<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB


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

For the fiscal year ended  December 31, 2001

                                       OR

[ ]      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 SMALL BUSINESS ISSUER IN ITS CHARTER)


    Nevada                                                  11-3320709
    ----------------------------------------                -------------------
    (STATE OR OTHER JURISDICTION OF                         (I.R.S. EMPLOYER
    INCORPORATION OR ORGANIZATION)                          IDENTIFICATION NO.)


    6336 17th Street Circle East
    Sarasota, Florida                                       34243
    ----------------------------------------                -------------------
    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                (ZIP CODE)

          ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE (941) 727-4370
                                                         --------------

SECURITIES TO BE REGISTERED UNDER SECTION 12(b) OF THE ACT:

         TITLE OF EACH CLASS                    NAME OF EACH EXCHANGE ON WHICH
         TO BE SO REGISTERED                    EACH CLASS IS TO BE REGISTERED

                None                                          N/A
         -------------------                    ------------------------------


SECURITIES TO BE REGISTERED UNDER SECTION 12(g) OF THE ACT:

                         Common Stock, $.0005 par value
--------------------------------------------------------------------------------
                                (TITLE OF CLASS)

<PAGE>

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 [ ]

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K contained in this form, 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-KSB or any amendment to
this Form 10-KSB. [X]

The registrant's revenues for its most recent fiscal year were: $ -0-.

The market capitalization value of the voting stock held by non-affiliates of
the registrant as of March 25, 2002 was approximately $21,971,682.

The number of shares of the Common Stock outstanding as of March 25, 2002 was
5,628,408.

                   DOCUMENTS INCORPORATED BY REFERENCE: NONE.

<PAGE>

PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

         UNLESS OTHERWISE INDICATED, ALL REFERENCES TO THE COMPANY INCLUDE ITS
WHOLLY-OWNED SUBSIDIARIES, CPCA 2000, INC., A NEVADA CORPORATION, AND HEARTMED,
INC., A NEVADA CORPORATION, AND ITS MAJORITY-OWNED SUBSIDIARY, MED ENCLOSURE,
LLC, A NEVADA LIMITED LIABILITY COMPANY.

Business Development
--------------------

         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 developed and intend to
manufacture and distribute external counterpulsation devices for the treatment
of coronary artery disease. In addition, we acquired a controlling interest in
Med Enclosure, LLC, a development stage company engaged in the business of
developing a patented internal puncture closing device and technique known as
"MedClose." As of the date of this report, we have not commenced revenue
producing operations. Both the external counterpulsation device and the MedClose
product are in development stage and neither has been approved for sale by the
FDA. Our operations to date have consisted of the design and development of our
counterpulsation units and MedClose, and the raising of capital.

         In November 1998, we commenced a private placement of shares of our
Series A Preferred Stock, at a price of $8.50 per share, pursuant to Rule 506
under the Securities Act of 1933 ("1933 Act"). The Series A Preferred Stock had
no voting rights. Each Series A Preferred Share was convertible into Common
Stock at a conversion price of $4.70 per share. In addition, the holders of the
shares of Series A Preferred Stock were entitled to an annual dividend of 5%,
payable in either cash or shares of Common Stock. In the private placement, we
sold a total of 79,293 shares of Series A Preferred Stock for the gross proceeds
of $674,000. Proceeds from the sale of the shares were applied towards working
capital and the research and development of our counterpulsation units. During
2000 and 2001, all 79,293 shares of Series A Preferred Stock were converted into
a total of 149,211 shares of Common Stock, including shares issued in payment of
the 5% dividend.

         In April 2000, we commenced a private placement of shares of our Series
B Preferred Stock, at a price of $8.75 per share, pursuant to Rule 506 under the
1933 Act. Each share of Series B Preferred Stock was initially convertible into
Common Stock at a conversion price of $8.75 per share; however, as required
pursuant to the terms of the subscription agreement, on June 30, 2001, the
conversion price was adjusted to $3.20 per share, such amount representing the
lower of (i) seventy-five percent (75%) of the average last ask price of the
Common Stock for the thirty (30) trading days immediately preceding such date as
reported on any stock exchange or (ii) $6.56 per share. The Series B Preferred
Stock has no voting rights. In addition, the holders of the shares of Series B
Preferred Stock are entitled to an annual dividend of 5%, payable in either cash
or shares of Common Stock. Proceeds from the sale of the shares were applied
towards working capital and the research and development of our two cardiology
products. During 2000 and 2001, a total of 185,144 shares of Series B Preferred
Stock were issued for proceeds of $1,620,010. During 2001, 113,715 shares of
Series B Preferred Stock were converted into a total of 314,037 shares of Common
Stock, including shares issued in payment of the 5% dividend.

         In October 2001, we commenced a private placement of shares of our
Series C Preferred Stock, at a price of $8.90 per share, pursuant to Rule 506
under the 1933 Act. Each share of Series C Preferred Stock is convertible into
Common Stock at an initial conversion price of $8.90 per share; however, on June
30, 2002, the conversion price shall be adjusted to the lower of (i)
seventy-five percent (75%) of the average last ask price of the Common Stock for
the thirty (30) trading days immediately preceding such date as reported on any
stock exchange or (ii) $6.68 per share. The Series C Preferred Stock has no
voting rights. In addition, the holders of the shares of Series C Preferred
Stock are entitled to an annual dividend of 5%, payable in either cash or shares
of Common Stock. We intend to apply the proceeds from the sale of the shares
towards working capital and the research and development of our cardiology
products. As of March 25, 2002, a total of 174,924 shares of Series C Preferred
Stock had been issued for proceeds of $1,556,825.

                                      -1-
<PAGE>

         In November 1999, we acquired a 73.3% interest in Med Enclosure, LLC, a
limited liability company organized under the laws of the State of Nevada.
Pursuant to the terms of an Operating Agreement dated November 5, 1999, we
received a 73.3% interest in Med Enclosure in exchange for our promissory note
in the original principal amount of $250,000. On April 25, 2000, we retired the
note in full by paying $255,208 to Med Enclosure. Med Enclosure used the funds
to acquire a patent from Gene Myers Enterprises, Inc.

         Our executive offices are located at 6336 17th Street Circle East,
Sarasota, Florida 34243; telephone number (941) 727-4370 fax number (941)
727-4371.

                                      -2-
<PAGE>

Business of the Issuer
----------------------

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 for the diagnosis and
treatment of coronary artery disease. To date, we have developed the CPCA 2000
counterpulsation devices and acquired a controlling interest in the MedClose
internal puncture closing device and technique.

         Our first product, the CPCA 2000 counterpulsation unit, is a
non-invasive, atraumatic and non-toxic method of treating certain coronary
disease states. MedClose is an internal puncture closure device and technique
that utilizes a human glue deployment to close puncture wounds following
surgery. As of the date of this report, we have not commenced revenue producing
operations. Both the CPCA 2000 and MedClose are in the development stage and
neither has been approved for sale by the FDA.

CORONARY ARTERY DISEASE AND TREATMENT

         Coronary artery disease is the most common cause of death in industrial
nations. The coronary arteries serve the heart with oxygen and other nutrients.
The progressive narrowing of these coronary arteries by increasing layers of
fatty plaque can lead to heart attacks, brain failure and eventually death. The
direct cost of coronary disease is great in terms of treatment expense, loss of
earnings and productivity, while the indirect costs are incalculable in terms of
pain, suffering and limited lifestyles.

         A percentage of these patients undergo invasive surgical procedures
such as angioplasty, artery bypass surgery or cardiac catheterization, all of
which are designed to remedy coronary artery narrowing. Coronary angioplasty is
an invasive process whereby a small balloon attached to a catheter is inserted
into a clogged artery. The balloon is then inflated to compress plaque and to
open the narrowed artery. The estimated cost per successfully treated patient
using the angioplasty method approaches $16,000 and many patients fail multiple
attempts at angioplasty. Coronary artery bypass surgery involves supplementing
the original arteries on the surface of the heart with additional conduits, or
bypasses, which carry the blood around areas of blockage or narrowing. These
bypasses or detours are frequently created by using veins harvested from the
patient's leg or arteries harvested from the chest wall. This invasive procedure
requires more lengthy hospitalization than angioplasty, carries a higher risk of
complications, and can cost up to $50,000 per patient. Many bypass conduits
close in the years following surgery requiring a return to medications,
angioplasty, or repeat bypass attempts. Cardiac catheterization is an invasive
procedure that involves threading a catheter through an artery from a patient's
groin to the heart. While cardiac catheterization is invaluable in diagnosing
and treating coronary artery blockages, it carries a serious risk of
hemorrhaging following the procedure at the site where the artery is punctured.

COUNTERPULSATION TECHNOLOGY: "CPCA2000"

         We have designed and, subject to FDA approval, intend to manufacture
and market a counterpulsation device under the name CPCA 2000, including a
mobile version of our counterpulsation device under the name CPCA 2000M.
Counterpulsation involves the rhythmic inflation and deflation of sets of
balloons or cuffs wrapped around the muscles of the calves, thighs and buttocks.
Inflation and deflation occurs in a sequential manner, progressing from the
calves to the lower and upper thighs and then to the buttocks. The sequence of
cuff inflation and deflation compresses the vascular beds and is timed to the
beating of the patient's own heart through synchronization with the patient's
electrocardiogram. Cuffs inflate sequentially and rapidly at the onset of
diastole to prevent blood from being trapped in vascular beds. Cuffs deflate
just before the heart squeezes, reducing the pressure against which the heart
must pump and allowing the heart to eject blood more efficiently and completely.
Counterpulsation is designed to increase the ease of work during the contraction
phase and to increase blood flow during the relaxation phase of the cardiac
cycle. Counterpulsation is significantly less invasive than angioplasty, artery
bypass surgery and cardiac catheterization and is designed to reduce the need
for these more invasive, complicated and costly procedures.

                                      -3-
<PAGE>

         Patients are typically treated with counterpulsation therapy during 35
one-hour outpatient visits or sessions, spanning four to seven weeks. During
their treatments, the patients remain outside the hospital and are free to
pursue work and other scheduled activities. Treatment success is observed by
relief of symptoms, possible reduction in medication, increased exercise
capacity on the treadmill, and elimination of areas of poor cardiac circulation.
A course of counterpulsation treatments, with a total expected cost of $7,500 or
less, compares favorably with the higher risk, expense, pain and lost
productivity time associated with the invasive angioplasty, coronary bypass or
cardiac catheterization procedures.

         A 1992 study by doctors at Stony Brook University in New York showed
that counterpulsation eliminated or reduced angina in over 80% of the patients
studied. In that study, doctors tested the clinical efficacy and tolerability of
counterpulsation in 18 patients with incapacitating chronic angina. In all
patients, treatment with counterpulsation was associated with a substantial
improvement in symptoms, with more than 80% of the patients in the study
reporting a complete absence of symptoms while performing their usual
activities. In addition, Thalium-201 stress testing (performed for the same
exercise duration before and after counterpulsation treatment) showed complete
resolution of ischemic defects in 12 patients (67%), a decrease in the area of
ischemia in two (11%), and no change in four (22%). Thus, 14 patients (78%) had
a reduction in myocardial ischemia as assessed by Thalium-201 imaging. In
addition, stress test results using a treadmill showed a significant increase in
exercise duration following counterpulsation treatment. We were not involved
with this study.

         Three years following the initial study, data from 17 of the original
18 patients was studied, including 13 of the 14 patients who had previously
shown a reduction in myocardial ischemia. One of these 13 patients suffered a
heart attack and another underwent a revascularization procedure during the
intervening period. The other 12 patients all remained free of limiting angina.

         In 1998, results of a study regarding the effectiveness of
counterpulsation were reported in a section of the official program of the
American Heart Association's 71st Scientific Sessions. The study involved a
randomized, sham-controlled, double-blinded clinical trial of 139 patients with
chronic angina. The study used standardized methodology to determine whether
counterpulsation treatment had an effect on quality-of-life functions up to 12
months after completion of treatment. Of the 125 patients who entered the study,
the group who received counterpulsation treatment demonstrated a 23% improvement
in their quality-of-life 12 months after the completion of their treatment. The
group that did not receive the counterpulsation treatment showed no improvement.

         We have completed the development of the CPCA 2000 and CPCA 2000M, and
have submitted the products to the FDA for premarket clearance. We expect to
commence the manufacture and sale of the CPCA 2000 and CPCA 2000M upon premarket
clearance by the FDA.

INTERNAL PUNCTURE CLOSURE DEVICES: "MEDCLOSE"

         MedClose is a proprietary technique for use during catheterization
procedures that is designed to reduce the risk of hemorrhage and speed recovery
time for patients following these procedures. MedClose is based on a basic
principle of arterial clotting. When the outer surface of an artery, called the
adventitia, is injured it releases a sticky chemical that serves as an adhesive
for the body's clot-inducing substances, thus initiating the clotting process.
MedClose accelerates the release of this chemical through the use of a special
instrument that surgically debrides the adventitia. To further speed clotting,
this debridement is combined with one of the newly developed forms of "human
glue." These products, a mixture of natural thrombin and fibrinogen, are widely
available and relatively inexpensive. In addition, they can be manufactured to
become adhesive only when exposed to a specific catalyst such as a laser.

         The glue alone is not sufficient to close the artery, however.
Debridement is the key to the effectiveness of this technique, creating a
surface area that allows the glue to adhere and form a solid seal. MedClose
includes a patented instrument and technique to temporarily close the wound,
debride the surrounding adventitia and deliver a form of human glue to the
puncture site that can be activated by laser light. Our majority-owned
subsidiary, Med Enclosure, LLC, holds the three patents for both the instrument
and the technique used in connection with MedClose.

                                      -4-
<PAGE>

         We believe that a major advantage of MedClose is that it requires no
sutures and leaves no foreign matter 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
to close puncture wounds following catheterization procedures. Using sutures
requires direct pressure to be applied to the wound for up to 45 minutes and for
the patient to remain still for up to 12 hours following the procedure 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
approximately 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.

         We have engaged Biomed Research, Inc., a medical device design and
testing firm located in Lutz, Florida, to conduct the development and testing of
the MedClose. As of the date of this report, Biomed has completed the
development of a product prototype and commenced animal testing. We expect that
the completion of design and testing of the MedClose, including the submission
of the final product for FDA premarket clearance, will take three years from the
date of this report.

MARKETING AND DISTRIBUTION

         COUNTERPULSATION TECHNOLOGY "CPCA2000"

         Our marketing strategy is to sell our CPCA2000 counterpulsation units
to physicians, clinics and hospitals, with us receiving revenues from the
proceeds of the sale as well as from service fees and licensing fees. We intend
to market the CPCA2000 both directly and through third party distributors. We
currently do not have any distributor agreements in place.

         We anticipate that we will need to employ approximately 10 full-time
employees to conduct our direct sales, marketing and distribution efforts. We
intend to grow our distributorship network and sales to and through:

         o        Major cardiology groups;
         o        HMO groups;
         o        Major payor groups and insurance companies;
         o        Other existing diagnostic and therapeutic companies and
                  centers;
         o        National and international distribution agreements; and
         o        Internet e-commerce.

         Following FDA approval of the CPCA 2000, we intend to initially focus
our marketing efforts on both domestic regions that are high in cardiology
disease demographics and key international markets that meet the criterias of
this clinical application and treatment thereof.

         INTERNAL PUNCTURE CLOSURE DEVICE " MEDCLOSE"

         We initially intend to market MedClose to both hospitals and to
physicians through both national and international distribution agreements. None
of these agreements are currently in place. We also intend to establish a direct
sales support team to assist the distributors with their customers and to
establish national contracting agreements with major providers of services.

         We intend to offer our products to potential customers through a
marketing campaign consisting of public relations, direct mail and personal
selling efforts by our representatives. The public relations campaign will be
designed to raise awareness of MedClose and its puncture internal closure device
among both industry leaders and the general public. We intend to generate
publicity for MedClose through press conferences, television forums,
demonstrations and press releases to trade and professional publications.

         Although we initially intend to concentrate our marketing efforts on
the U.S. domestic market, once domestic operations have been established, we
intend to expand our marketing efforts in various international markets. We

                                      -5-
<PAGE>

intend to market our counterpulsation units and puncture closing devices to
international customers through affiliations and agreements with international
partners.

GOVERNMENT REGULATION AND SUPERVISION

         FDA APPROVAL PROCESS

         Clinical testing, manufacture and sale of the CPCA 2000/2000M and
MedClose are subject to regulation by numerous governmental authorities,
principally the 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 the clinical testing, manufacturing,
labeling, distribution and promotion of medical devices. Under the Medical
Device Act of 1976, the FDA places medical devices into one of three classes
called Class I, II, or III, on the basis of the controls deemed necessary by the
FDA to reasonably ensure their safety and effectiveness. Class I devices are
subject only to general controls, including labeling, premarket notification and
adherence to good manufacturing practices. Class II devices are subject to
general controls and performance standards established by the FDA, including
postmarket surveillance, patient registries and FDA guidelines. Class III
devices must receive premarket approval by the FDA to ensure their safety and
effectiveness. Class III devices generally include life-sustaining,
life-supporting and implantable devices, or new devices which have been found to
be substantially equivalent to devices currently on the market. Both the CPCA
2000 and MedClose are considered by the FDA to be Class III devices.

         Before a Class III medical device can be introduced to the market, 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 clearance through the premarket approval
process, we believe that we will be able to receive FDA clearance pursuant to a
510(k) premarket notification. Because counterpulsation devices and puncture
closure devices are already on the market, newer versions, similar to the CPCA
2000 and MedClose, have been permitted to be marketed pursuant to the 510(k)
premarket notification procedure. However, there is no assurance that we will be
eligible to utilize the 510(k) premarket notification process in the future or
that the FDA will not in the future require us to submit a premarket
application, which would be a more costly, lengthy and uncertain approval
process.

         Generally, 510(k) premarket notification clearance will be granted if
the proposed device is "substantially equivalent" to a legally marketed Class I
or Class II medical device, or to a preamendment Class III medical device for
which the FDA has not called for premarket approval applications. The FDA has
recently been requiring a more rigorous demonstration of substantial equivalence
than in the past, for example, by more frequently requiring clinical data. It
generally can take from 12 to 36 months or longer from submission of the product
to obtain 510(k) premarket clearance. 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, would 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) 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) submission. There can be no assurance that we will obtain 510(k)
premarket clearance within the above time frames, if at all, for any of the
devices for which we may file a 510(k).

         Further, once FDA approval is obtained, our products will be subject to
pervasive and continuing regulation by the FDA, including various record keeping
requirements and the requirement to report adverse 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 practices regulations. These regulations
impose certain procedural and documentation requirements upon us and the
companies with which we contract to manufacture our products. The FDA has
recently finalized changes to good manufacturing practice requirements that,
among other things, add requirements for design controls and maintenance of
service records. These changes are expected to increase the cost of compliance.

                                      -6-
<PAGE>

         On November 12, 1998, we submitted to the FDA our application for the
CPCA 2000. The FDA responded to the application on February 10, 1999 with
requests for clarification on certain issues and for additional data. The FDA
inspected one of our manufacturing facilities in May 1999, and since then has
issued additional requests for information. As of the date of this report, we
are in the process of filing a further response to the FDA.

         THIRD-PARTY COVERAGE

         The commercial success of the CPCA 2000 is also dependent upon positive
coverage policies by the Health Care Financing Administration, which administers
the Medicare program, as well as by other third-party payors. In February 1999,
the HCFA extended Medicare coverage to external counterpulsation treatment for
patients with disabling angina who, in the opinion of a cardiologist or
cardiothoracic surgeon, are not readily amenable to surgical interventions. In
November 1999, the Health Care Financing Administration created a new code to
describe external counterpulsation technology. This new code, HCPCS code G0166,
is specific to Medicare beneficiaries and went into effect on January 1, 2000
for angina patients being treated by the counterpulsation. The allowable charge
under this HCPCS code for 35 one-hour treatments is $4,550. Certain patients may
require additional services, such as evaluation and management, which may be
billed separately. We expect third-party insurance companies to follow the lead
of Medicare and to adopt similar coverage policies for counterpulsation
treatment. Failure by these third-party payors to adopt coverage policies
similar to Medicare's, or the elimination of coverage entirely for
counterpulsation treatment, would seriously impact the demand for our
counterpulsation units.

         ANTI-KICKBACK STATUTES

         In addition, there are federal and state laws, which regulate the
financial relationships between manufacturers of medical devices and hospitals,
physicians and other potential purchasers of medical devices. The federal
Medicare and Medicaid anti-kickback statute prohibits financial relationships
designed to induce the purchase, or arranging for or recommending the purchase,
of items or services for which payment may be made under Medicare, Medicaid, or
other federally funded state health care programs. The anti-kickback statute
contains exceptions for, among other things, properly reported discounts and
compensation for bona fide employees. In addition, federal regulations establish
certain "safe harbors" from liability under the anti-kickback statute, including
further refinements of the exceptions for discounts and employee compensation.
Our future practices, in some cases, may not meet all of the criteria for a safe
harbor from anti-kickback law liability. Other provisions of state and federal
law provide civil and/or criminal penalties for presenting or causing to be
presented for payment claims that are fraudulent or for items or services that
were not provided as claimed. Because of the breadth of the statutory provisions
described above, it is possible that some of our business practices could be
subject to scrutiny and challenge under one or more such laws. Such a challenge
could have a material adverse effect on our business, financial condition and
results of operations.

COMPETITION

         COUNTERPULSATION TECHNOLOGY "CPCA2000"

         At present, we are aware of only four other companies that are
currently producing and marketing or intending to market a counterpulsation
device similar to the CPCA 2000 or the CPCA 2000M: Vasomedical, Inc.,
Cardiomedics, Inc., Cardio-Vascular Electronics, Inc. and NYCOR, Inc. Two of
these companies have already begun to market their counterpulsation units in the
U.S. and, accordingly, have already obtained some level of market acceptance. We
believe that these competitors have only a limited presence in the market and
that the market in general for counterpulsation devices is largely untapped.
There can be no assurance, however, that we will be able to compete initially or
on a continual basis with companies that are currently marketing
counterpulsation devices or those that presently seek to enter into the
counterpulsation device market.

                                      -7-
<PAGE>

         We estimate that counterpulsation therapy is presently used to treat
only a small percentage of all patients with coronary artery diseases.
Accordingly, we anticipate that the CPCA 2000 and the CPCA 2000M will indirectly
compete with more mainstream cardiology treatment techniques, such as
angiography, coronary angioplasty, coronary artery bypass surgery and
medication. While counterpulsation does not replace the need for these services
in all cases, a percentage of coronary artery disease patients can be
successfully treated using counterpulsation as an alternative to invasive
procedures.

         INTERNAL PUNCTURE CLOSURE DEVICE  " MEDCLOSE"

         We have several competitors that manufacture and market in the puncture
closure devices, including Perclose, Inc., Kensey Nash, Datascope Corp. and
Vascular Solutions, Inc. We believe our devices have competitive advantages over
other products because our product is superior in delivery of arterial site
closures that are safe, variable and cost effective. 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

         At present, we have submitted domestic and international applications
to patent the CPCA 2000 and our counterpulsation technology and have already
received a trademark on the name "CPCA 2000." In addition, our subsidiary, Med
Enclosure, LLC, holds three patents for the MedClose device and procedure and we
have applied for a trademark for the name MedClose. Our ability to compete
successfully depends, in part, on our ability to protect the proprietary
technology contained in our products. We will rely upon a combination of patent,
trade secret and trademark laws, together with non-disclosure agreements, to
establish and protect proprietary rights in our counterpulsation devices and
other technology, as well as our trade names and other similar property. We also
intend to enter into confidentiality agreements with our employees,
manufacturers, distributors, customers and suppliers, and will limit access to
and distribution of our proprietary information. If and when implemented, these
measures will 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, 2001, our research and development
expenses have amounted to approximately $3,607,843. Of this amount, we spent
$3,373,843 on the design and development of both the CPCA 2000 and the CPCA
2000M, as well as the submission of both of these units to the FDA for approval,
and $234,000 on the development of the MedClose product. 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. We acquired the
technology for MedClose in the 73.3% acquisition of Med Enclosure, LLC in
November 1999.

EMPLOYEES

         As of the date of this report, we employ one person consisting of our
one executive officer. We contract with various consultants to provide services
to us including engineering, software, testing, regulatory, product development,
medical and clinical affairs on a project by project basis.

ITEM 2.  DESCRIPTION OF PROPERTY

         Our executive offices are located in Sarasota, Florida and consist of
approximately 1,000 square feet. The lease has an initial term of one year,
subject to two one-year renewal options.

                                      -8-
<PAGE>

ITEM 3.  LEGAL PROCEEDINGS.

         In March 1999, we were named as a defendant in a lawsuit brought by
Nancy Lee, one of our former consultants, in the United States District Court
for the Central District of California. In her complaint, Ms. Lee alleged that
we prohibited Ms. Lee from selling the balance of her shares of stock she
acquired as one of our founders. Ms. Lee seeks a judicial declaration from the
court that she is the rightful owner of the shares. We have filed an answer and
a counterclaim against Ms. Lee seeking the return of the shares of common stock
on the grounds that Ms. Lee failed to provide adequate consideration for the
securities. We intend to vigorously defend against Ms. Lee's allegations and
prosecute our counterclaim. We believe that a determination of the lawsuit
adverse to us will not have a materially adverse effect on our financial
condition or operations.

         In August 1999, we were named and served as a defendant in a lawsuit
brought by Richard E. Rubin, M.D., one of our former officers and directors, in
the United States District Court for the District of Maryland, Southern
Division. Rubin alleges that we breached an employment contract with him and
prevented him from selling his shares of common stock or exercising his options.
Rubin seeks damages in excess of $5,000,000. We have filed an answer denying any
and all liability to Rubin. We have interposed counterclaims against Rubin
seeking recovery of the shares and options we believe are unlawfully held by
him, or in the alternative, monetary damages. We believe that the allegations of
Rubin's complaint are without merit and, accordingly, we intend to vigorously
defend this case. We believe that a determination of the lawsuit adverse to us
will not have a material adverse effect on our financial condition or
operations.

         The Rubin and Lee matters have been transferred to U.S. District Court
for the District of New York.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         There were no matters submitted to the security holders of the Company
during the fourth quarter of the fiscal year ended December 31, 2001.

                                      -9-
<PAGE>

PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.

Market Information
------------------

         The Company's Common Stock has been listed on the OTC Bulletin Board
under the symbol "CPCF" since February 18, 1998. Set forth below are high and
low closing prices for the Company's Common Stock for each quarter during the
two fiscal years ended December 31, 2001. The Company considers its 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, 2000                                       $ 8.25   $5.00
         June 30 , 2000                                       $ 6.125  $4.00
         September 30, 2000                                   $ 5.50   $3.75
         December 31, 2000                                    $ 5.00   $2.125

         March 31, 2001                                       $ 4.44   $2.19
         June 30 , 2001                                       $ 4.60   $2.26
         September 30, 2001                                   $ 4.07   $2.85
         December 31, 2001                                    $ 7.30   $2.50

Holders
-------

         As of March 25, 2002, there were 58 record holders and approximately
560 beneficial owners 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 Certificate of Designations, holders of shares of
Series A Preferred Stock, Series B Preferred Stock and Series C 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. During 2001, we issued
333 shares of Common Stock as payment of dividends on the Series A Preferred
Stock and 3,095 shares of Common Stock as payment of dividends on the Series B
Preferred Stock. During 2001, we also paid $1,301 of cash dividends on the
shares of Series B Preferred Stock.

Sales of Unregistered Securities
--------------------------------

         During the fiscal year ended December 31, 2001, we sold unregistered
shares of our securities in the following transactions:

         During 2000, we issued 16,290 shares of Common Stock upon the
conversion of outstanding shares of Series A Preferred Stock. The common shares
were issued pursuant to Rule 506 under the Act. There was no underwriter
involved in this issuance.

         During 2001, we issued a total of 100,000 shares of Common Stock to
three directors and a consultant. The shares were issued pursuant to Section
4(2) of the Act. There was no underwriter involved in this issuance.

         During 2001, we sold 113,715 shares of Series B Preferred Stock to 16
accredited investors for gross proceeds of $995,000. The shares were issued
pursuant to Rule 506 under the Act. There was no underwriter involved in this

                                      -10-
<PAGE>

issuance. During 2001, all of the 113,715 Series B Preferred Shares were
converted into a total of 314,037 shares of Common Stock.

Equity Compensation Plans
-------------------------

         The following table sets forth certain information as of December 31,
2001 concerning our equity compensation plans:

<TABLE>
<CAPTION>
                                   Number of Common
                               Shares to Be Issued Upon         Weighted- Average           Number of Common
                                Exercise of Outstanding         Exercise Price of           Shares Remaining
      Plan Category                     Options                Outstanding Options       Available for Issuance
--------------------------     -------------------------     -----------------------     ----------------------
<S>                                    <C>                            <C>                       <C>
Equity compensation plan               2,109,671                      $1.64                     9,686,610
approved by shareholders

Equity compensation plan               4,000,000                      $2.50                        -0-
not approved by
shareholders (1)
</TABLE>

----------
(1) Represents shares of common stock issuable to Rod Shipman and CTM Consulting
Group, Inc. pursuant to an employment agreement and consulting agreement,
respectively, entered into with CPC of America, Inc.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

General
-------

         To date, our activities have included the market analysis and
development of our counterpulsation units, the acquisition of our controlling
interest in Med Enclosures, LLC 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 and a mobile version known
as the CPCA 2000M. Both units have been submitted for approval by the U.S. Food
and Drug Administration. We have also acquired a 73.3% interest in Med
Enclosures, LLC, a development stage company engaged in the business of
developing a patented internal puncture closure device and technique known as
"MedClose". We have completed a product prototype of the MedClose and commenced
animal studies of the product. We intend to commence revenue producing
operations subject to FDA approval of either the counterpulsation units or
MedClose.

         We have financed our activities to date through the sale of our
securities. During 2001, we conducted the private placement sale of 113,715
shares of our Series B Preferred Stock, at a price of $8.75 per share, for the
gross proceeds of $995,000. During 2001, we commenced a private placement
offering of Series C Preferred Stock, at $8.90 per share, and sold 95,123 shares
of Series C Preferred Stock through December 31, 2001 for the gross proceeds of
$846,595. During 2001, we also received $413,663 of gross proceeds from the sale
of shares of our Common Stock in connection with the exercise of outstanding
options.

         As of December 31, 2001, we had working capital of $727,867. Between
January 1, 2002 and March 25, 2002, we received an additional $710,230 of
capital from the sale of 79,801 shares of Series C Preferred Stock. In addition
to our working capital on hand as of the date of this report, we believe that we
will require, at least, an additional $1,000,000 of capital in order to fund our
plan of operations over the next 12 months. We expect to fund our capital
requirements over the next 12 months from the sale of our securities. However,
we have no agreements or commitments concerning the sale of our securities and
there can be no assurance we will be able to obtain sufficient additional
capital through the sale of our securities as needed. The report of our
independent accountants for the fiscal year ended December 31,

                                      -11-
<PAGE>

2001 states that due to the absence of operating revenues and our limited
capital resources, there is doubt about our ability to continue as a going
concern.

Forward Looking Statements
--------------------------

         This report contains forward-looking statements that are based on our
beliefs as well as assumptions and information currently available to us. When
used in this prospectus, the words "believe," "expect," "anticipate," "estimate"
and similar expressions are intended to identify forward-looking statements.
These statements are subject to risks, uncertainties and assumptions, including,
without limitation, the risks and uncertainties concerning our recent
commencement of commercial operations; the risks and uncertainties concerning
FDA approval of our products; the risks and uncertainties concerning the
acceptance of our services and products by our potential customers; our present
financial condition and the risks and uncertainties concerning the availability
of additional capital as and when required; the risks and uncertainties
concerning technological changes and the competition for our services and
products; and the risks and uncertainties concerning general economic
conditions. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated, or projected. We caution you not
to place undue reliance on any forward-looking statements, all of which speak
only as of the date of this report.

                                      -12-
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

<TABLE>
                                   INDEX TO FINANCIAL STATEMENTS
<CAPTION>

<S>                                                                                             <C>
Report of Independent Certified Public Accountants..............................................F-1

Consolidated Balance Sheet at December 31, 2001.................................................F-2

Consolidated Statements of Operations for the years ended December 31, 2001 and 2000
  and cumulative from inception (April 11, 1996) to December 31, 2001...........................F-3

Consolidated Statements of Shareholders' Equity (Deficit)
  from inception (April 11, 1996) to December 31, 2001..........................................F-4

Consolidated Statements of Cash Flows for the years ended December 31, 2001 and 2000
  and cumulative from inception (April 11, 1996) to December 31, 2001...........................F-6

Notes to Consolidated Financial Statements......................................................F-7
</TABLE>

                                               -13-
<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
               --------------------------------------------------


The Board of Directors and Shareholders
CPC of America, Inc.

We have audited the accompanying consolidated balance sheet of CPC of America,
Inc. and subsidiaries (a development stage company) (the "Company") as of
December 31, 2001, 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, 2001 and for the period from inception (April 11,
1996) to December 31, 2001. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes, on a test
basis, examination of evidence supporting the amounts and disclosures in the
financial statements. An audit also includes 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.

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. and subsidiaries as of December 31, 2001, and the results of their
consolidated operations and cash flows for each of the years in the two year
period ended December 31, 2001 and for the period from inception (April 11,
1996) to December 31, 2001, in conformity with accounting principles generally
accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 6 to the
consolidated financial statements, the Company has incurred losses since its
inception and remains in the development stage. These conditions raise
substantial doubt about its ability to continue as a going concern. Management's
plans regarding those matters are also described in Note 6. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


                                             CACCIAMATTA ACCOUNTANCY CORPORATION

Irvine, California
March 14, 2002

                                      F-1
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                           Consolidated Balance Sheet


                                                                    DECEMBER 31,
                                                                        2001
                                                                    ------------
                                     ASSETS
CURRENT ASSETS
   Cash and equivalents                                             $   721,602
   Prepaid expenses                                                      70,383
                                                                    ------------

      TOTAL CURRENT ASSETS                                              791,985

EQUIPMENT, NET OF ACCUMULATED DEPRECIATION OF $12,342                     5,175

PATENTS, NET OF ACCUMULATED AMORTIZATION OF $36,421                     213,579

TRADEMARK, NET OF ACCUMULATED AMORTIZATION OF $2,077                      4,155
                                                                    ------------
                                                                    $ 1,014,894
                                                                    ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts payable                                                 $    17,243
   Accrued dividends payable                                             46,875
                                                                    ------------
      TOTAL CURRENT LIABILITIES                                          64,118
                                                                    ------------

COMMITMENTS AND CONTINGENCIES                                                 -

SHAREHOLDERS' EQUITY
   Preferred stock, 5,000,000 shares authorized, $.001 par value,
      Series B - 71,429 shares issued and outstanding                        71
      Series C - 95,123 shares issued and outstanding                        95
   Common stock, 20,000,000 shares authorized, $.0005 par value,
      5,628,408 shares issued and outstanding                             2,815
   Additional paid-in capital - preferred                             2,318,419
   Additional paid-in capital - common                                6,004,709
   Unamortized stock option costs                                       (35,000)
   Deficit accumulated during the development stage                  (7,340,333)
                                                                    ------------
      TOTAL SHAREHOLDERS' EQUITY                                        950,776
                                                                    ------------
                                                                    $ 1,014,894
                                                                    ============

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

                                      F-2
<PAGE>
<TABLE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                      Consolidated Statements of Operations
<CAPTION>


                                                                           CUMULATIVE
                                                                         FROM INCEPTION
                                              Year ended December 31,   (APRIL 11, 1996)
                                            --------------------------   TO DECEMBER 31,
                                                2001           2000           2001
                                            ------------   ------------   ------------
<S>                                         <C>            <C>            <C>
Costs and expenses:

  Research and development                  $   888,924    $   851,732    $ 3,607,843

  General and administrative                  1,089,128        906,743      2,638,825
                                            ------------   ------------   ------------

OPERATING LOSS                                1,978,052      1,758,475      6,246,668
                                            ------------   ------------   ------------

OTHER INCOME (EXPENSE):

  Interest expense                                  (12)        (1,942)        (8,954)

  Interest income                                 9,593         10,973         49,771
                                            ------------   ------------   ------------

                                                  9,581          9,031         40,817
                                            ------------   ------------   ------------

LOSS BEFORE MINORITY INTEREST                 1,968,471      1,749,444      6,205,851

MINORITY INTEREST                                     -              -          1,120
                                            ------------   ------------   ------------

NET LOSS                                    $ 1,968,471    $ 1,749,444    $ 6,204,731
                                            ============   ============   ============


BASIC AND DILUTED NET LOSS PER SHARE        $     (0.52)   $     (0.42)
                                            ============   ============

BASIC AND DILUTED WEIGHTED AVERAGE NUMBER
  OF COMMON SHARES OUTSTANDING                5,114,133      4,619,400
                                            ============   ============
</TABLE>

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

                                      F-3
<PAGE>
<TABLE>

                                                 CPC OF AMERICA, INC. AND SUBSIDIARIES
                                                     (A Development Stage Company)
                                       Consolidated Statements of Shareholders' Equity (Deficit)
                                         From inception (April 11, 1996) to December 31, 2001
<CAPTION>

                                                              PREFERRED STOCK                          COMMON STOCK
                                              -------------------------------------------------- ------------------------
                                                      SERIES A                SERIES B
                                              ------------------------  ------------------------
                                                NUMBER                    NUMBER                    NUMBER
                                               OF SHARES      TOTAL      OF SHARES      TOTAL      OF SHARES      TOTAL
                                              -----------  -----------  -----------  -----------  -----------  -----------
<S>                                                <C>     <C>                   <C> <C>           <C>        <C>
Initial capitalization                                 -   $        -            -   $        -    2,400,000  $     1,200
Issuance of common stock for a note                    -            -            -            -      300,000          150
Issuance of common stock for cash                      -            -            -            -      100,000           50
Issuance of common stock for services                  -            -            -            -      764,000          382
Net loss for 1996                                      -            -            -            -            -            -
                                              -----------  -----------  -----------  -----------  -----------  -----------
 BALANCE, DECEMBER 31, 1996                            -            -            -            -    3,564,000        1,782
Exercise of options                                    -            -            -            -       26,666           13
Issuance of common stock for cash and
    conversion of note payable ($77,000)               -            -            -            -      640,000          320
Payment of note receivable
Net loss for 1997                                      -            -            -            -            -            -
                                              -----------  -----------  -----------  -----------  -----------  -----------
 BALANCE, DECEMBER 31, 1997                            -            -            -            -    4,230,666        2,115
Exercise of options                                    -            -            -            -       57,000           29
Issuance of common stock for cash                      -            -            -            -       40,000           20
Issuance of preferred stock for cash               8,824            9            -            -            -            -
Valuation of beneficial conversion
    feature on Series A Preferred                      -            -            -            -            -            -
Contribution of officer's salary                       -            -            -            -            -            -
Net loss for 1998                                      -            -            -            -            -            -
                                              -----------  -----------  -----------  -----------  -----------  -----------
 BALANCE, DECEMBER 31, 1998                        8,824            9            -            -    4,327,666        2,164
Exercise of warrants                                   -            -            -            -      209,490          105
Exercise of options                                    -            -            -            -      146,903           73
Issuance of preferred stock for cash              70,469           70            -            -            -            -
Preferred stock dividend                               -            -            -            -        5,474            3
Valuation of beneficial conversion
    feature on Series A Preferred                      -            -            -            -            -            -
Repurchase of common shares                            -            -            -            -     (560,000)        (280)
Net loss for 1999                                      -            -            -            -            -            -
                                              -----------  -----------  -----------  -----------  -----------  -----------
 BALANCE, DECEMBER 31, 1999                       79,293  $        79            -          $ -    4,129,533  $     2,065
</TABLE>
                                                                       continued
<PAGE>
<TABLE>
<CAPTION>
                                                   ADDITIONAL   ADDITIONAL   ACCUMULATED     NET
                                        STOCK       PAID-IN      PAID-IN     DURING THE  SHAREHOLDERS'
                                        OPTION      CAPITAL-     CAPITAL-    DEVELOPMENT    EQUITY
                                        COSTS       COMMON      PREFERRED      STAGE      (DEFICIT)
                                     -----------  -----------  -----------  -----------  -----------
<S>                                  <C>          <C>          <C>          <C>          <C>
Initial capitalization               $        -   $        -   $        -   $        -   $    1,200
Issuance of common stock for a note           -            -            -            -          150
Issuance of common stock for cash             -        4,950            -            -        5,000
Issuance of common stock for services         -       37,818            -            -       38,200
Net loss for 1996                             -            -            -      (59,079)     (59,079)
                                     -----------  -----------  -----------  -----------  -----------
 BALANCE, DECEMBER 31, 1996                   -       42,768            -      (59,079)     (14,529)
Exercise of options                           -       29,987            -            -       30,000
Issuance of common stock for cash and
    conversion of note payable ($77,0         -      927,680            -            -      928,000
Payment of note receivable
Net loss for 1997                             -            -            -     (457,829)    (457,829)
                                     -----------  -----------  -----------  -----------  -----------
 BALANCE, DECEMBER 31, 1997                   -    1,000,435            -     (516,908)     485,642
Exercise of options                           -      114,971            -            -      115,000
Issuance of common stock for cash             -       57,980            -            -       58,000
Issuance of preferred stock for cash          -            -       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                   -    1,253,386       99,991   (1,182,488)     173,062
Exercise of warrants                          -      366,503            -            -      366,608
Exercise of options                           -      177,289            -            -      177,362
Issuance of preferred stock for cash          -            -      598,930            -      599,000
Preferred stock dividend                      -       25,722            -      (25,725)           -
Valuation of beneficial conversion
    feature on Series A Preferred             -            -      199,486     (199,486)           -
Repurchase of common shares                   -            -            -            -         (280)
Net loss for 1999                             -            -            -   (1,329,328)  (1,329,328)
                                     -----------  -----------  -----------  -----------  -----------
 BALANCE, DECEMBER 31, 1999          $        -  $ 1,822,900  $   898,407  $(2,737,027) $   (13,576)

</TABLE>
                                                                 F-4
<PAGE>
<TABLE>
                                                 CPC OF AMERICA, INC. AND SUBSIDIARIES
                                                     (A Development Stage Company)
                                       Consolidated Statements of Shareholders' Equity (Deficit)
                                         From inception (April 11, 1996) to December 31, 2001
<CAPTION>

                                                                          PREFERRED STOCK
                                             ----------------------------------------------------------------------------
                                                    SERIES A                  SERIES B                    SERIES C
                                             ------------------------  ------------------------ -------------------------
                                               NUMBER                    NUMBER                    NUMBER
                                              OF SHARES      TOTAL      OF SHARES     TOTAL       OF SHARES     TOTAL
                                             -----------  -----------  -----------  -----------  -----------  -----------
<S>                                             <C>      <C>             <C>        <C>              <C>      <C>
Balance, December 31, 1999                       79,293  $        79            -   $        -            -   $        -
   Exercise of warrants                               -            -            -            -            -            -
   Exercise of options                                -            -            -            -            -            -
   Issuance of preferred stock for cash               -            -       71,429           71            -            -
   Valuation of beneficial conversion
       feature on Series B Preferred                  -            -            -            -            -            -
   Conversion of Series A Preferred                   -            -            -            -            -            -
       into common shares                       (70,469)         (70)           -            -            -            -
   Beneficial conversion feature on                   -            -
       Series  A Preferred shares                     -            -            -            -            -            -
   Settlement of lawsuit                              -            -            -            -            -            -
   Purchase of patent                                 -            -            -            -            -            -
   Stock option costs                                 -            -            -            -            -            -
   Amortization of stock option costs                 -            -            -            -            -            -
   Cancellation of common shares                      -            -            -            -            -            -
   Net loss for 2000                                  -            -            -            -            -            -
                                             -----------  -----------  -----------  -----------  -----------  -----------

BALANCE, DECEMBER 31, 2000                        8,824            9       71,429           71            -            -
   Exercise of options                                -            -            -            -            -            -
   Issuance of common stock for services              -            -            -            -            -            -
   Issuance of preferred stock for cash               -            -      113,715          114       95,123           95
   Valuation of beneficial conversion
       feature on Series B Preferred                  -            -            -            -            -            -
   Valuation of beneficial conversion
       feature on Series C Preferred                  -            -            -            -            -            -
   Conversion of  preferred stock and
       accrued dividends into common shares      (8,824)          (9)    (113,715)        (114)           -            -
  Preferred stock dividend                            -            -            -            -            -            -
  Issuance of common stock
     options for services                             -            -            -            -            -            -
   Amortization of stock option costs                 -            -            -            -            -            -
   Net loss for 2001                                  -            -            -            -            -            -
                                             -----------  -----------  -----------  -----------  -----------  -----------

BALANCE, DECEMBER 31, 2001                            -   $        -       71,429  $        71       95,123  $        95
                                             ===========  ===========  ===========  ===========  ===========  ===========
</TABLE>
                                                                       continued
<PAGE>
<TABLE>
<CAPTION>

                                                 COMMON STOCK
                                           -----------------------
                                                                                  ADDITIONAL    ADDITIONAL  ACCUMULATED     NET
                                                                        STOCK      PAID-IN       PAID-IN    DURING THE  SHAREHOLDE
                                              NUMBER                    OPTION     CAPITAL-      CAPITAL-  DEVELOPMENT     EQUITY
                                            OF SHARES     TOTAL         COSTS      COMMON       PREFERRED     STAGE       (DEFICIT
                                           -----------  -----------  -----------  -----------  ----------- ------------ ----------
                                            <C>        <C>                  <C>  <C>          <C>          <C>          <C>
Balance, December 31, 1999                  4,129,533  $     2,065          $ -  $ 1,822,900  $   898,407  $(2,737,027) $   (13,576)
   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             -            -            -            -      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                     127,447           64            -      598,936     (598,930)           -            -
   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                  4,837,687        2,421     (175,000)   4,234,459      933,045   (4,694,596)     300,409
   Exercise of options                        360,394          179            -      413,484            -            -      413,663
   Issuance of common stock for services      100,000           50            -      255,450            -            -      255,500
   Issuance of preferred stock for cash             -            -            -            -    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   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                  5,628,408  $     2,815  $   (35,000) $ 6,004,709  $ 2,318,419  $(7,340,333) $   950,776
                                           ===========  ===========  ===========  ===========  ===========  ===========  ===========

                                         The accompanying notes are an integral part of these
                                                  consolidated financial statements.
</TABLE>

                                                                 F-5
<PAGE>
<TABLE>

                                        CPC OF AMERICA, INC. AND SUBSIDIARIES
                                            (A Development Stage Company)
                                        Consolidated Statements of Cash Flows
<CAPTION>


                                                                                        CUMULATIVE
                                                                                      FROM INCEPTION
                                                             YEAR ENDED DECEMBER 31, (APRIL 11, 1996)
                                                            ------------------------- TO DECEMBER 31,
                                                                2001          2000         2001
                                                            ------------ ------------ ------------
<S>                                                         <C>          <C>          <C>
Cash flows from operating activities:
  Net loss                                                  $(1,968,471) $(1,749,444) $(6,204,731)
  Adjustments to reconcile net loss to net cash
    used by operating activities:
    Depreciation and amortization                                28,305       14,023       64,479
    Amortization of stock option costs                          140,000      105,000      245,000
    Contribution of officer's salary                                  -            -       80,000
    Issuance of common stock and options for services           275,500            -      313,700
    Other                                                             -            -       38,879
    Decrease (increase) in other assets                         (64,304)     180,066      (16,614)
    Increase (decrease) in accounts payable                    (110,772)      60,197       17,728
    (Decrease) increase in accrued expenses                           -      (50,000)     223,000
                                                            ------------ ------------ ------------
    Net cash used by operating activities                    (1,699,742)  (1,440,158)  (5,238,559)
                                                            ------------ ------------ ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of equipment                                          (2,097)           -     (131,096)
  Purchase of patent                                                  -      (14,795)     (14,795)
  Capital expenditures                                                -            -      (15,420)
                                                            ------------ ------------ ------------
    Net cash used by investing activities                        (2,097)     (14,795)    (161,311)
                                                            ------------ ------------ ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from notes to shareholders                                 -            -       73,000
  Proceeds from note receivable from shareholder                      -            -          150
  Payments on note payable to shareholder                             -            -       (3,000)
  Exercise of options and warrants                              413,663      898,266    2,000,899
  Issuance of preferred stock                                 1,841,601      625,000    3,140,601
  Issuance of common stock                                            -            -      915,200
  Dividends                                                      (5,051)           -       (5,051)
  Repurchase of common stock                                          -          (45)        (325)
                                                            ------------ ------------ ------------
    Net cash provided by financing activities                 2,250,213    1,523,221    6,121,474
                                                            ------------ ------------ ------------

Net increase (decrease) in cash                                 548,374       68,268      721,604
CASH, BEGINNING OF PERIOD                                       173,230      104,962            -
                                                            ------------ ------------ ------------
CASH, END OF PERIOD                                         $   721,604  $   173,230  $   721,604
                                                            ============ ============ ============

NON-CASH INVESTING AND FINANCING ACTIVITIES:
  Issuance of common stock for note receivable              $         -  $         -  $       150
  Debt to equity conversion                                 $         -  $         -  $    77,000
  Acquisition of minority interest                          $         -  $         -  $    33,250
  Sale of Tercero - elimination of goodwill                 $         -  $         -  $   (40,000)
  Preferred dividends accrued                               $    46,875  $         -  $    46,875
  Preferred dividends paid through issuance of common stock $    11,471  $         -  $    37,196
  Acquisition of Med Enclosures for note payable            $         -  $         -  $   250,000
  Acquisition of patent paid by issuance of common stock    $         -  $   235,208  $   235,208
  Settlement of lawsuit by issuance of common stock         $         -  $   200,000  $   200,000

</TABLE>

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

                                      F-6
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (A DEVELOPMENT STAGE COMPANY)

                                December 31, 2001

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 to manufacture and distribute external
      counterpulsation medical devices. The Company 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.

      On July 25, 1997, the Company acquired 80% of DSDS Group, Inc. ("DSDS").
      The sole owner of DSDS, John P. Colonna, served as a technical and
      engineering consultant to the Company. DSDS had no operating history and
      its only assets consisted of two patents relating to a self-destructing
      single-use syringe. The patents had approximately 16 years remaining
      before expiration, and were deemed to have a fair value of $76,250. The
      Company purchased its interest in DSDS for a total price of $61,000, of
      which $25,000 was paid in cash at the closing, and $36,000 was to be paid
      by the Company in 18 equal monthly installments. The transaction was
      accounted for as a purchase of DSDS by the Company and, accordingly, the
      accompanying financial statements include the amounts and operations of
      the Company from its inception and of DSDS from July 25, 1997. In
      September 1998, the Company purchased the remaining 20% interest of DSDS
      for $18,000 cash. On December 1, 1998, the Company sold DSDS for its book
      value of $60,000 to a consulting firm that has been providing research and
      development activities to the Company since early 1998. In consideration
      for the acquisition of DSDS, this R & D consulting firm provided $60,000
      worth of consulting services to the Company through May 1999.

      In June 1998 CPC formed CPCA 2000, Inc., a Nevada corporation ("CPCA") to
      serve as the Company's wholly-owned operating subsidiary. The Company
      transferred all of its assets and liabilities to CPCA.

      On February 1, 1999, the Company filed a lawsuit against Partner Provider
      Health, Inc. (PPH) alleging breach of contract, misrepresentation and
      fraud relating to its joint venture with HeartMed LLC. Under terms of a
      November 1999 settlement, CPC dropped its lawsuit and received the
      remaining interest in HeartMed LLC making it a wholly-owned subsidiary of
      CPC. HeartMed LLC had no operations or assets during 2000 or 2001.

      On November 22, 1999, CPC formed Med Enclosures, LLC, a Nevada limited
      liability company, (MED) with Gene Myers Enterprises, Inc., (GME) a
      minority shareholder of CPC. CPC received a 73.3% interest in MED for a
      $250,000 promissory note, which was retired in April 2000. GME contributed
      two patents it developed that are recorded at GME's carrying value of
      zero. MED acquired its third patent from GME with the proceeds from the
      $250,000 promissory note.

                                      F-7
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (A DEVELOPMENT STAGE COMPANY)


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, DSDS, from July 1997 through November
      1998, CPCA, from June 1998, and MED and HeartMed LLC from November 1999.
      All significant intercompany transactions and balances have been
      eliminated in consolidation.

      Cash and equivalents
      --------------------

      The Company considers all liquid investments with a maturity of three
      months or less from the date of purchase that are readily convertible into
      cash to be cash equivalents. Balances in bank accounts may, from time to
      time, exceed federally insured limits. The Company believes that its loss
      exposure is limited.

      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 ten and fifteen years, respectively.

      Equipment
      ---------

      Depreciation expense is provided over the estimated useful life of 5 years
      using the straight-line method.

      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.

      Intangibles and long-lived assets
      ---------------------------------

      Long-lived assets are reviewed annually for impairment whenever events or
      changes in circumstances indicate that 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.

      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 SFAS 109.

                                      F-8
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (A DEVELOPMENT STAGE COMPANY)


1.    ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
-----------------------------------------------------------------------------

      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 FASB
      Statement No. 2, "Accounting for Research and Development Costs".

      Basic and diluted net loss per share
      ------------------------------------

      Net loss per share is calculated in accordance with Statement of Financial
      Accounting Standards 128, Earnings Per Share ("SFAS 128"). 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 2001 and 2000 all common stock
      equivalents were anti-dilutive.

      Stock-based compensation
      ------------------------

      The Company has elected to adopt the disclosure provisions only of SFAS
      123 and continues to measure compensation cost related to stock and stock
      options issued to employees using the intrinsic method of accounting
      prescribed by Accounting Principles Board Opinion No. 25 ("APB25"),
      "Accounting for Stock Issued to Employees," and related interpretations.
      Stock based compensation issued to persons other than employees is
      reflected in the financial statements at fair value.

      Recent accounting pronouncements
      --------------------------------

      On July 20, 2001, the FASB issued SFAS No. 141, "Business Combinations,"
      and SFAS No. 142, "Goodwill and Other Intangible Assets." These statements
      make significant changes to the accounting for business combinations,
      goodwill, and intangible assets.

      SFAS No. 141 establishes new standards for accounting and reporting
      requirements for business combinations and will require that the purchase
      method of accounting be used for all business combinations initiated after
      June 30, 2001. Use of the pooling-of-interests method will be prohibited.
      This statement is effective for business combinations completed after June
      30, 2001.

      SFAS No. 142 establishes new standards for goodwill acquired in a business
      combination and eliminates amortization of goodwill and instead sets forth
      methods to periodically evaluate goodwill for impairment. Intangible
      assets with a determinable useful life will continue to be amortized over
      that period. This statement becomes effective January 1, 2002.

                                      F-9
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (A DEVELOPMENT STAGE COMPANY)


1.    ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
-----------------------------------------------------------------------------

      Recent accounting pronouncements (continued)
      --------------------------------------------

      The impact of the adoption of SFAS 141 and SFAS 142 on the Company's
      reported operating results, financial position and existing financial
      statement disclosure is not expected to be material.

      In June 2001, the Financial Accounting Standards Board ("FASB") issued
      Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting
      for Asset Retirement Obligations". SFAS 143 addresses financial accounting
      and reporting for obligations associated with the retirement of tangible
      long-lived assets and the associated asset retirement costs. This
      Statement is effective for financial statements issued for fiscal years
      beginning after June 15, 2002. The impact of the adoption of SFAS 143 on
      the Company's reported operating results, financial position and existing
      financial statement disclosure is not expected to be material.

      In August 2001, Statement of Financial Accounting Standards No. 144,
      "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS
      144"), was issued. This statement addresses financial accounting and
      reporting for the impairment or disposal of long-lived assets and broadens
      the definition of what constitutes a discontinued operation and how the
      results of a discontinued operation are to be measured and presented. The
      provisions of SFAS 144 are effective for financial statements issued for
      fiscal years beginning after December 15, 2001. The impact of the adoption
      of SFAS 144 on the Company's reported operating results, financial
      position and existing financial statement disclosure is not expected to be
      material.

2.    SHAREHOLDERS' EQUITY (DEFICIT)
------------------------------------

      Series A Preferred stock
      ------------------------

      In November 1998, the Company offered in a private placement memorandum
      Series A preferred stock at $8.50 per share. As of November 15, 1999, the
      Company sold 79,293 shares for proceeds of $674,000. The Series A
      Preferred stock has no voting rights and has a 5% annual dividend which
      may be payable in cash or common stock. Each Series A share was
      convertible into one common share until December 31, 1999, when the
      conversion price was adjusted to the lower of $6.38 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 December 31, 1999 the conversion price
      was calculated at $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. In
      January 2000, 70,469 Series A shares were converted into 127,447 common
      shares. In June 2001, the remaining 8,824 Series A shares and related
      accrued dividends of $1,563 were converted into 16,290 common shares.
      Additional accrued dividends of $3,750 were paid in cash.

                                      F-10
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (A DEVELOPMENT STAGE COMPANY)


2.    SHAREHOLDERS' EQUITY (DEFICIT) (CONTINUED)
------------------------------------------------

      Series B Preferred stock
      ------------------------

      In April 2000, the Company offered in a private placement memorandum
      Series B preferred stock at $8.75 per share. As of December 31, 2001, the
      Company sold 185,144 shares for proceeds of $1,620,010. The Company
      recorded the beneficial conversion feature totaling $208,125 in 2000 and
      $331,636 in 2001 at the date of issuance. The Series B Preferred stock has
      no voting rights and has a 5% annual dividend which may be payable in cash
      or common stock. Each Series B share was convertible into one common share
      until June 30, 2001, when the conversion price was adjusted to the lower
      of $6.56 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. The conversion
      price was calculated at $3.20 per share. During the fourth quarter of
      2001, 113,715 Series B shares and related accrued dividends of $9,908 were
      converted into 314,037 common shares. Additional accrued dividends of
      $1,301 were paid in cash. Accrued dividends of $46,875 on the 71,429
      outstanding shares remain unpaid at December 31, 2001.

      Series C Preferred stock
      ------------------------

      In October 2001, the Company offered in a private placement memorandum
      Series C preferred stock at $8.90 per share. As of December 31, 2001, the
      Company sold 95,123 shares for proceeds of $846,595. The Company recorded
      the beneficial conversion feature totaling $282,233 at the date of
      issuance. The Series C Preferred stock has no voting rights and has a 5%
      annual dividend which may be payable in cash or common stock. Each Series
      C share is convertible into one common share until June 30, 2002, when the
      conversion price will be 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.

      Common stock
      ------------

      In January and July 2001, the Company issued 75,000 common shares to
      directors and 25,000 common shares to a consultant shareholder.

      In June 2001, 8,824 Series A preferred shares were converted into 16,290
      common shares.

      During April through June 2001, 113,715 Series B shares were converted
      into 314,037 common shares.

                                      F-11
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (A DEVELOPMENT STAGE COMPANY)


      In January and February 2000, 70,469 Series A preferred shares were
      converted into 127,447 common shares.


2.    SHAREHOLDERS' EQUITY (DEFICIT) (CONTINUED)
------------------------------------------------

      In February 2000, 33,333 common shares valued at $200,000 were issued as
      part of a settlement of a lawsuit against the Company.

      In April 2000, the Company purchased a patent for 47,042 common shares
      valued at $235,208 and $14,795 cash.

      In December 2000, 89,000 common shares were canceled as part of the
      settlement with a former consultant to the Company.

      In the second quarter of 1999, the Company reached an agreement with one
      of its shareholders to repurchase 560,000 shares at par. These shares were
      originally issued for services and the Company claimed that the services
      had not been provided. In addition, options to purchase 490,000 common
      shares held by the shareholder were canceled.

      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 offered in a private placement memorandum 35
      units at $29,000 per unit. Each unit consists 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. As of
      December 31, 1998, the Company had 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 3 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. During 2000, warrants to purchase 365,500 common shares were
      exercised and the remaining balance of 785,010 at December 31, 2000 were
      not converted and therefore expired.

      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.

                                      F-12
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (A DEVELOPMENT STAGE COMPANY)


2.    SHAREHOLDERS' EQUITY (DEFICIT) (CONTINUED)
------------------------------------------------

      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. A summary of stock option activity follows:
<TABLE>
<CAPTION>

                                        Number of          Price
                                         Options         Per Share        Expiration
                                       ----------      -------------      -----------
<S>                                    <C>             <C>                <C>
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                               (146,903)      $1.125 - 2.50
Canceled                                (490,000)         $1.125
                                       ----------      -------------
Outstanding at December 31, 1999       6,503,097       $1.125 - 9.00      2003 - 2008

Granted                                  175,000       $5.00 - $5.75
Exercised                               (223,832)      $1.125 - 2.50
                                       ----------      -------------
Outstanding at December 31, 2000       6,454,265       $1.125 - 9.00      2003 - 2008

Granted                                   15,800           $2.50             2004
Exercised                               (360,394)      $1.125 - 2.50
                                       ----------      -------------
Exercisable at December 31, 2000       6,109,671       $1.125 - 9.00      2003 - 2008
                                      ==========       =============
</TABLE>

                                      F-13
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (A DEVELOPMENT STAGE COMPANY)


2.    SHAREHOLDERS' EQUITY (DEFICIT) (CONTINUED)
------------------------------------------------

      Stock options (continued)

      The following information applies to all options outstanding at December
      31, 2001:
<TABLE>
<CAPTION>
                                                      Weighted                         Weighted
                                      Average         average                           average
  Exercise           Options         remaining        exercise          Number         exercise
    Price          Outstanding     life (years)        price          exercisable        price
--------------   ---------------  ---------------  ---------------  ---------------  ---------------
<C>                   <C>                      <C> <C>                   <C>         <C>
$       1.125         1,796,871                4   $        1.125        1,796,871   $        1.125
$        2.50         4,097,800                6   $         2.50        1,681,800   $         2.50
$ 4.63 - 5.75           205,000                2   $         5.33          180,000   $         5.33
$        9.00            10,000                2   $         9.00           10,000   $        9.00


      Included in options granted in 1998 and 1996 are 4,080,000 and 4,200,000
      options, respectively, granted to employees. SFAS 123 encourages but does
      not require companies to record compensation cost for stock-based employee
      compensation plans at fair value. The Company has chosen to account for
      stock-based compensation using the intrinsic value method prescribed in
      APB Opinion 25, and related interpretations. Accordingly, compensation
      cost for stock options is measured as the excess, if any, of the quoted
      market price of the Company's stock at the date of grant over the amount
      an employee must pay to acquire the stock.

      The following information applies to employee options outstanding at
      December 31, 2001:

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

$       1.125         1,796,871                4    $       1.125        1,796,871   $        1.125
$        2.50         4,078,000                6    $        2.50        1,662,000   $         2.50

</TABLE>

      The fair value of these options was estimated at the date of grant using
      the Black-Scholes option-pricing model with the following weighted average
      assumptions for 1998 and 1996, respectively: risk-free interest rate of 6%
      and 9%; volatility of 50% and 200%; and a weighted fair value of $1.26 and
      $.001.

                                      F-14
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (A DEVELOPMENT STAGE COMPANY)


2.    SHAREHOLDERS' EQUITY (DEFICIT) (CONTINUED)
------------------------------------------------

      Stock options (continued)

      Had compensation cost been determined based on the fair value of the
      options at the grant dates consistent with the method of SFAS 123, the
      Company's net loss and loss per share would have been:

                                               2001                 2000
                                           --------------      -------------

Net loss
       As reported                          $ (1,968,471)      $ (1,749,444)
       Pro forma                            $ (2,495,516)      $ (2,486,540)

Basic and fully diluted loss per share
       As reported                          $      (0.38)      $      (0.42)
       Pro forma                            $      (0.49)      $      (0.60)


      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 are to be performed
      over two years. The cost of $280,000 is being amortized over two years and
      the balance of $35,000 at December 31, 2001 is recorded on the balance
      sheet as unamortized stock option costs. During 2001 and 2000, $140,000
      and $105,000 were charged to expense and recorded in the statement of
      operations, respectively. The fair value of the options issued to
      non-employees during 1999 and 1998 was determined to be minimal.


                                      F-15
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (A DEVELOPMENT STAGE COMPANY)


3.    BASIC AND DILUTED NET LOSS PER SHARE
------------------------------------------

      The following table illustrates the required disclosure of the
      reconciliation of the numerators and denominators of the basic and diluted
      earnings per share computations.

<TABLE>
<CAPTION>
                                                                  2001            2000
                                                              -------------   ------------
<S>                                                           <C>             <C>
Basic and diluted loss per share:

  Numerator
      Net loss                                                $ (1,968,471)   $(1,749,444)
      Preferred dividend                                           (63,379)             -
      Beneficial conversion feature preferred stock               (613,869)      (208,125)
                                                              -------------   ------------

                                                              $ (2,645,719)   $(1,957,569)
                                                              =============   ============
  Denominator
      Basic and diluted weighted average number of
      common shares outstanding during the period                5,114,133      4,619,400
                                                              =============   ============

  Basic and diluted loss per share                                 $ (0.52)       $ (0.42)
                                                              =============   ============

   Incremental common shares (not included in denominator
   of diluted earnings per share calculation due to their
   antidilutive nature) attributable to exercise of:
         Outstanding options                                     6,109,671      6,454,265
         Outstanding warrants                                            -              -
         Preferred stock                                           483,672        426,829
                                                              -------------   ------------

                                                                 6,593,343      6,881,094
                                                              =============   ============
</TABLE>


4.    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. Deferred tax assets are reduced by a valuation allowance
      when deemed appropriate. For 2001 and 2000 there is no difference between
      income tax expense and the amount computed by applying the federal
      statutory income tax rate.

      At December 31, 2001, the Company has a net operating loss carryforward
      for federal tax purposes of $6,204,000 which, if unused to offset future
      taxable income, will begin to expire in 2012.

      The Company had deferred tax assets of $2,109,000 and $1,440,000 at
      December 31, 2001 and 2000, respectively, relating to its net operating
      loss. A valuation allowance has been recognized to offset all of the
      related deferred tax asset due to the uncertainty of realizing the
      benefit.

                                      F-16
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (A DEVELOPMENT STAGE COMPANY)


5.    COMMITMENTS AND CONTINGENCIES
-----------------------------------

      Lease
      -----

      The Company leases office space under a one year lease at $1,000 per
      month. The lease expires November 30, 2002. Future rental payments are
      $11,000 in 2002. Actual rent expense was $2,756 in 2001 and $1,500 in
      2000.

      Consulting agreements
      ---------------------

      In January 1997, the Company entered into a consulting agreement with its
      strategic consultant, a related party, for five years at $5,000 per month.
      The agreement was revised in November 1997 to $8,000 per month, in April
      1998 to $10,000 per month and for an additional five years and in April
      1999 to $18,333 per month. Options to purchase 2,000,000 shares of common
      stock at an exercise price of $2.50 per share were also granted under the
      April 1998 revision agreement. The options vest and become exercisable in
      ten equal installments of 200,000 shares each year starting on the grant
      date and are exercisable for ten years.

      In April 1998, the Company entered into an employment agreement with its
      President and CEO for ten years. The agreement provides for a base salary
      of $10,000 per month beginning May 1998, to be paid when the Company
      begins recording revenues. In December 1998, the Company's president
      elected to contribute his accrued salary of $80,000 to the Company.
      Options to purchase 2,000,000 shares of common stock at an exercise price
      of $2.50 per share were granted under the agreement. The options vest and
      become exercisable in ten equal installments of 200,000 shares each year
      starting on the grant date and are exercisable for ten years. The
      employment agreement was revised in April 1999 to $18,333 per month.

      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 ..0075%
      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.To date, MED has not had any sales.

      Litigation
      ----------

      In settlement of its lawsuit with Carepoint Networks, Inc., in February
      2000 the Company paid $50,000 cash and issued 33,333 common shares valued
      at the then current market price of $6.00 per share. The total amount of
      $250,000 is included in the 1999 consolidated statement of operations
      under general and administrative expenses. Since management was unable to
      register the 33,333 shares by the deadline outlined in the settlement
      agreement, the Company subsequently paid Carepoint Networks, Inc. $200,000
      in cash.

                                      F-17
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (A DEVELOPMENT STAGE COMPANY)


5.    COMMITMENTS AND CONTINGENCIES (CONTINUED)
-----------------------------------------------

      Litigation (continued)
      ----------------------

      The Company has been named in a lawsuit brought by Nancy Lee, a former
      consultant to the Company. Ms. Lee alleges that the Company prohibited her
      from selling the balance of her shares of stock she acquired as one of the
      Company's founders. She seeks a judicial declaration from the court that
      she is the rightful owner of the shares. The Company has filed an answer
      and a counterclaim seeking return of the shares on the grounds that Ms.
      Lee failed to provide adequate consideration for the securities. The
      Company intends to vigorously defend against the allegations and prosecute
      the counterclaim. Management believes that an adverse determination to the
      lawsuit will not have a material effect on the Company's financial
      condition or operations.

      The Company has been named in a lawsuit brought by Richard E. Rubin, M.D.,
      a former officer and director of the Company. Rubin alleges that the
      Company breached an employment contract with him and prohibited him from
      selling his shares of stock or exercising his stock options. He seeks
      damages in excess of $5,000,000. The Company has filed an answer denying
      any and all liability to Rubin. The Company has interposed counterclaims
      against Rubin seeking recovery of the shares and options, or in the
      alternative, monetary damages. Management believes that the allegations of
      Rubin's complaint are without merit and, accordingly, intends to
      vigorously defend this case. Management believes that an adverse
      determination to the lawsuit will not have a material effect on the
      Company's financial condition or operations.

      The Lee and Rubin matters have been transferred to U.S. District Court for
      the District of New York.

6.    GOING CONCERN
-------------------

      The accompanying consolidated financial statements have been prepared
      assuming the Company will continue as a going concern. The Company has
      reported losses from its inception, is still in the development stage and
      does not have sufficient cash to cover its current operating needs.
      Management anticipates that it will need to raise an additional $1,000,000
      in order to fund its operations over the next 12 months

      The Company expects to fund its capital requirements over the next 12
      months from the sale of its securities. However, the Company has no
      agreements or commitments concerning the sale of its securities and there
      can be no assurance the Company will be able to obtain sufficient
      additional capital through the sale of its securities as needed.


                                      F-18



<PAGE>

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         None.

PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

Set forth below are our directors and officers.

           NAME             AGE                      POSITION
------------------------  -------  --------------------------------------------

Rod A. Shipman              51     President, Secretary, Treasurer and Director
Rafe Cohen                  54     Director
William C. Lievense         54     Director

         Mr. Shipman has been the President, Chief Executive Officer of the
Company since January 1997, became Secretary in July 1997 and Treasurer in
September 2000 and has been a director of the Company since its inception in May
1996. Mr. Shipman has over 20 years of experience in the medical industry. From
August 1994 to September 1999, Mr. Shipman was President and Chief Executive
Officer of R.A. Shipman & Associates, L.L.C., a health care consulting firm.
>From January 1993 to July 1994 he served as Senior Vice President and Chief
Operating Officer of MRI Medical Diagnostics, a Colorado corporation that
provided imaging and nuclear medical services and operated a senior retirement
facility. Mr. Shipman also served as a director of that company from May 1993 to
June 1994. From January 1991 to September 1992, Mr. Shipman served as the
President and Chief Operating Officer of Southern California Imaging Services, a
private mobile diagnostic imaging and service company. From 1978 to 1990 he
served in various positions including Business Manager, Controller, Account
Executive and District General Manager with Philips Medical Systems, CGR Medical
Systems, ADAC Laboratories and Picker, all medical imaging companies. 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. He currently serves as a director on several small
privately held companies in real estate and environmental companies

         Mr. Cohen has served as a director of the Company since July 1998. Mr.
Cohen previously served as a director of the Company in 1996. Mr. Cohen served
as Treasurer from July 1998 to September 2000. Mr. Cohen is a certified public
accountant and has owned and managed his own accounting practice since 1974. Mr.
Cohen also currently serves as President of Galaxy Theaters. 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.

         Mr. Lievense has served as a director of the Company since October
1996. He has approximately 26 years of experience in the medical industry. 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 recent retirement in January 2000. Mr. Lievense has
worked for Humana, Inc., a nationwide owner and operator of hospitals and
healthcare facilities, for 20 years, serving as its Vice President and Assistant
Regional Manager from 1988 to 1993. He also worked for American Inhalation
Representatives, Inc., a respiratory services company in Birmingham, Alabama.
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.

         All directors serve for a one-year term and until their successors are
duly elected and qualified. All officers serve at the discretion of the Board of
Directors.

                                      -14-
<PAGE>

KEY CONSULTANTS TO THE COMPANY

         The CTM Group, Inc., has a consulting contract to provide strategic
planning services to the Company. Mr. Paul Shabty is the key consultant from the
CTM Group, Inc. who provides these consulting services. Mr. Shabty is a former
founder of the Company and served as its 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.

         Gene Myers, M.D. has been the Medical and Clinical Affairs Director of
the Company's wholly-owned subsidiary, CPCA2000, Inc., since July 1998 and
majority-owned subsidiary, Med Enclosure, LLC, since November 1999. Dr. Myers
has performed medical internships at the University of Michigan's Department of
Internal Medicine and at the University Health Center of Pittsburgh. Dr Myers
was also an Assistant Resident, Research Cardiology Fellow and Chief Medical
Resident at Duke University Hospital, and has published or presented more than
two dozen scientific studies. He received a Bachelor's degree in Chemistry and
Physics from Pennsylvania State University and his M.D. from the Pennsylvania
School of Medicine at the University of Pennsylvania. Dr. Myers is licensed in
three states, and has a cardiology practice in Sarasota, Florida. He is a member
of numerous professional organizations including the American College of
Cardiology, the American Heart Association, the American College of Nuclear
Cardiology and the American Board of Quality Assurance and Utilization Review.


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our officers, directors and persons who beneficially own more than 10%
of a registered class of our equity securities to file reports of securities
ownership and changes in such ownership with the Securities and Exchange
Commission (the "SEC"). Officers, directors and greater than 10% beneficial
owners are also required by rules promulgated by the SEC to furnish us with
copies of all Section 16(a) forms they file.

         Based solely upon a review of the copies of such forms furnished to us,
or written representations that no Form 5 filings were required, we believe that
during the fiscal year ended December 31, 2001, all Section 16(a) filing
requirements applicable to our officers, directors and greater than 10%
beneficial owners were complied with.

                                      -15-
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION.

         CASH COMPENSATION OF EXECUTIVE OFFICERS. The following table sets forth
the cash compensation paid by the Company to its Chief Executive Officer for
services rendered during the fiscal years ended December 31, 2001, 2000 and
1999.

<TABLE>
<CAPTION>
                                           ANNUAL COMPENSATION                      LONG-TERM COMPENSATION
                                  -------------------------------------   --------------------------------------------
    NAME AND POSITION             YEAR     SALARY   BONUS  OTHER ANNUAL   RESTRICTED     COMMON SHARES     ALL OTHER
                                                           COMPENSATION      STOCK        UNDERLYING      COMPENSATION
                                                                          AWARDS ($)    OPTIONS GRANTED
                                                                                          (# SHARES)
-----------------------------------------------------------------------------------------------------------------------
<S>                               <C>    <C>         <C>       <C>             <C>            <C>          <C>
Rod A. Shipman, President and     2001   $278,685    -0-        -0-            -0-            -0-          $54,500(1)
Chief Executive Officer           2000   $220,000    -0-       9,000           -0-            -0-             -0-
                                  1999   $195,000    -0-        -0-            -0-            -0-             -0-
</TABLE>

<TABLE>
                                AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                                           AND FY-END OPTION/SAR VALUES
<CAPTION>

             NAME                  SHARES ACQUIRED      VALUE REALIZED          NUMBER OF             VALUE OF
                                   ON EXERCISE (#)            ($)               SECURITIES           UNEXERCISED
                                                                                UNDERLYING          IN-THE-MONEY
                                                                               UNEXERCISED         OPTIONS/SARS AT
                                                                             OPTIONS/SARS AT         FY-END ($)
                                                                                FY-END (#)


                                                                               EXERCISABLE/         EXERCISABLE/
                                                                              UNEXERCISABLE         UNEXERCISABLE
------------------------------------------------------------------------------------------------------------------
<S>                                         <C>            <C>               <C>                    <C>
Rod A. Shipman, President and               271,061        $691,109          1,417,824/1,000,000     $6,671,151/
Chief Executive Officer                                                                              $4,300,000(2)
</TABLE>

(1)      Represents bonus of 25,000 shares of Common Stock valued at $2.18 per
         share, the closing price of the Common Stock on the date of grant.
(2)      Based on a price of $6.15 per share for the Common Stock as quoted on
         the OTC Bulletin Board on December 31, 2001.


         COMPENSATION OF DIRECTORS. At the present time, directors receive no
compensation for serving as directors of the Company, however the Company may in
the future begin to compensate its non-officer directors. All directors receive
reimbursement for out-of-pocket expenses in attending Board of Directors
meetings. From time to time the Company may engage certain members of the Board
of Directors to perform services on behalf of the Company and will compensate
such persons for the services which they perform.

         EMPLOYMENT AGREEMENTS. On April 23, 1998, the Company entered into an
Employment Agreement with Rod A. Shipman to serve as President and Chief
Executive Officer of the Company. Pursuant to the terms of that employment
agreement, Mr. Shipman received an annual salary of $120,000. Effective April 1,
1999, the Company and Mr. Shipman amended the terms of his employment agreement
to increase annual compensation to $220,000 and to permit Mr. Shipman to use his
accrued salary to pay the exercise price on his outstanding options. Pursuant to
his employment agreement with the Company, Mr. Shipman received options to
purchase 2,000,000 shares of Common Stock at an exercise price of $2.50 per
share, of which options to purchase 200,000 were immediately exercisable and
options to purchase 200,000 shares vest and first become exercisable on April 23
on each of the next nine anniversaries of the date of grant. The options expire
on April 22, 2008. The Employment Agreement is for a term of ten years.

                                      -16-
<PAGE>

         In July 2000, the Board of Directors of the Company approved, and
caused its 73.3% subsidiary, Med Enclosure LLC, to award, a bonus to Mr. Shipman
in the form of a royalty on the net sale of products of Med Enclosure LLC
derived from two of its three patents. Mr. Shipman will 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, the Board of Directors of the
Company approved an amendment to the royalty agreement increasing the royalty
payable to Mr. Shipman to one and one-half percent (1.5%) on all net sales.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The following table sets forth certain information regarding the
beneficial ownership of the shares of Common Stock as of March 25, 2002 by (i)
each person who is known by the Company to be the beneficial owner of more than
five percent (5%) of the issued and outstanding shares of Common Stock, (ii)
each of the Company's directors and executive officers and (iii) all directors
and executive officers as a group.

<TABLE>
<CAPTION>
              NAME AND ADDRESS                           NUMBER OF SHARES       PERCENTAGE OWNED
              ----------------                           ----------------       ----------------
<S>                                                          <C>                     <C>
Rod A. Shipman(1)(2)                                         1,609,169               22.8%
Rafe Cohen(1)                                                   87,000                1.5%
Dr. Richard E. Rubin(3)                                        456,666                8.1%
William C. Lievense(1)                                         100,000                1.7%
CTM Group, Inc.(4)(5)                                        2,648,021               35.2%
Leslie J. Kessler(6)(7)                                        950,000               15.5%
All officers and directors as a group (three persons)        1,796,169               26.0%
</TABLE>

---------------

(1)  Address is 6336 17th Street Circle East, Sarasota, Florida 34243.

(2)  Includes options granted to Mr. Shipman to purchase 1,417,824 shares of
     Common Stock. Does not include options to purchase 1,000,000 shares of
     Common Stock, which are subject to vesting.

(3)  Address is 5530 Wisconsin Avenue, Suite 750, Chevy Chase, Maryland 20815.

(4)  Address is 1350 East Flamingo, #800, Las Vegas, Nevada  89119.

(5)  Includes options granted to the CTM Group to purchase 1,888,180 shares of
     Common Stock. Does not include options to purchase 1,000,000 shares of
     Common Stock, which are subject to vesting.

(6)  Address is 11 Hedgerow Lane, Jericho, New York 11753.

(7) Includes an option granted to Ms. Kessler to purchase 490,000 shares of
    Common Stock.

                                      -17-
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         In July 2000, the Board of Directors of the Company approved, and
caused its 73.3% subsidiary, Med Enclosure LLC, to award, bonuses to the
Company's Chief Executive Officer, Rod A. Shipman, and its strategic consultant,
CTM Group, Inc., in the form of royalties on the net sale of products of Med
Enclosure LLC derived from two of its three patents. Mr. Shipman and CTM Group
each will 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, the Board of Directors of the Company approved amendments to both royalty
agreements increasing the royalty payable to Mr. Shipman and CTM Group each to
one and one-half percent (1.5%) on all net sales.

         In 2001, the Board of Directors of the Company approved a bonus of
25,000 shares of Common Stock to each of its three directors and CTM Group.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(a)      INDEX TO EXHIBITS


         3.1      Articles of Incorporation of the Company (1)

         3.2      Bylaws of the Company (1)

         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 (6)

         4.4      Certificate of Designations of the Company's Series C
                  Preferred Stock (6)

         10.1     Consulting Agreement between the Company and CTM Group, Inc
                  (1)

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

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

         10.4     Operating Agreement dated August 21, 1998 between the Company
                  and Partner Provider Health, Inc. (2)

         10.5     Consulting Agreement dated April 23, 1998 between the Company
                  and CTM Consulting Group, Inc. (2)

         10.6     Agreement dated November 17, 1998 between the Company and
                  Automated Specialties Enterprises, Inc. (3)

         10.7     Agreement dated November 17, 1998 (3)

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

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

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

         10.11    Operating Agreement for Med Enclosures LLC (6)

         10.12    Royalty Agreement dated July 28, 2000 between Med Enclosures
                  LLC and Rod A. Shipman (6)

                                      -18-
<PAGE>

         10.13    Royalty Agreement dated July 28, 2000 between Med Enclosures
                  LLC and CTM Group, Inc. (6)

         10.14    Amendment No. 1 dated July 13, 2001 to Royalty Agreement
                  between Med Enclosure LLC and Rod A. Shipman (7)

         10.15    Amendment No. 1 dated July 13, 2001 to Royalty Agreement
                  between Med Enclosure LLC and CTM Group, Inc. (7)

         10.16    Product Development Services Agreement between Biomed
                  Research, Inc. and Med Enclosure LLC

         21.1     List of Subsidiaries

         23.1     Consent of Independent Certified Public Accountants

---------------

(1)  Previously filed as part of the Company's registration statement on Form
     10-SB (SEC File No. 0-24053) filed with the Securities and Exchange
     Commission on April 20, 1998.

(2)  Previously filed as part of the Company's registration statement on Form
     10-SB/A (SEC File No. 0-24053) filed with the Securities and Exchange
     Commission on August 14, 1998.

(3)  Previously filed as part of the Company's annual report on Form 10-KSB (SEC
     File No. 0-24053) for the year ended December 31, 1998 filed with the
     Securities and Exchange Commission on March 31, 1999.

(4)  Previously filed as part of the Company's quarterly report on Form 10-QSB
     (SEC File No. 0-24053) for the quarter ended March 31, 1999 filed with the
     Securities and Exchange Commission on May 17, 1999.

(5)  Previously filed as part of the Company's quarterly report on Form 10-QSB
     (SEC File No. 0-24053) for the quarter ended June 30, 1999 filed with the
     Securities and Exchange Commission on August 9, 1999.

(6)  Previously filed as part of the Company's annual report on Form 10-KSB (SEC
     File No. 0-24053) for the year ended December 31, 2000 filed with the
     Securities and Exchange Commission on April 17, 2001.

(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 11, 2001.

(b)      REPORTS ON FORM 8-K.

         None.

                                      -19-
<PAGE>

                                   SIGNATURES

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

                                       CPC OF AMERICA, INC.

Date:  March 29, 2002                  By: /s/ ROD A. SHIPMAN
                                           -------------------------------------
                                           Rod A. Shipman,
                                           President and Chief Executive Officer

         In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.


Signature                 Title                                   Date
---------                 -----                                   ----

/s/ ROD A. SHIPMAN        President, Chief Financial Officer,     March 29, 2002
------------------------  Secretary, Treasurer and Principal
ROD A. SHIPMAN            Accounting Officer and Director


/s/ RAFE COHEN            Director                                March 29, 2002
------------------------
RAFE COHEN


/s/ WILLIAM LIEVENSE      Director                                March 29, 2002
------------------------
WILLIAM LIEVENSE

                                      -20-