #89, Las Vegas, Nevada 89108.

Name of Director, Executive Officer or Nominee	Shares(1)				Percentage
Rod A. Shipman		986,832	(2	)		10.2	%
Rafe Cohen		80,455	(3	)(4)		1.2	%
William C. Lievense		119,727	(4	)(5		1.2	%
Marcia Hein		92,909	(4	)(6)		1.0	%
Ronald Cenko		55,455	(3	)(4)		*

All directors and executive officers as a group (5 persons)		1,372,377				14.0	%
* Less than one percent

Name and Address of 5% Holder
CTM Group, Inc.	3,169,940	(7	)	28.6	%
1350 East Flamingo, #800
Las Vegas, Nevada 89119

(1)	Unless otherwise noted, the persons identified in this table have sole voting and sole investment power with regard to the shares beneficially owned by them.

(2)	Includes options to purchase 100,000 shares of common stock

(3)	Includes 5,455 shares of common stock issuable upon conversion of 2,500 shares of Series E Preferred Stock beneficially owned as of April 2, 2010. The Series E Preferred Stock was issued for service on the Board of Directors.

(4)	Includes options to purchase 50,000 shares of common stock.

(5)	Includes 4,727 shares of common stock issuable upon conversion of 2,167 shares of Series E Preferred Stock beneficially owned as of April 2, 2010. The Series E Preferred Stock was issued for service on the Board of Directors.

(6)	Includes 42,909 shares of common stock issuable upon conversion of 19,667 shares of Series E Preferred Stock beneficially owned by Ms. Hein as of April 2, 2010. Pursuant to her employment agreement, Ms. Hein was granted 30,000 shares of our Series E Preferred Stock, of which 5,000 shares vested upon the execution of the employment agreement and the balance will be issued in 30 equal monthly installments, subject to Ms. Hein’s continued employment. As of April 2, 2010, 17,500 of these shares had vested. In addition, Ms. Hein received 2,167 shares of Series E Preferred Stock in 2009 for service on the Board of Directors.

(7)	Includes options to purchase 1,553,907 shares of common stock at $7.90 which expire on or before April 23, 2013. Exercise of all these options for cash would create $12,275,865 of capital to the Company.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CTM Agreements

In 1998, we entered into a consulting agreement with CTM Group, Inc. Under the consulting agreement, CTM Group, Inc., was to provide strategic planning services to our company. Mr. Paul Shabty is the key consultant from the CTM Group, Inc. who provides these consulting services. Mr. Shabty is the co-inventor of our CPCA 2000 counterpulsation device and was primarily responsible for the development of the mechanical and electrical features of the device. Mr. Shabty was responsible for identifying the opportunity to acquire the technology underlying our MedClose device and was primarily responsible for the negotiation and acquisition of the technology in 1993. Following the acquisition of the MedClose technology, Mr. Shabty played a key role in the development of the MedClose technology, including the design and engineering of the MedClose device, the development of additional applications of the technology outside of vascular closure and interfacing with our contract research and development firm, BioMed Research, Inc., concerning animal testing and clinical trials. Mr. Shabty is named as the co-inventor, along with our chief executive officer, Rod Shipman, on two patent applications relating to the MedClose device.

Mr. Shabty is a founder of our company and served as our president, treasurer and chairman of the board from April 1996 to January 1997. Mr. Shabty was a member of the Board of Trustees of Columbia/Doctors Hospital of Sarasota, Florida. He is a former director of TD Technologies, Inc., a private engineering and software company, and Advanced Technologies Management Corporation, a medical software and management company. Mr. Shabty has been involved in the medical and manufacturing industries since 1970. He was the founder, chairman of the board and chief executive officer of Medical Clinic Unlimited, Inc., which specialized in both the provision of outpatient dialysis services and the manufacturing of medical devices, equipment and supplies. From October 1993 to September 1994, Mr. Shabty served as executive vice president of U.S. Diagnostic Labs, Inc., a physician practice management provider specializing in diagnostic imaging centers. Mr. Shabty received a Bachelor of Arts degree in Accounting from the University of Tel Aviv.

Pursuant to the consulting agreement, we made payments to CTM Group amounting to $216,559 in 2009 and $689,937 in 2008. We also sublease warehouse space in Sarasota, Florida from CTM Group and paid CTM Group lease payments of $15,732 in 2009 and $14,280 in 2008. Of these amounts payable, CTM Group declined to take a cash payment and instead applied to the exercise of outstanding options to all consulting and rent expenses in 2009 and 2008. The CTM Group consulting agreement expired by its terms on April 23, 2008, and will not be extended. After the expiration of the consulting agreement, there will be no further consulting arrangement between us and CTM Group or Mr. Shabty.

In July 2000, our board of directors approved, and caused our subsidiary, Med Enclosure LLC, to award, bonuses to our chief executive officer, Rod A. Shipman and CTM Group, Inc in the form of a royalty on the net sale of products of Med Enclosure derived from two of its three patents. Under the original royalty agreements, Mr. Shipman and CTM Group were to each receive a royalty in the amount of three-quarters of one percent (.75%) on all net sales of products subject to the royalty agreement. In July 2001, our board of directors approved amendments to the royalty agreements increasing the royalties payable to Mr. Shipman and CTM Group to one and one-half percent (1.5%) on all net sales. In October 2004, our board of directors approved further amendments to the royalty agreements with Mr. Shipman and CTM Group. Pursuant to those amendments, in the event of a change in control of either Med Enclosure or CPC of America, Med Enclosure shall be obligated to pay Mr. Shipman and CTM Group each minimum royalty payments of $4,000,000 per year. CTM Group beneficially owns approximately 31.8% of our outstanding common shares. In May 2008, each of Rod Shipman and CTM Group cancelled their royalty agreements with Med Enclosure. In exchange, we granted Mr. Shipman and CTM Group options to purchase 1,607,565 and 1,583,311 shares of our common stock respectively. The options are exercisable immediately at an exercise price of $7.90 per share, and the options expire on April 24, 2013. At the same time, Mr. Shipman also cancelled previously granted options to purchase 275,000 shares of common stock at $29.12 per share and 50,000 shares of common stock at $30.00 per share. Mr. Shipman exercised 38,371 of these options in lieu of salary in 2008, cancelled 1,469,194 options in 2009, and the remaining 100,000 options are outstanding. Mr. Shabty exercised 29,404 of these options in lieu of consulting fees and rent in 2009 and the remaining 1,553,907 options remain outstanding.

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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Independent Registered Public Accounting Firm Fees

The following table sets forth the aggregate fees billed to us for services rendered to us for the years ended December 31, 2009 and 2008 by our independent registered public accounting firm for such years, fees for the audit of our consolidated financial statements for the years ended December 31, 2009 and 2008, and assistance with the reporting requirements thereof, the review of our condensed consolidated financial statements included in our quarterly reports on Form 10-Q.

	2009		2008
Audit Fees	$	97,350	$	84,000
Audit-Related Fees		--		--
Tax Fees		--		--
All Other Fees		--		--
	$	97,350	$	84,000

Pre-Approval Policies and Procedures

We have implemented pre-approval policies and procedures related to the provision of audit and non-audit services. Under these procedures, our board pre-approves all services to be provided by Cacciamatta Accountancy Corporation and the estimated fees related to these services.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) List of Financial Statements.

Reference is made to the Index and Financial Statements under Item 8 in Part II hereof where these documents are listed

(b) Index to Exhibits

3.1

Articles of Incorporation of the Company (1)

3.2

Certificate of Amendment of Articles of Incorporation (3)

3.3

Bylaws of the Company (1)

3.4

Amended and Restated Operating Agreement for Med Enclosures LLC (6)

4.1

Specimen of Common Stock Certificate (1)

4.2

Certificate of Designations of the Company's Series A Preferred Stock (4)

4.3

Certificate of Designations of the Company's Series B Preferred Stock (7)

4.4

Certificate of Designations of the Company's Series C Preferred Stock (7)

4.5

Certificate of Designations of the Company's Series D Preferred Stock (9)

4.6

Certificate of Designations of the Company's Series E Preferred Stock (13)

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10.1

Stock Purchase Agreement between the Company and DSDS Group, Inc. dated July 25, 1997 (1)

10.2

Employment Agreement dated April 23, 1998 between the Company and Rod A. Shipman (2)

10.3

Amendment to Employment Agreement dated April 1, 1999 between the Company and Rod A. Shipman (4)

10.4

Amendment to Consulting Agreement dated April 1, 1999 between the Company and CTM Group, Inc. (4)

10.5

Letter Agreement between the Company and Leslie J. Kessler dated May 18, 1999 (5)

10.6

Membership Interest Purchase Agreement dated September 30, 2002 between Gene Myers Enterprises, Inc. and the Company (8)

10.7

Technology Agreement dated October 29, 2002 between Med Close Corp. and Med Enclosure LLC (8)

10.8

Amendment No. 2 dated January 1, 2003 to Employment Agreement dated April 23, 1998 between the Company and Rod A. Shipman (9)

10.9

Amendment No. 3 dated October 15, 2004 to Royalty Agreement between Med Enclosure, LLC and Rod A. Shipman (10)

10.10

Amendment No. 3 dated October 15, 2004 to Royalty Agreement between Med Enclosure, LLC and CTM Group, Inc. (10)

10.11

Membership Interest Purchase Agreement dated November 30, 2004 between Gene Myers Enterprises, Inc. and the Company (11)

10.12

Membership Interest Purchase Agreement dated January 31, 2005 between Gene Myers Enterprises, Inc. and the Company (11)

10.13

Amendment No. 3 dated May 31, 2005 to Employment Agreement dated April 23, 1998 between the Company and Rod A. Shipman (12)

10.14

Employment Agreement dated February 4, 2009 between the Company and Marcia J. Hein (14)

10.15

Product Development Agreement dated March 9, 2009 between the Company and Olex Hnojewyj (15)

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

_______________

* Filed herewith

-26-

(1) Previously filed as part of the Company's registration statement on Form 10-SB filed with the Securities and Exchange Commission on April 20, 1998, and incorporated herein by reference.

(2) Previously filed as part of the Company's registration statement on Form S-8 filed with the Securities and Exchange Commission on July 14, 1998, and incorporated herein by reference.

(3) Previously filed as part of the Company's registration statement on Form 10-SB/A filed with the Securities and Exchange Commission on August 14, 1998, and incorporated herein by reference.

(4) Previously filed as part of the Company's quarterly report on Form 10-QSB for the quarter ended March 31, 1999 filed with the Securities and Exchange Commission on May 17, 1999, and incorporated herein by reference.

(5) Previously filed as part of the Company's quarterly report on Form 10-QSB for the quarter ended June 30, 1999 filed with the Securities and Exchange Commission on August 9, 1999, and incorporated herein by reference.

(6) Previously filed as part of the Company's annual report on Form 10-KSB for the year ended December 31, 2000 filed with the Securities and Exchange Commission on April 17, 2001, and incorporated herein by reference.

(7) Previously filed as part of the Company's quarterly report on Form 10-QSB for the quarter ended September 30, 2001 filed with the Securities and Exchange Commission on November 14, 2001, and incorporated herein by reference.

(8) Previously filed as part of the Company's quarterly report on Form 10-QSB for the quarter ended September 30, 2002 filed with the Securities and Exchange Commission on November 19, 2002, and incorporated herein by reference.

(9) Previously filed as part of the Company's annual report on Form 10-KSB for the year ended December 31, 2002 filed with the Securities and Exchange Commission on March 31, 2003, and incorporated herein by reference.

(10) Previously filed as part of the Company's quarterly report on Form 10-QSB for the quarter ended September 30, 2004 filed with the Securities and Exchange Commission on November 15, 2004, and incorporated herein by reference.

(11) Previously filed as part of the Company's current report on Form 8-K filed with the Securities and Exchange Commission on February 22, 2005, and incorporated herein by reference.

(12) Previously filed as part of the Company's annual report on Form 10-K for the year ended December 31, 2005 filed with the Securities and Exchange Commission on March 21, 2006, and incorporated herein by reference.

(13) Previously filed as part of the Company's annual report on Form 10-K for the year ended December 31, 2007 filed with the Securities and Exchange Commission on March 17, 2008, and incorporated herein by reference.

(14) Previously filed as part of the Company’s current report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2009, and incorporated herein by reference.

(15) Previously filed as part of the Company’s current report on Form 8-K filed with the Securities and Exchange Commission on March 13, 2009, and incorporated herein by reference.

Financial statement schedules are either not required or the required information is included in the consolidated financial statements or notes thereto filed under Item 8 in Part II hereof.

-27-

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CPC OF AMERICA, INC.

Date: April 15, 2010	By:	/s/ Rod A. Shipman
		Rod A. Shipman,
		President and, Chief Executive Officer (principal executive officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Capacity	Date

/s/ Rod A. Shipman Rod A. Shipman	Chairman of the Board, President and Chief Executive Officer (principal executive officer)	April 15, 2010

/s/ Marcia J. Hein Marcia J. Hein	Chief Financial Officer andTreasurer (principal financial and accounting Officer), and Director	April 15, 2010

/s/ Rafe Cohen

Rafe Cohen

Director

April 15, 2010

/s/ William Lievense William Lievense	Director	April 15, 2010

/s/ Ronald P. Cenko Ronald P. Cenko	Director	April 15, 2010

-28-

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