<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A


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

For the fiscal year ended  December 31, 2005

                                       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 REGISTRANT 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)


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

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

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

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-K or any amendment to this
Form 10-K. [ X ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes  X   No
                                       ---     ---

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

The aggregate market value of the voting and non-voting stock held by
non-affiliates of the registrant as of March 3, 2006 was approximately
$76,285,537.

The number of shares of the common stock outstanding as of March 3, 2006 was
7,716,209.

                   DOCUMENTS INCORPORATED BY REFERENCE: NONE.

<PAGE>


                                EXPLANATORY NOTE

         CPC of America, Inc. (the "Company") is filing this Amendment No. 2 on
Form 10-K/A to amend our previously filed Annual Report on Form 10-K for the
year ended December 31, 2005, as filed with the Securities and Exchange
Commission (the "SEC") on March 21, 2006 (the "Original Filing") and amended on
May 4, 2006 ("Amendment No. 1"). This amendment is being filed to correct a
typographical error in the report of Cacciamatta Accountancy Corp. located on
page F-2.

         The remaining Items contained within this Amendment No. 2 to Annual
Report on Form 10-K/A for the year ended December 31, 2005 consist of all other
Items originally contained in the Amendment No. 1. This Form 10-K/A for the year
ended December 31, 2005 does not reflect events occurring after the filing of
the Amendment No. 1 or modify or update those disclosures in any way other than
as described above.



<PAGE>

PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

         UNLESS OTHERWISE INDICATED, ALL REFERENCES TO OUR COMPANY INCLUDE OUR
WHOLLY-OWNED SUBSIDIARIES, MED ENCLOSURE, LLC, A NEVADA LIMITED LIABILITY
COMPANY, CPCA 2000, INC., A NEVADA CORPORATION, AND MED CLOSE CORP., A NEVADA
CORPORATION.

General
-------

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

         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. In September 2002, we
increased our percentage interest in Med Enclosure to 80.3% pursuant to a
purchase agreement with the minority owner of Med Enclosure by which we acquired
from the minority owner an additional 7% membership interest in Med Enclosure in
exchange for our issuance of 10,000 shares of our common stock. In November
2004, we acquired from the minority owner an additional 12% membership interest
in exchange for $100,000. In February 2005, we acquired the remaining 7.7%
membership interest in exchange for our issuance of 4,000 shares of our common
stock. Med Enclosure, LLC is now the 100%-owned subsidiary of CPC of America.

         In October 2002, we organized MedClose Corp., a wholly-owned Nevada
corporation, for purposes of conducting the development and commercialization of
non-cardiac applications of the MedClose technology.

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

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 completed development of
the CPCA 2000 counterpulsation devices and we are currently engaged in the
development of 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. We have completed the development of the CPCA 2000 and, in March
2003, we received FDA clearance to market the CPCA 2000 counterpulsation unit as
a Class III medical device. MedClose is an internal puncture closure device and
technique that utilizes a human glue deployment to close puncture wounds
following surgery. MedClose is in the development stage and has not been
approved for sale by the FDA. As of the date of this report, we have not
commenced revenue producing operations.

                                      -1-

<PAGE>

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. 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. 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.

INTERNAL PUNCTURE CLOSURE DEVICE: "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. We hold three patents for
both the instrument and the technique used in connection with MedClose, and we
recently filed for a fourth patent with the USPTO.

         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.



         In October 2002, we organized Med Close Corp., a wholly-owned Nevada
corporation, for purposes of conducting the development and commercialization of
non-cardiac applications of the Med Close technology. Pursuant to a Technology
License Agreement dated October 29, 2002 between Med Enclosure and Med Close,
Med Enclosure granted Med Close exclusive worldwide rights to the Med Enclosure
technology and patents for all non-cardiac applications. Med Close paid to Med
Enclosure $100,000 upon execution of the license agreement and has agreed to pay
Med Enclosures a royalty in the amount of four percent (4%) on all net sales of
Med Close products that incorporate the licensed technology or patents.

                                      -2-

<PAGE>


         The MedClose is not presently available for human use. Extensive animal
studies were successfully completed in 2002 through 2004 and provided to the FDA
Center for Devices and Radiological Health ("CDRH"). We have also successfully
manufactured 800 MedClose devices, including the completion of procedures and
processes relating to the sterilization, packaging, manufacturing, engineering,
and testing of the MedClose device. In July 2005, after prior consultation with
the primary CDRH reviewer, we submitted to the CDRH an investigative device
exemption ("IDE") application to clinically investigate the MedClose device in
the U.S. The FDA's IDE approval is required before we can proceed to the last
phase of the FDA approval process, human testing of the MedClose device.

         In August 2005, the CDRH responded to our IDE application by
identifying certain deficiencies and we responded to the CDRH in November of
2005. In November 2005, we were advised by the FDA's Office of Combination
Products ("OCP") that the FDA's Center for Biologics Evaluation and Research
("CBER"), rather than the CDRH, would be the lead agency in evaluating the
MedClose IDE application. The CBER conveyed a conditional IDE approval in March
2006. We are appealing the OCP decision and seeking to have IDE responsibility
transferred back to the CDRH with whom we have interacted with since 2001. In
the meantime, we are continuing to communicate and cooperate with the CBER
concerning its conditional approval while we consider further appeals of the OCP
decision.

         We are proceeding with our selection of, and implementation of
procedures for, our proposed clinical sites in the U.S. or in Canada, based on
the requirements of both the CBER and CDRH. The clinical investigation of the
MedClose device, known as the F-A-S-T trial, will be a randomized study
involving diagnostic and interventional patients versus manual compression, and
is expected to take place at five U.S. and Canadian sites. The results of the
clinical investigation will enable us obtain the CE Mark with the same study
data derived from the clinical investigation. The F-A-S-T trial is expected to
begin in the second quarter of 2006. Results obtained from the F-A-S-T trial
will be used to support a premarket approval application for the MedClose device
projected to be within nine to 12 months after first clinical trial patient.

         Since November 2001, Biomed Research, Inc. has acted as our contract
research, development and engineering team under a turnkey contract to take our
MedClose technologies, including our three patents and a fourth patent pending,
from engineering through to FDA approval. Biomed Research is an unaffiliated
medical device research and engineering firm located in Tampa Florida. Pursuant
to our agreement with Biomed Research, Biomed Research is responsible for the
development, testing and FDA approval of the MedClose product. We are obligated
to pay Biomed based on agreed milestones relating to the development of the
MedClose product and progress in the FDA approval process. During 2004 and 2005,
we paid Biomed Research $615,165 and $295,765, respectively.

         We estimate that the costs of conducting clinical studies and obtaining
FDA approval of the MedClose device to be between $1,219,413 to $1,737,251. We
believe that we have sufficient working capital to on hand to complete clinical
studies and obtain FDA approval. Upon FDA approval, we intend to analyze our
options for moving forward with the commercial exploitation of the MedClose,
including licensing or sale of the product and our manufacture, marketing and
sale of the product directly. If we pursue the manufacture or marketing of the
MedClose product, we will, in all likelihood require significant additional
capital. In that event we will endeavor to acquire the necessary working capital
from the sale of our securities. However, there can be no assurance we will be
able to obtain the required additional working capital on commercially
reasonable terms or at all.


COUNTERPULSATION TECHNOLOGY: "CPCA 2000"

         We are the developers and owners of a counterpulsation device under the
name CPCA 2000. 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.


         We have completed the development of the CPCA 2000 and, in March 2003,
we received FDA clearance to market the CPCA 2000 counterpulsation unit as a
Class III medical device. As of the date of this report, we have not commenced
marketing the CPCA 2000.

         During 2003 and 2004, we pursued the potential sale of CPCA 2000, Inc.,
our subsidiary that owns our counterpulsation technologies and products. In July
2003, we engaged an investment banking firm to represent us in connection with
our proposed sale of the CPCA 2000. In July 2003, the investment banking firm
undertook standard due diligence and valuation analysis of CPCA 2000, and
between October 2003 and April 2004 the investment banking firm contacted
potential acquirers of the CPCA 2000, consisting mostly of medical device
manufacturers in the U.S. Based on the analysis and inquiries by our investment
banker, along with our own internal inquiries and analysis, we are of the
opinion that there is not sufficient interest in the acquisition of CPCA 2000,
Inc. or our counterpulsation technologies at this time. We believe that the lack
of interest is the result of declines in the amount of reimbursable patient
costs for counterpulsation treatments under the Medicare program. Between 2002
and 2005, the amount of reimbursable patient costs for counterpulsation
treatments under Medicare declined by approximately 30%. The decline in coverage
has had a material negative impact on projected profitability of operations
based on our counterpulsation technologies and products.

         At the present time, we have no intention of commencing operations
based on our counterpulsation technologies, and we are no longer pursuing the
potential sale of CPCA 2000, Inc. While we believe that our counterpulsation
technologies continue to retain value, we do not believe we will be able to
negotiate a sale of CPCA 2000, Inc. or its counterpulsation technologies that
will result in a meaningful return to us or our shareholders until such as the
reimbursable patient costs for counterpulsation treatments under the Medicare
program are significantly increased. We have historically charged to expense all
research and development costs and expenses associated with our counterpulsation
technologies. As of December 31, 2005, we had no assets on our consolidated
balance sheet relating to our counterpulsation products or technologies, other
than equipment and trademarks of less than $2,000.


MARKETING AND DISTRIBUTION

         INTERNAL PUNCTURE CLOSURE DEVICE " MEDCLOSE"

         We initially intend to market MedClose to both hospitals and to
physicians through both national and international distribution agreements.
There are no agreements currently in place, however we have commenced
discussions with potential distributors and customers. 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
intend to market our counterpulsation units and puncture closing devices to
international customers through affiliations and agreements with international
partners.


                                      -4-

<PAGE>

GOVERNMENT REGULATION AND SUPERVISION

         FDA APPROVAL PROCESS

         Clinical testing, manufacture and sale of the CPCA 2000 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 were able to obtain FDA premarket approval for our CPCA 2000 as a
Class III medical device in March 2003. We believe that we will be able to
receive FDA clearance pursuant to a 510(k) premarket notification for MedClose
as well. Because puncture closure devices are already on the market, newer
versions, similar to the MedClose, have been permitted to be marketed pursuant
to the 510(k) 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 MedClose or any
other device 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.

                                      -5-

<PAGE>

         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 was initially $7,274, however
the allowable charge has declined the past several years with a resulting
adverse impact on the commercial potential for counterpulsation technologies,
including the CPCA2000. 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

         INTERNAL PUNCTURE CLOSURE DEVICE "MEDCLOSE"

         We have several competitors that manufacture and market in the puncture
closure devices, including Kensey Nash, St. Jude Medical, Johnson & Johnson,
Abbot Laboratories, 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 on the basis of safety,
variability, shortened time in conducting repuncture post procedures and cost
effectiveness. However, all of our competitors have greater marketing and
financial resources than we do and, accordingly, there can be no assurance that
we will be able to compete effectively, if at all.

         COUNTERPULSATION TECHNOLOGY "CPCA 2000"

         At present, we are aware of four other companies that are currently
producing and marketing counterpulsation device similar to the CPCA 2000:
Vasomedical, Inc., Cardiomedics, Inc., Cardio-Vascular Electronics, Inc. and
NYCOR, Inc. We are also aware of three other companies that have received FDA
clearance to market counterpulsation devices: Solo Medical Devices, LLC, Living
Data Technology Corporation and Shanghai First People Hospital. Some 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.

         We estimate that counterpulsation therapy is presently used to treat
only a small percentage of all patients with coronary artery diseases.
Counterpulsation therapies 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.


                                      -6-

<PAGE>

PATENTS AND TRADEMARKS

         In September 2002, we received three patents from the U.S. Patent and
Trademark Office on our CPCA 2000 counterpulsation unit. At present, we have
submitted domestic and international applications to patent the CPCA 2000 and
our counterpulsation technology and have already received a trademark on the
name "CPCA 2000." In addition, our subsidiary, Med Enclosure, LLC, holds three
patents from the USPTO for the MedClose device and procedure and a fourth patent
is pending before the USPTO. We have also 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, 2005, our research and development
expenses have amounted to approximately $16,410,223, including $1,266,093 and
$6,699,714 spent on research and development in 2005 and 2004, respectively. At
present, none of these research and development expenses have been borne by
customers, as we have not begun to market or sell our products and services.

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.

AVAILABLE INFORMATION

         We do not have a corporate website. We will make available free of
charge copies of our periodic reports filed with the SEC upon request to our
executive offices at 6336 17th Street Circle East, Sarasota, Florida 34243;
telephone number (941) 727-4370.

ITEM 1A.   RISK FACTORS.

         We make written and oral statements from time to time regarding our
business and prospects, such as projections of future performance, statements of
management's plans and objectives, forecasts of market trends, and other matters
that are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Statements containing the words or phrases "will likely result," "are expected
to," "will continue," "is anticipated," "estimates," "projects," "believes,"
"expects," "anticipates," "intends," "target," "goal," "plans," "objective,"
"should" or similar expressions identify forward-looking statements, which may
appear in documents, reports, filings with the Securities and Exchange
Commission, news releases, written or oral presentations made by officers or
other representatives made by us to analysts, stockholders, investors, news
organizations and others, and discussions with management and other
representatives of us. For such statements, we claim the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.

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

                                      -7-

<PAGE>

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

         WE HAVE NOT COMMENCED REVENUE PRODUCING OPERATIONS. We were
incorporated in 1996 and to date have not generated any revenues from
operations. To date, our activities have included the market analysis and
development of our counterpulsation units and MedClose device, and the raising
of development and working capital. As a result of the absence of any operating
history or revenues, there can be no assurance that we will achieve a
significant level of operations and, if so, that such operations can continue to
be conducted on a profitable basis.

         WE MAY REQUIRE ADDITIONAL CAPITAL IN THE FUTURE IN ORDER TO FURTHER
DEVELOP OR MARKET OUR PRODUCTS, BUT WE DO NOT HAVE ANY COMMITMENTS TO OBTAIN
SUCH CAPITAL AND WE CANNOT ASSURE YOU THAT WE WILL BE ABLE TO OBTAIN ADEQUATE
CAPITAL AS AND WHEN REQUIRED. As of December 31, 2005, we had working capital of
$1,877,046, excluding $1,335,361 of accrued dividends payable on our outstanding
preferred shares as of such date. We believe that our working capital on hand as
of the date of this report will be sufficient in order to fund our plan of
operations over the next 12 months. However, we believe that our ability to
achieve commercial success and our continued growth will be dependent on our
ability to access to capital within the next 12 to 18 months. We will seek to
obtain any required working capital through the sale of our securities. However,
we have no agreements or understandings with any third parties at this time for
our receipt of additional working capital. Consequently, there can be no
assurance we will be able to access to capital as and when needed or, if so,
that the terms of any available financing will be subject to commercially
reasonable terms.

         WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY OR COMPETITIVE PRESSURES
FACED BY US MAY MATERIALLY ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION,
AND RESULTS OF OPERATIONS. We expect to face significant competition in
connection with the marketing of both our MedClose puncture closing device and
counterpulsation units. We have had several competitors that manufacture and
market puncture closure devices, including Kensey Nash, St Jude Medical, Johnson
& Johnson, Abbott Laboratories, Datascope Corp. and Vascular Solutions, Inc. In
addition, we are aware of four other companies that are currently producing and
marketing or intending to market a counterpulsation device similar to ours, two
of whom have already begun to market their counterpulsation units in the U.S.
and, accordingly, have already obtained some level of market acceptance. All of
our competitors have greater marketing and financial resources than us and,
accordingly, there can be no assurance that we will be able to compete
effectively or that competitive pressures faced by us will not materially
adversely affect our business, financial condition, and results of operations.

         WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY RIGHTS AND WE MAY INCUR
SIGNIFICANT COSTS IN ATTEMPTING TO DO SO. Our success and ability to compete are
dependent to a significant degree on our proprietary technology. We rely on a
combination of patent, trade secret and trademark laws, as well as
confidentiality and licensing agreements to protect our proprietary rights.
However, it may be possible for a third party to copy or otherwise obtain and
use our proprietary information without authorization or to develop similar
technology independently. In addition, litigation may be necessary in the future
to enforce our intellectual property rights, to protect our trade secrets, to
determine the validity and scope of the proprietary rights of others, or to
defend against claims of infringement or invalidity. Such litigation, whether
successful or unsuccessful, could result in substantial costs and diversions of
resources, either of which could have a material adverse affect on our business,
financial condition and operating results.

ITEM 1B.  UNRESOLVED STAFF COMMENTS.

         None.

ITEM 2.  DESCRIPTION OF PROPERTY.

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

ITEM 3.  LEGAL PROCEEDINGS.

         Neither the company nor our property is subject to any pending legal
proceedings, other than routine litigation incidental to our business .

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, 2005.

                                      -8-

<PAGE>

PART II

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

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

         Our common stock is listed on the OTC Bulletin Board under the symbol
"CPCF." Set forth below are high and low closing prices for our common stock for
each quarter during the two fiscal years ended December 31, 2005. We consider
our common stock to be thinly traded and that any reported bid or sale prices
may not be a true market-based valuation of the common stock.


         QUARTER ENDED                                        HIGH     LOW
         -------------                                        ----     ---

         March 31, 2004                                       $42.50   $29.00
         June 30, 2004                                        $39.75   $29.00
         September 30, 2004                                   $36.30   $27.00
         December 31, 2004                                    $37.50   $29.55

         March 31, 2005                                       $41.00   $ 32.50
         June 30, 2005                                        $35.00   $ 22.00
         September 30, 2005                                   $31.50   $ 20.00
         December 31, 2005                                    $20.25   $ 14.00


Holders
-------

         As of March 14, 2006, there were 80 record holders of our common stock.

Dividends
---------

         We have not paid any cash dividends on our common stock since our
inception and do not contemplate paying dividends in the foreseeable future. It
is anticipated that earnings, if any, will be retained for the operation of our
business. Pursuant to our certificates of designations, holders of shares of our
Series C preferred stock and Series D preferred stock are entitled to dividends
at a rate of 5% per annum, payable at the option of the holders, in either cash
or shares of common stock. During 2005, we paid no cash dividends on the shares
of our preferred stock.

Securities Authorized for Issuance Under Equity Compensation Plans
------------------------------------------------------------------

         Item 12 of this report includes information about the securities
underlying outstanding options and securities remaining available for issuance
under our equity compensation plans as of December 31, 2005.

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

         None.


                                      -9-

<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA.

The table below sets forth a summary of our selected financial data for each of
the years ended December 31:


<TABLE>
<CAPTION>
                                          2005            2004          2003           2002            2001
                                       -----------    -----------    -----------    -----------    -----------

STATEMENT OF OPERATIONS DATA:

<S>                                    <C>            <C>            <C>            <C>            <C>
Revenue                                $        --    $        --    $        --    $        --    $        --
Research and development                 1,266,093      6,699,714      2,300,315      2,848,245        749,863
General and administrative                 418,510      1,689,369        526,043        621,016      1,228,189
                                       -----------    -----------    -----------    -----------    -----------
Operating loss                           1,684,603      8,389,083      2,826,358      3,469,261      1,978,052
                                       -----------    -----------    -----------    -----------    -----------

Interest expense                                --             --             --             --            (12)
Interest income                             59,087         74,828         66,892          8,687          9,593
                                       -----------    -----------    -----------    -----------    -----------
Net loss                                 1,625,516      8,314,255      2,759,466      3,460,574      1,968,471
                                       ===========    ===========    ===========    ===========    ===========

Basic and diluted net loss per share         (0.29)         (1.31)         (0.90)         (0.81)         (0.52)

Basic and diluted weighted average
  number of common shares
  outstanding                            7,323,397      6,723,101      5,904,416      5,768,032      5,114,133


BALANCE SHEET DATA:

  Total assets                           2,842,770      3,494,578      6,372,462      1,313,671      1,014,894

  Total liabilities                      1,421,689        995,342        718,889        365,691         64,118

  Total shareholders' equity             1,421,081      2,499,236      5,653,573        947,980        950,776
</TABLE>

                                      -10-

<PAGE>

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

GENERAL

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

         During 2003 and 2004, we pursued the potential sale of CPCA 2000, Inc.,
our subsidiary that owns our counterpulsation technologies and products. In July
2003, we engaged an investment banking firm to represent us in connection with
our proposed sale of the CPCA 2000. In July 2003, the investment banking firm
undertook standard due diligence and valuation analysis of CPCA 2000, and
between October 2003 and April 2004 the investment banking firm contacted
potential acquirers of the CPCA 2000, consisting mostly of medical device
manufacturers in the U.S. Based on the analysis and inquiries by our investment
banker, along with our own internal inquiries and analysis, we are of the
opinion that there is not sufficient interest in the acquisition of CPCA 2000,
Inc. or our counterpulsation technologies at this time. We believe that the lack
of interest is the result of declines in the amount of reimbursable patient
costs for counterpulsation treatments under the Medicare program. Between 2002
and 2005, the amount of reimbursable patient costs for counterpulsation
treatments under Medicare declined by approximately 30%. The decline in coverage
has had a material negative impact on projected profitability of operations
based on our counterpulsation technologies and products.

         At the present time, we have no intention of commencing operations
based on our counterpulsation technologies, and we are no longer pursuing the
potential sale of CPCA 2000, Inc. While we believe that our counterpulsation
technologies continue to retain value, we do not believe we will be able to
negotiate a sale of CPCA 2000, Inc. or its counterpulsation technologies that
will result in a meaningful return to us or our shareholders until such as the
reimbursable patient costs for counterpulsation treatments under the Medicare
program are significantly increased. We have historically charged to expense all
research and development costs and expenses associated with our counterpulsation
technologies. As of December 31, 2005, we had no assets on our consolidated
balance sheet relating to our counterpulsation products or technologies, other
than equipment and trademarks of less than $2,000.

         The MedClose is a proprietary catheter based delivery system that uses
an existing Food and Drug Administration ("FDA") licensed fibrin sealant to
rapidly seal arterial puncture sites following angiography and angioplasty. This
vascular closure system, known as MedClose-Arterial, is not presently available
for human use. Extensive animal studies were successfully completed in 2002
through 2004 and provided to the FDA Center for Devices and Radiological Health
("CDRH"). We have also successfully manufactured 800 MedClose devices, including
the completion of procedures and processes relating to the sterilization,
packaging, manufacturing, engineering, and testing of the MedClose device. In
July 2005, after prior consultation with the primary CDRH reviewer, we submitted
to the CDRH an investigative device exemption ("IDE") application to clinically
investigate the MedClose device in the U.S. The FDA's IDE approval is required
before we can proceed to the last phase of the FDA approval process, human
testing of the MedClose device.

         In August 2005, the CDRH responded to our IDE application by
identifying certain deficiencies and we responded to the CDRH in November of
2005. In November 2005, we were advised by the FDA's Office of Combination
Products ("OCP") that the FDA's Center for Biologics Evaluation and Research
("CBER"), rather than the CDRH, would be the lead agency in evaluating the
MedClose IDE application. The CBER conveyed a conditional IDE approval in March
2006. We are appealing the OCP decision and seeking to have IDE responsibility
transferred back to the CDRH with whom we have interacted with since 2001. In
the meantime, we are continuing to communicate and cooperate with the CBER
concerning its conditional approval while we consider further appeals of the OCP
decision.

         We are proceeding with our selection of, and implementation of
procedures for, our proposed clinical sites in the U.S. or in Canada, based on
the requirements of both the CBER and CDRH. The clinical investigation of the
MedClose device, known as the F-A-S-T trial, will be a randomized study
involving diagnostic and interventional patients versus manual compression, and
is expected to take place at five U.S. and Canadian sites. The results of the
clinical investigation will enable us obtain the CE Mark with the same study
data derived from the clinical investigation. The F-A-S-T trial is expected to
begin in the second quarter of 2006. Results obtained from the F-A-S-T trial
will be used to support a premarket approval application for the MedClose device
projected to be within nine to 12 months after first clinical trial patient.

                                      -11-

<PAGE>

         Since November 2001, Biomed Research, Inc. has acted as our contract
research, development and engineering team under a turnkey contract to take our
MedClose technologies, including our three patents and a fourth patent pending,
from engineering through to FDA approval. Biomed Research is an unaffiliated
medical device research and engineering firm located in Tampa Florida. Pursuant
to our agreement with Biomed Research, Biomed Research is responsible for the
development, testing and FDA approval of the MedClose product. We are obligated
to pay Biomed based on agreed milestones relating to the development of the
MedClose product and progress in the FDA approval process. During 2004 and 2005,
we paid Biomed Research $615,165 and $295,765, respectively.

         We estimate that the costs of conducting clinical studies and obtaining
FDA approval of the MedClose device to be between $1,219,413 to $1,737,251. We
believe that we have sufficient working capital to on hand to complete clinical
studies and obtain FDA approval. Upon FDA approval, we intend to analyze our
options for moving forward with the commercial exploitation of the MedClose,
including licensing or sale of the product and our manufacture, marketing and
sale of the product directly. If we pursue the manufacture or marketing of the
MedClose product, we will, in all likelihood require significant additional
capital. In that event we will endeavor to acquire the necessary working capital
from the sale of our securities. However, there can be no assurance we will be
able to obtain the required additional working capital on commercially
reasonable terms or at all.

         We expect to commence revenue producing operations subject to FDA
approval of MedClose. We do not expect to purchase or sell significant plant or
equipment during 2006, nor do we expect a significant change in the number of
our employees during the year.


RESULTS OF OPERATIONS

         During the 2005 fiscal year, we incurred $1,266,093 of research and
development expenses compared to $6,699,714 during fiscal 2004. Research and
development expenses relate to our ongoing development and testing of our
internal puncture closure device and technique known as "Medclose." The amount
of research and development declined 2005 due to a decreased level of research
and development activity pending FDA approval of our investigative device
application. We submitted our IDE application in July 2005. Subject to FDA
approval of the IDE application, we expect to initiate human studies, at which
time we expect research and development activity to increase.

FINANCIAL CONDITION

         As of December 31, 2005, we had working capital of $1,877,046,
excluding $1,335,361 of accrued dividends payable on our outstanding preferred
shares as of such date. Those dividends are convertible into our common shares
at the rate of $3.57 per share in the case of the Series C preferred stock and
$6.86 per share in the case of the Series D preferred stock. Assuming that the
holders of our outstanding preferred shares elect to receive dividends payable
in common shares rather than cash, we believe that our working capital on hand
as of the date of this report will be sufficient in order to fund our plan of
operations over the next 12 months. However, we believe that our ability to
achieve commercial success and our continued growth will be dependent on our
ability to access to capital within the next 12 to 18 months. We will seek to
obtain any required working capital through the sale of our securities. However,
we have no agreements or understandings with any third parties at this time for
our receipt of additional working capital. Consequently, there can be no
assurance we will be able to access to capital as and when needed or, if so,
that the terms of any available financing will be subject to commercially
reasonable terms.

OFF-BALANCE SHEET ARRANGEMENTS

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

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 report, 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 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 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         Market risk is the risk of loss to future earnings, to fair values or
to future cash flows that may result from changes in the price of a financial
instrument. The value of a financial instrument may change as a result of
changes in interest rates, exchange rates, commodity prices, equity prices and
other market changes. Market risk is attributed to all market sensitive
financial instruments, including long-term debt.

         We do not utilize derivative financial instruments or investments in
available-for-sale securities. All cash is held in both interest and
non-interest bearing accounts. However, we do not believe that our cash accounts
would have significant impact as a result of changes in interest rate since we
do not rely on earnings from our cash accounts for cash flow.

                                      -13-

<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm......................F-1
Report of Independent Registered Public Accounting Firm......................F-2
Consolidated Balance Sheets at December 31, 2005 and 2004....................F-3
Consolidated Statements of Operations for the three years ended
   December 31, 2005 and cumulative from inception (April 11, 1996)
   to December 31, 2005......................................................F-4
Consolidated Statements of Shareholders' Equity (Deficit)
   from inception (April 11, 1996) to December 31, 2005......................F-5
Consolidated Statements of Cash Flows for the three years ended
   December 31, 2005 and cumulative from inception (April 11, 1996)
   to December 31, 2005......................................................F-8
Notes to Consolidated Financial Statements...................................F-9

                                      -14-

<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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


We have audited the accompanying consolidated balance sheets of CPC of America,
Inc. and subsidiaries (a development stage company) (the "Company") as of
December 31, 2005 and 2004, and the related consolidated statements of
operations, shareholders' equity (deficit) and cash flows for each of the years
in the three year period ended December 31, 2005 and for the period from
inception (April 11, 1996) to December 31, 2005. These 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 standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, 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 the
Company as of December 31, 2005 and 2004, and the results of its consolidated
operations and cash flows for each of the years in the three year period ended
December 31, 2005 and for the period from inception (April 11, 1996) to December
31, 2005, in conformity with accounting principles generally accepted in the
United States of America.

We were also engaged to audit, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the effectiveness of the
Company's internal control over financial reporting as of December 31, 2005,
based on criteria established in INTERNAL CONTROL-INTEGRATED FRAMEWORK issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and
in our report dated May 1, 2006, we disclaimed an opinion on management's
assessment of the effectiveness of internal control over financial reporting and
disclaimed an opinion on the effectiveness of internal control over financial
reporting due to management's inability to complete its documentation, testing
and remediation of a significant portion of its internal control processes on a
timely basis and our inability to apply other procedures to satisfy ourselves as
to the effectiveness of the Company's internal control over financial reporting.

/s/ CACCIAMATTA ACCOUNTANCY CORPORATION

Irvine, California
May 1, 2006



                                      F-1

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Shareholders of CPC of America, Inc.

We were engaged to audit management's assessment, included in the accompanying
Management's Report on Internal Control over Financial Reporting , that CPC of
America, Inc. maintained effective internal control over financial reporting as
of December 31, 2005, based on criteria established in INTERNAL
CONTROL--INTEGRATED FRAMEWORK issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). CPC of America's management is
responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting.

During 2005, the Company began preparing for its requirements to perform an
assessment of its internal control over financial reporting. It engaged an
accounting expert to assist in its external reporting. This consultant made
certain enhancements to the reporting processes. However, in March 2005,
management consulted with counsel and concluded that the Company was not
required to comply with Regulation 404 in 2005. Therefore, the auditors were not
engaged to audit management's assessment of and the effectiveness of the
Company's internal control over financial reporting. After the Company filed its
2005 annual report with the Securities Exchange Commission, it was notified by
the NASD that the filing was deficient because it lacked appropriate wording in
its 302 certifications and more importantly was missing management's assessment
regarding the Company's internal control over financial reporting. In April
2006, the Company completed its documentation of a significant portion of its
internal control processes. However, they did not complete all the procedures
necessary in order for us to form an opinion on management's assessment of
internal control over financial reporting and an opinion on the effectiveness of
internal control over financial reporting.

A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

Since management did not complete its documentation, testing and remediation of
a significant portion of its internal control processes on a timely basis and we
were unable to apply other procedures to satisfy ourselves as to the
effectiveness of the company's internal control over financial reporting, the
scope of our work was not sufficient to enable us to express, and we do not
express, an opinion either on management's assessment or on the effectiveness of
the company's internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheets and
the related consolidated statements of operations, shareholders equity
(deficit), and cash flows of CPC of America, Inc. and our report dated May 1,
2006 expressed an unqualified opinion.


/s/ CACCIAMATTA ACCOUNTANCY CORPORATION

Irvine, California
May 1, 2006


                                      F-2
<PAGE>

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

                                   Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                                             DECEMBER 31,
                                                                                    ----------------------------
                                                                                       2005             2004
                                                                                    ------------    ------------
                                             ASSETS
<S>                                                                                 <C>             <C>
CURRENT ASSETS
   Cash and equivalents                                                             $  1,940,660    $  1,279,628
   Short term investments                                                                     --       1,896,390
   Prepaid expenses                                                                       22,714          14,904
                                                                                    ------------    ------------

      TOTAL CURRENT ASSETS                                                             1,963,374       3,190,922

EQUIPMENT, NET OF ACCUMULATED DEPRECIATION OF $18,482 IN 2005 AND $18,210 IN 2004            535             807

PATENTS, NET OF ACCUMULATED AMORTIZATION OF $144,773 IN 2005 AND $103,561 IN 2004        412,727         299,939

TRADEMARK, NET OF ACCUMULATED AMORTIZATION OF $3,880 IN 2005 AND $3,322 IN 2004            2,352           2,910

CASH SURRENDER VALUE OF LIFE INSURANCE                                                   463,782              --
                                                                                    ------------    ------------
                                                                                    $  2,842,770    $  3,494,578
                                                                                    ============    ============
                              LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts payable                                                                 $     40,580    $      9,454
   Accrued payroll taxes                                                                  45,748          35,125
   Accrued dividends payable                                                           1,335,361         950,763
                                                                                    ------------    ------------
      TOTAL CURRENT LIABILITIES                                                        1,421,689         995,342
                                                                                    ------------    ------------

COMMITMENTS AND CONTINGENCIES                                                                 --              --

SHAREHOLDERS' EQUITY
   Convertible preferred stock, 5,000,000 shares authorized, $.001 par value,
      Series C - 297,002 and 303,182 shares
        issued and outstanding at December 31, 2005 and 2004,
        respectively                                                                         297             303
      Series D -  684,541 and 791,463 shares issued and outstanding
        at December 31, 2005 and 2004, respectively                                          685             792
   Common stock, 20,000,000 shares authorized, $.0005 par value,
      7,657,066 and 7,006,268 shares issued and outstanding at
      December 31, 2005 and 2004, respectively                                             3,828           3,503
   Additional paid-in capital - preferred                                             11,454,915      12,989,945
   Additional paid-in capital - common                                                16,656,593      14,574,414
   Deficit accumulated during the development stage                                  (26,695,237)    (25,069,721)
                                                                                    ------------    ------------
      TOTAL SHAREHOLDERS' EQUITY                                                       1,421,081       2,499,236
                                                                                    ------------    ------------
                                                                                    $  2,842,770    $  3,494,578
                                                                                    ============    ============


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

                                              F-3

<PAGE>

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

                                      Consolidated Statements of Operations

                                                                                             CUMULATIVE
                                                                                           FROM INCEPTION
                                                         Year ended December 31,           (APRIL 11, 1996)
                                               ------------------------------------------  TO DECEMBER 31,
                                                   2005           2004          2003            2005
                                               ------------   ------------   ------------   ------------

Costs and expenses:
  Research and development - related party     $    513,448   $  4,247,269   $  1,192,739   $  8,222,253
  Research and development - other                  752,645      2,452,445      1,107,576      8,187,970
  General and administrative - related party        131,107        886,450        119,517      1,287,640
  General and administrative - other                287,403        802,919        406,526      4,918,110
                                               ------------   ------------   ------------   ------------

OPERATING LOSS                                    1,684,603      8,389,083      2,826,358     22,615,973
                                               ------------   ------------   ------------   ------------

OTHER INCOME (EXPENSE):
  Interest expense                                       --             --             --         (8,954)

  Interest income                                    59,087         74,828         66,892        259,265
                                               ------------   ------------   ------------   ------------

                                                     59,087         74,828         66,892        250,311
                                               ------------   ------------   ------------   ------------

LOSS BEFORE MINORITY INTEREST                     1,625,516      8,314,255      2,759,466     22,365,662

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

NET LOSS                                       $  1,625,516   $  8,314,255   $  2,759,466   $ 22,364,542
                                               ============   ============   ============   ============

LOSS PER SHARE CALCULATION:
NET LOSS                                       $  1,625,516   $  8,314,255   $  2,759,466
PREFERRED DIVIDEND                                  501,921        478,594        390,289
BENEFICIAL CONVERSION FEATURE PREFERRED STOCK            --             --      2,161,694
                                               ------------   ------------   ------------
  NUMERATOR                                    $  2,127,437   $  8,792,849   $  5,311,449
                                               ============   ============   ============

BASIC AND DILUTED NET LOSS PER SHARE           $       0.29   $       1.31   $       0.90
                                               ============   ============   ============

BASIC AND DILUTED WEIGHTED AVERAGE NUMBER
  OF COMMON SHARES OUTSTANDING - DENOMINATOR      7,323,397      6,723,101      5,904,416
                                               ============   ============   ============


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

                                                      F-4


<PAGE>

                                                CPC OF AMERICA, INC. AND SUBSIDIARIES
                                                    (A Development Stage Company)
                                      Consolidated Statements of Shareholders' Equity (Deficit)
                                        From inception (April 11, 1996) to December 31, 2005

                                                     PREFERRED STOCK                  COMMON STOCK
                                        ----------------------------------------  --------------------
                                              SERIES A            SERIES B
                                        ------------------  --------------------                               STOCK
                                           NUMBER              NUMBER                 NUMBER                  OPTION
                                        OF SHARES    TOTAL  OF SHARES      TOTAL   OF SHARES     TOTAL         COSTS
                                        ---------  -------  ---------   --------  ---------- ---------   -----------

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            --
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                            --       --         --        --     146,904         73            --
Issuance of preferred stock for cash       70,469       70         --        --          --         --            --
Preferred stock dividend                       --       --
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         --   $    --   4,124,060  $   2,062   $        --


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

                                                               F-5a
continued on next page


<PAGE>
continued from above

                             CPC OF AMERICA, INC. AND SUBSIDIARIES
                                 (A Development Stage Company)
                   Consolidated Statements of Shareholders' Equity (Deficit)
                      From inception (April 11, 1996) to December 31, 2005
(continued)


                                                                        DEFICIT
                                           ADDITIONAL    ADDITIONAL   ACCUMULATED         TOTAL
                                              PAID-IN       PAID-IN    DURING THE SHAREHOLDERS'
                                             CAPITAL-      CAPITAL-   DEVELOPMENT        EQUITY
                                               COMMON     PREFERRED         STAGE     (DEFICIT)
                                           ----------   -----------   -----------   -----------

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 ($77,000)        927,680            --            --      928,000
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                           --            --       (25,725)     (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              $ 1,797,178   $   872,682  $(2,711,302)  $    (39,301)


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

                                              F-5b

<PAGE>

                                                CPC OF AMERICA, INC. AND SUBSIDIARIES
                                                    (A Development Stage Company)
                                      Consolidated Statements of Shareholders' Equity (Deficit)
                                        From inception (April 11, 1996) to December 31, 2005

                                                                                PREFERRED STOCK
                                             -----------------------------------------------------------------------------------
                                                   SERIES A             SERIES B             SERIES C            SERIES D
                                             -------------------  -------------------  -------------------  -------------------
                                                NUMBER               NUMBER               NUMBER               NUMBER
                                             OF SHARES     TOTAL  OF SHARES     TOTAL  OF SHARES     TOTAL  OF SHARES     TOTAL
                                             ---------  --------  ---------  --------  ---------  --------  ---------  --------

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         --        --
   Exercise of options                              --        --         --        --         --        --         --        --
   Conversion of  preferred stock and
     accrued dividends into common shares           --        --    (71,429)      (71)   (18,576)      (19)        --        --
   Valuation of beneficial conversion
     feature on Series C Preferred                  --        --         --        --         --        --         --        --
   Cancellations of shares                          --        --         --        --         --        --         --        --
   Issuance of preferred stock for cash             --        --         --        --    264,657       265    110,627       111
   Amortization of stock option costs               --        --         --        --         --        --         --        --
   Preferred stock dividend                         --        --         --        --         --        --         --        --
   Purchase of Med Enclosure Stocks                 --        --         --        --         --        --         --        --
   Net loss for 2002                                --        --         --        --         --        --         --        --
                                             ---------  --------  ---------  --------  ---------  --------  ---------  --------
BALANCE DECEMBER 31, 2002                           --  $     --         --  $     --    341,204  $    341    110,627  $    111

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

                                                                 F-6a
continued on next page

<PAGE>
continued from above


                                                CPC OF AMERICA, INC. AND SUBSIDIARIES
                                                    (A Development Stage Company)
                                      Consolidated Statements of Shareholders' Equity (Deficit)
                                        From inception (April 11, 1996) to December 31, 2005
(continued)


                                                                                                                             DEFICIT
                                                   COMMON STOCK                  ADDITIONAL   ADDITIONAL   ACCUMULATED         TOTAL
                                             ----------------------      STOCK      PAID-IN      PAID-IN    DURING THE SHAREHOLDERS'
                                                  NUMBER                OPTION     CAPITAL-     CAPITAL-   DEVELOPMENT        EQUITY
                                               OF SHARES      TOTAL      COSTS       COMMON    PREFERRED         STAGE     (DEFICIT)
                                             -----------  ---------  ---------  -----------  -----------  ------------  ------------

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

BALANCE, DECEMBER 31, 2000                     4,836,763      2,420   (175,000)   4,234,460      907,320    (4,668,871)     300,409
   Exercise of options                           360,394        180         --      413,483           --            --      413,663
   Issuance of common stock for services         100,000         50         --      255,450           --            --      255,500
   Issuance of preferred stock for cash               --         --         --           --    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                     5,627,484      2,815    (35,000)   6,004,709    2,229,297    (7,251,211)     950,776
   Exercise of options                           282,480        140         --      317,650           --            --      317,790
   Conversion of  preferred stock and
     accrued dividends into common shares        241,627        120         --      790,205     (783,495)           --        6,740
   Valuation of beneficial conversion
     feature on Series C Preferred                    --         --         --           --    1,122,521    (1,122,521)          --
   Cancellations of shares                      (535,933)      (268)        --     (199,732)          --            --     (200,000)
   Issuance of preferred stock for cash               --         --         --           --    3,367,233            --    3,367,609
   Amortization of stock option costs                 --         --     35,000           --           --            --       35,000
   Preferred stock dividend                           --         --         --           --     (122,861)           --     (122,861)
   Purchase of Med Enclosure Stocks               10,000          5         --       53,495           --            --       53,500
   Net loss for 2002                                  --         --         --           --           --    (3,460,574)  (3,460,574)
                                             -----------  ---------  ---------  -----------  -----------  ------------  -----------
BALANCE DECEMBER 31, 2002                      5,625,658  $   2,812  $      --  $ 6,966,327  $ 5,812,695  $(11,834,306) $   947,980

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

                                                                F-6b

<PAGE>

                                                CPC OF AMERICA, INC. AND SUBSIDIARIES
                                                    (A Development Stage Company)
                                      Consolidated Statements of Shareholders' Equity (Deficit)
                                        From inception (April 11, 1996) to December 31, 2005

                                                                                  PREFERRED STOCK
                                            ---------------------------------------------------------------------------------------
                                                  SERIES A               SERIES B               SERIES C              SERIES D
                                            --------------------  --------------------  -------------------- ---------------------
                                            NUMBER                   NUMBER                NUMBER                NUMBER
                                            OF SHARES      TOTAL  OF SHARES      TOTAL  OF SHARES      TOTAL  OF SHARES      TOTAL
                                            ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------

 BALANCE, DECEMBER 31, 2002                        --  $      --         --  $      --    341,204  $     341    110,627  $     111
    Exercise of options                            --         --         --         --         --         --         --         --
    Conversion of  preferred stock and
      accrued dividends into common shares         --         --         --         --    (26,786)       (27)        --         --
    Valuation of beneficial conversion
        feature on Series D Preferred              --         --         --         --         --         --         --         --
    Issuance of preferred stock for cash           --         --         --         --         --         --    708,709        709
    Preferred stock dividend                       --         --         --         --         --         --         --         --
    Net loss for 2003                              --         --         --         --         --         --         --         --
                                            ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
 BALANCE DECEMBER 31, 2003                         --         --         --         --    314,418        314    819,336        820
    Exercise of options                            --         --         --         --         --         --         --         --
    Conversion of  preferred stock and
      accrued dividends into common shares         --         --         --         --    (11,236)       (11)   (27,873)       (28)
    Preferred stock dividend                       --         --         --         --         --         --         --         --
    Stock option costs                             --         --         --         --         --         --         --         --
    Net loss for 2004                              --         --         --         --         --         --         --         --
                                            ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
 BALANCE DECEMBER 31, 2004                         --         --         --         --    303,182        303    791,463        792
    Exercise of options                            --         --         --         --         --         --         --         --
    Conversion of  preferred stock and             --
      accrued dividends into common shares         --         --         --         --     (6,180)        (6)  (106,922)      (107)
    Preferred stock dividend                       --         --         --         --         --         --         --         --
    Issuance of common stock for patent            --         --         --         --         --         --         --         --
    Net loss for 2005                              --         --         --         --         --         --         --         --
                                            ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
BALANCE DECEMBER 31, 2005                          --  $      --         --  $      --    297,002  $     297    684,541  $     685
                                            =========  =========  =========  =========  =========  =========  =========  =========

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

                                                                F-7a
continued on next page

<PAGE>
continued from above
                                                CPC OF AMERICA, INC. AND SUBSIDIARIES
                                                    (A Development Stage Company)
                                      Consolidated Statements of Shareholders' Equity (Deficit)
                                        From inception (April 11, 1996) to December 31, 2005
(continued)
                                                                                                           DEFICIT
                                                 COMMON STOCK                 ADDITIONAL   ADDITIONAL   ACCUMULATED           TOTAL
                                            ----------------------   STOCK       PAID-IN      PAID-IN    DURING THE   STOCKHOLDERS'
                                                 NUMBER             OPTION      CAPITAL-     CAPITAL-   DEVELOPMENT          EQUITY
                                              OF SHARES     TOTAL    COSTS        COMMON     PREFERRED        STAGE       (DEFICIT)
                                            -----------  ---------  ------  ------------  ------------  ------------   ------------


 BALANCE, DECEMBER 31, 2002                   5,625,658  $   2,812  $   --  $  6,966,327  $  5,812,695  $(11,834,306)  $    947,980
    Exercise of options                         775,117        388      --     1,351,807            --            --      1,352,195
    Conversion of  preferred stock and
      accrued dividends into common shares       73,800         37      --       263,034      (244,973)           --         18,071
    Valuation of beneficial conversion
        feature on Series D Preferred                --         --      --            --     2,161,694    (2,161,694)            --
    Issuance of preferred stock for cash             --         --      --            --     6,484,373            --      6,485,082
    Preferred stock dividend                         --         --      --            --      (390,289)           --       (390,289)
    Net loss for 2003                                --         --      --            --            --    (2,759,466)    (2,759,466)
                                            -----------  ---------  ------  ------------  ------------  ------------   ------------
 BALANCE DECEMBER 31, 2003                    6,474,575      3,237      --     8,581,168    13,823,500   (16,755,466)     5,653,573
    Exercise of options                         460,775        230      --     1,082,034            --            --      1,082,264
    Conversion of  preferred stock and
      accrued dividends into common shares)      70,918         36      --       383,428      (354,961)           --         28,464
    Preferred stock dividend                         --         --      --            --      (478,594)           --       (478,594)
    Stock option costs                               --         --      --     4,527,784            --            --      4,527,784
    Net loss for 2004                                --         --      --            --            --    (8,314,255)    (8,314,255)
                                            -----------  ---------  ------  ------------  ------------  ------------   ------------
 BALANCE DECEMBER 31, 2004                    7,006,268      3,503      --    14,574,414    12,989,945   (25,069,721)     2,499,236
    Exercise of options                         470,393        235      --       777,724            --            --        777,959
    Conversion of  preferred stock and
      accrued dividends into common shares)     176,405         88      --     1,150,457    (1,033,109)           --        117,323
    Preferred stock dividend                         --         --      --            --      (501,921)           --       (501,921)
    Issuance of common stock for patent           4,000          2      --       153,998            --            --        154,000
    Net loss for 2005                                --         --      --            --            --    (1,625,516)    (1,625,516)
                                            -----------  ---------  ------  ------------  ------------  ------------   ------------
BALANCE DECEMBER 31, 2005                     7,657,066  $   3,828  $   --  $ 16,656,593  $ 11,454,915  $(26,695,237)  $  1,421,081
                                            ===========  =========  ======  ============  ============  ============   ============

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

                                                               F-7b



<PAGE>

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

                                      Consolidated Statements of Cash Flows

                                                                                                               CUMULATIVE
                                                                                                             FROM INCEPTION
                                                                        YEAR ENDED DECEMBER 31,             (APRIL 11, 1996)
                                                              --------------------------------------------   TO DECEMBER 31,
                                                                  2005            2004            2003             2005
                                                              ------------    ------------    ------------    ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                    $ (1,625,516)   $ (8,314,255)   $ (2,759,466)   $(22,364,542)
  Adjustments to reconcile net loss to net cash
    used by operating activities:
    Depreciation and amortization                                   42,042          21,247          21,274         180,770
    Contribution of officer's salary                                    --              --              --          80,000
    Issuance of common stock and options for services              587,334       4,962,866          33,770       6,216,547
  Changes in operating assets and liabilities
    Decrease (increase) in other assets                             (7,810)        162,912         (70,329)         31,059
    Increase (decrease) in accounts and other payable               31,126        (198,268)        (13,546)         41,757
    (Decrease) increase in accrued expenses                         10,623          24,591          (5,474)        233,475
                                                              ------------    ------------    ------------    ------------
    Net cash used by operating activities                         (962,201)     (3,340,907)     (2,793,771)    (15,580,934)
                                                              ------------    ------------    ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  (Purchase) redemption of short-term investments                1,896,390         554,079      (2,450,469)             --
  Purchase of patent                                                    --        (100,000)             --        (114,795)
  Increase in cash surrender value of life insurance              (463,782)             --              --        (463,782)
  Capital expenditures                                                  --              --          (1,500)       (148,016)
                                                              ------------    ------------    ------------    ------------
    Net cash provided (used) by investing activities             1,432,608         454,079      (2,451,969)       (726,593)
                                                              ------------    ------------    ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from shareholder notes                                       --              --              --          73,150
  Payments on note payable to shareholder                               --              --              --          (3,000)
  Exercise of options and warrants                                 190,625         647,182       1,318,425       4,474,921
  Issuance of preferred stock                                           --              --       6,485,082      12,993,292
  Issuance of common stock                                              --              --              --         915,200
  Dividends                                                             --              --              --          (5,051)
  Cancellation of common stock                                          --              --              --        (200,325)
                                                              ------------    ------------    ------------    ------------
    Net cash provided by financing activities                      190,625         647,182       7,803,507      18,248,187
                                                              ------------    ------------    ------------    ------------

Net increase (decrease) in cash                                    661,032      (2,239,646)      2,557,767       1,940,660
CASH, BEGINNING OF PERIOD                                        1,279,628       3,519,274         961,507              --
                                                              ------------    ------------    ------------    ------------
CASH, END OF PERIOD                                           $  1,940,660    $  1,279,628    $  3,519,274    $  1,940,660
                                                              ============    ============    ============    ============

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                                 $    501,921    $    478,594    $    372,925    $    979,242
  Preferred dividends paid through issuance of common stock   $    117,323    $     28,464    $     18,071    $     90,356
  Acquisition of Med Enclosures for note payable              $         --    $         --    $         --    $    250,000
  Acquisition of patent paid by issuance of common stock      $    154,000    $         --    $         --    $    288,708
  Settlement of lawsuit by issuance of common stock           $         --    $         --    $         --    $    200,000
  Valuation of beneficial conversion features                 $         --    $         --    $  2,161,694    $  4,330,695


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

                                                      F-8
</TABLE>

<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2005

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 has had no operations.

      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. During 2002, the Company purchased an additional
      7% of MED through the issuance of 10,000 shares of common stock valued at
      $53,500. During 2004, the Company purchased an additional 12% of MED for
      $100,000, and in January 2005 purchased the remaining 7.7% of MED through
      the issuance of 4,000 shares of common stock valued at $154,000.

                                      F-9

<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2005


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

      Organization (continued)
      ------------------------
      During 2002, the Company formed Med Close Corp ("MCC"). In 2004, MCC began
      research and development activities.

      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, MED and HeartMed LLC from November 1999, and
      MCC from 2002. All significant intercompany transactions and balances have
      been eliminated in consolidation.

      Cash and equivalents, short-term investments and other cash flow statement
      --------------------------------------------------------------------------
      supplemental information
      ------------------------
      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. Short term investments are bank certificates
      of deposit with original terms in excess of three months. Balances in bank
      accounts may, from time to time, exceed federally insured limits. The
      Company believes that its loss exposure is limited.

      No income taxes have been paid since inception. Payments of $8,954 for
      interest have been made since inception; none in 2003, 2004 or 2005.

      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. During 2004, the Company acquired
      12% additional interest in MED for $100,000, which was added to patent
      costs in the accompanying financial statements. In January 2005, the
      Company acquired the final 7.7% of MED for $154,000, which was added to
      patent costs in the accompanying financial statements. Amortization
      expense was $41,770 in 2005 and $20,649 in 2004 and in 2003.

      Equipment
      ---------
      Depreciation expense is provided over the estimated useful life of 5 years
      using straight line and accelerated methods. Depreciation expense was $415
      in 2005, $598 in 2004 and $625 in 2003.

      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.


                                      F-10

<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2005


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

      Reclassifications
      -----------------
      Certain items in the 2004 and 2003 financial statements have been
      reclassified to conform to the 2005 presentation.

      Intangibles and long-lived assets
      ---------------------------------
      Long-lived assets are reviewed annually for impairment whenever events or
      changes in circumstances indicate that the carrying amount of an asset may
      not be recoverable. Impairment is necessary when the undiscounted cash
      flows estimated to be generated by the asset are less than the carrying
      amount of the asset.


                                              2005          2004          2003
                                            --------      --------      --------
      Patents
         Gross carrying amount              $557,500      $403,500      $303,500
                                            ========      ========      ========
         Accumulated amortization           $144,773      $103,561      $ 83,327
                                            ========      ========      ========
         Amortization expense               $ 41,212      $ 20,234      $ 20,234
                                            ========      ========      ========

      Trademark
         Gross carrying amount              $  6,232      $  6,232      $  6,232
                                            ========      ========      ========
         Accumulated amortization           $  3,880      $  3,322      $  2,907
                                            ========      ========      ========
         Amortization expense               $    558      $    415      $    415
                                            ========      ========      ========


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

      On October 1, 2005, the Company made a change in estimate for the
      amortization of its patents. Now all portions of the patents (acquired in
      increments over the last five years) will be amortized over the remaining
      life of the first portion acquired. This change in estimate resulted in
      additional amortization for 2005 of about $1,400 and will result in
      additional amortization in each of the next 10 years of approximately
      $5,700 each year.

      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.

      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".


                                      F-11

<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2005


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

      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 2005, 2004 and 2003 all common stock
      equivalents were anti-dilutive. Incremental common shares not included in
      the denominator of diluted earnings per share calculation due to their
      antidilutive nature are as follows:

                                                  2005       2004       2003
                                                ---------  ---------  ---------

      Attributable to exercise/conversion of:
               Outstanding options              4,560,905  5,031,298  4,942,073
               Preferred stock                  1,653,479  1,811,500  1,876,751
                                                ---------  ---------  ---------
                                                6,214,384  6,842,798  6,818,824
                                                =========  =========  =========


      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.

      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:

<TABLE>
<CAPTION>
                                                   2005            2004            2003
                                               ------------    ------------    ------------
      Net loss
<S>                                            <C>             <C>             <C>
             As reported                       $ (1,625,516)   $ (8,314,255)   $ (2,759,466)
             Stock compensation                $    111,416    $  1,885,540    $    267,487
             Pro forma                         $ (1,736,932)   $(10,199,795)   $ (3,026,953)
      Basic and fully diluted loss per share
             As reported                       $      (0.29)   $      (1.31)   $      (0.90)
             Pro forma                         $      (0.31)   $      (1.59)   $      (1.05)
</TABLE>


                                      F-12

<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2005


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

      Stock-based compensation (continued)
      ------------------------------------
      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 2004, 1998 and 1996, respectively: risk-free interest rate
      of 3.375%, 6% and 9%; volatility of 20%, 50% and 200%; and a weighted fair
      value of $11.33, $1.26 and $.001.

      Recent accounting pronouncements
      --------------------------------
      In December 2004, the FASB issued SFAS No. 123 (Revised 2004), SHARE-BASED
      PAYMENTS ("SFAS 123R"). SFAS 123R requires all share-based payments to
      employees, including grants of employee stock options, to be recognized in
      the income statement based on their fair values. The Company is required
      to adopt the new standard in the first interim period beginning after
      December 15, 2005. When the Company adopts SFAS 123R, the statements of
      operations in 2006 and 2007 will include additional expenses of $60,060
      and $23,063, respectively to reflect the modified prospective application
      method described in the pronouncement. Any new share-based compensation,
      whether to employees or non-employees, will be accounted for based on the
      fair value of the compensation, and the related expense will be recorded
      in the statement of operations.

      In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
      Corrections" which changes the requirements for the accounting for and
      reporting of a change in accounting principle. SFAS No. 154 is effective
      in fiscal years beginning after December 31, 2005. The Company does not
      expect the adoption of SFAS No. 154 to have a material effect on the
      consolidated financial statements.

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

      Series A Preferred stock
      ------------------------
      In November 1998, the Company commenced the private placement sale of
      Series A preferred stock at $8.50 per share. The Company sold 79,293
      shares for proceeds of $674,000. The Series A Preferred stock had no
      voting rights and had a 5% annual dividend 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 adjusted to $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-13

<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2005


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

      Series B Preferred stock
      ------------------------
      In April 2000, the Company commenced the private placement sale of Series
      B preferred stock at $8.75 per share. The Company sold 185,144 shares for
      proceeds of $1,620,010. The Company recorded a beneficial conversion
      feature totaling $208,125 in 2000 and $331,636 in 2001 at the date of
      issuance. The Series B Preferred stock had no voting rights and had a 5%
      annual dividend 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. At June 30, 2001, the conversion price was adjusted to
      $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. In March 2002, the remaining 71,429 Series B shares were
      converted into 195,313 common shares. Additional accrued dividends of
      $53,125 were paid in cash.

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

      At June 30, 2002, the conversion price was adjusted to $3.57 per share.
      During the fourth quarter of 2002, 18,576 Series C shares and related
      accrued dividends of $6,625 were converted into 46,314 common shares.
      During 2003, 26,786 Series C shares and related accrued dividends of
      $18,071 were converted into 73,689 common shares. During 2004, 11,236
      Series C shares and related accrued dividends of $11,758 were converted
      into 31,304 common shares. During 2005, 6,180 Series C shares and related
      accrued dividends of $9,500 were converted into 18,068 common shares.
      Accrued dividends of $490,111 on the 297,002 shares outstanding at
      December 31, 2005 remain unpaid.

                                      F-14

<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2005


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

      Series D Preferred stock
      ------------------------
      In November 2002, the Company commenced the private placement sale of
      Series D preferred stock at $9.15 per share. The Company sold 819,336
      shares for proceeds of $7,496,924. The Company recorded a beneficial
      conversion feature totaling $2,499,111 at the date of issuance. The Series
      D Preferred stock has no voting rights and has a 5% annual dividend
      payable in cash or common stock. Each Series D share was convertible into
      one common share until June 30, 2003, when the conversion price was
      adjusted to the lower of $6.86 or 75% of the average last sale price of
      the common stock for the 30 trading days immediately preceding such date
      as reported on any stock exchange, according to the terms of the original
      agreement. Based on the last prices over the applicable period, no
      adjustment was made to the conversion price and it remains fixed at $6.86
      per share. During 2004, 27,873 Series D shares and related accrued
      dividends of $16,706 were converted into 39,614 common shares. During
      2005, 106,922 shares and related accrued dividends of $107,823 were
      converted into 158,337 common shares. Accrued dividends of $845,249 on the
      684,541 outstanding shares remain unpaid at December 31, 2005.

      Common stock
      ------------
      During 2005, 6,180 Series C shares and 106,922 Series D shares and related
      accrued dividends of $117,323 were converted into 176,405 common shares.
      During 2004, 11,236 Series C shares and 27,873 Series D shares and related
      accrued dividends of $28,464 were converted into 70,918 common shares.
      During 2003, 26,786 Series C shares and related accrued dividends of
      $18,071 were converted into 73,689 common shares. During 2002, 18,576
      Series C shares and related accrued dividends of $6,625 were converted
      into 46,314 common shares.

      In March 2002, 71,429 Series B shares were converted into 195,313 common
      shares.

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

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

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


                                      F-15

<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2005


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

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

      Stock options
      -------------
      The Company has granted options to purchase its common stock. The option
      prices at the time of grant were at or above the fair value of the
      Company's common stock. The following information applies to all options
      outstanding at December 31, 2005:

                                            Weighted                 Weighted
                                Average     average                  average
      Exercise     Options     remaining    exercise     Number      exercise
       Price     Outstanding  life (years)   price     exercisable    price
      --------   -----------  ------------  --------   -----------  ---------
      $  1.125       468,191       1        $  1.125       468,191  $   1.125
      $  2.50      3,542,714       3        $  2.50      2,742,714  $   2.50
      $ 29.12        550,000       5        $ 29.12        550,000  $  29.12


                                      F-16

<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2005


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

      Stock options (continued)
      -------------------------

      A summary of stock option activity follows:

<TABLE>
<CAPTION>
                                                            Exercise
                                             Number of        Price
                                              Options       Per Share        Expiration
                                            ----------   ---------------    ------------
<S>                                           <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                                     (146,904)   $1.125 - 2.50
Canceled                                      (490,000)         $1.125
                                            -----------   --------------
Outstanding at December 31, 1999             6,503,096    $1.125 - 9.00    2003 - 2008

Granted                                        175,000    $5.00 - $5.75
Exercised                                     (223,832)   $1.125 - 2.50
                                            -----------   --------------
Outstanding at December 31, 2000             6,454,264    $1.125 - 9.00    2003 - 2008

Granted                                         15,800           $2.50           2004
Exercised                                     (360,394)   $1.125 - 2.50
                                            -----------   --------------
Outstanding at December 31, 2001             6,109,670    $1.125 - 9.00    2003 - 2008

Exercised                                     (282,480)         $1.125
Canceled                                      (100,000)          $5.50
                                            -----------   --------------
Outstanding at December 31, 2002             5,727,190    $1.125 - 9.00    2003 - 2008

Exercised                                     (775,117)   $1.125 - 9.00
Canceled                                       (10,000)          $8.00
                                            -----------   --------------
Outstanding at December 31, 2003             4,942,073    $1.125 - 5.75    2004 - 2008

Granted                                        550,000          $29.12        2009
Exercised                                     (460,775)   $1.125 - 5.75
                                            ----------   ---------------
Outstanding at December 31, 2004             5,031,298    $1.125 - 29.12   2006-2009

Exercised                                     (470,393)   $1.125 - 2.50
                                            -----------  ---------------
Outstanding at December 31, 2005             4,560,905    $1.125 - 29.12   2006-2009
                                            ===========
</TABLE>

                                      F-17

<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2005


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

      Stock options (continued)
      -------------------------
      The following information applies to employee options outstanding at
      December 31, 2005:


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

  $ 1.125               19         1         $ 1.125            19    $  1.125
  $  2.50        1,551,412         3         $  2.50     1,151,412    $  2.50
  $ 29.12          275,000         5         $ 29.12       275,000    $  29.12


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

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

      In 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.
      During 2002 and 2001, $35,000 and $140,000 were charged to expense and
      recorded in the statement of operations, respectively. In 2002, 100,000 of
      these options were cancelled due to non-performance. The fair value of the
      options issued to non-employees during 1999 and 1998 was determined to be
      minimal.

      Of the $777,959 in options exercised during 2005, the Company received
      $190,625 in cash and the other exercises were in exchange for compensation
      and expense reimbursements to the Company's only employee, and consulting
      services and expense reimbursements for the Company's primary consultant.
      Compensation was recorded according to an employment contract and the
      employee elected not to receive cash for his net pay and expense
      reimbursements, but to exercise options in the amounts of $385,188 and
      $16,297, respectively. Similarly, the consultant elected not to receive
      cash for $170,650 of services and $15,199 of reimbursable expenses, but
      exercised options in those amounts. The $587,334 of total non-cash
      exercises of options is included in the line item "issuance of common
      stock and options for services" in the statement of cash flows.

      Of the $1,082,264 in options exercised during 2004, the Company received
      $647,182 in cash and the other exercises were in exchange for compensation
      to the Company's only employee, and consulting services and expense
      reimbursements for the Company's primary consultant. Compensation was
      recorded according to an employment contract and the employee elected not
      to receive cash for his net pay, but to exercise options in the amount of
      $351,460. Similarly, the consultant elected not to receive cash for
      $29,880 of services and $53,742 of reimbursable expenses, but exercised
      options in those amounts. The $435,082 of total non-cash exercises of
      options is included in the line item "issuance of common stock and options
      for services" in the statement of cash flows.


                                      F-18

<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2005


3.    INCOME TAXES
------------------

      The Company recognizes deferred tax assets and liabilities for temporary
      differences between the financial reporting and tax bases of its assets
      and liabilities. At December 31, 2005 the Company has an estimated net
      operating loss carryforward for federal tax purposes of $17,400,000,
      which, if unused to offset future taxable income, will begin to expire in
      2012 and continue through 2026. The Company had deferred tax assets of
      approximately $6,100,000, $5,600,000 and $3,400,000 at December 31, 2005,
      2004 and 2003, respectively, relating to its net operating loss. A 100%
      valuation allowance, which increased by $500,000 in 2005 and $2,200,000 in
      2004, has been recognized to offset the entire related deferred tax asset
      due to the uncertainty of realizing the benefit.

4.    COMMITMENTS AND CONTINGENCIES
-----------------------------------

      Consulting agreements
      ---------------------
      In January 1997, the Company entered into a consulting agreement with its
      strategic consultant, a related party, for five years at $5,000 per month.
      The agreement was amended in November 1997 to increase the fees to $8,000
      per month, in April 1998 to increase the fees to $10,000 per month and
      extend the term of the agreement for an additional five years and in April
      1999 to provide for increases in compensation based on increases in the
      consumer price index in the preceding year. Base compensation was $19,250
      per month in 2002 and $18,333 per month in 2001. In 2003, the agreement
      was amended; accordingly, base monthly compensation was $31,797 plus a
      bonus of $175,000. For 2004, base monthly compensation was $30,323, plus a
      cash bonus of $58,344 and 275,000 in stock options valued at $3,117,034
      (see note 2). The agreement was amended again in 2005; accordingly, annual
      base compensation for 2005 was increased to $570,194.

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

      The Company has entered into various agreements with its strategic
      consultant for the research and development of additional applications of
      the Company's proprietary intellectual properties. The Company made
      payments to the strategic consultant amounting the $47,155 in 2005,
      $1,528,725 in 2004 and $704,307 in 2003.

                                      F-19

<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2005


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

      Employment agreement
      --------------------
      In April 1998, the Company entered into a ten-year employment agreement
      with its CEO. The agreement provides for a base salary of $10,000 per
      month beginning May 1998. In December 1998, the CEO elected to contribute
      his accrued salary of $80,000 to the Company. The agreement was amended in
      April 1999 to provide for increases in compensation based on increases in
      the consumer price index in the preceding year. Base monthly compensation
      was $18,333 in 2001 and $19,250 in 2002. In 2003, the agreement was
      amended; accordingly, base monthly compensation was $31,797 plus a bonus
      of $175,000. For 2004, base monthly compensation was $30,323, plus a cash
      bonus of $58,344 and 275,000 in stock options (see note 2). The agreement
      was amended again in 2005; accordingly, annual base compensation for 2005
      was increased to $570,194.

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

      Royalty agreements
      ------------------
      In July 2000, the Company entered into royalty agreements with its CEO and
      its strategic consultant granting each of them royalties equal to .75% on
      net sales of certain MED products as defined. In July 2001, these
      agreements were amended to increase the royalties to 1.5% of net sales of
      certain MED products as defined. In October 2004, the agreements were
      amended again. Pursuant to that amendment, in the event of a change in
      control of either MED or CPC of America, MED will be obligate to pay the
      CEO and the strategic consultant each minimum royalty payments of
      $4,000,000 per year. To date, MED has not had any sales.

      In October 2002, the Company entered into royalty agreements with its CEO
      and its strategic consultant granting each of them royalties equal to 2.5%
      of net sales of certain MCC products as defined. To date, MCC has not had
      any sales.

      Office lease
      ------------
      The Company leases its office space under a one-year lease at $1,000 per
      month from a related party. The lease expired November 30, 2005 and is now
      on a month-to-month basis. Actual rent expense was $12,000 in 2005, 2004
      and 2003.


                                      F-20

<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2005



5.    RELATED PARTY TRANSACTIONS
--------------------------------

      The Company has a consulting agreement with its strategic consultant, a
      related party. The Company has also entered into various agreements with
      its strategic consultant for the research and development of additional
      applications of the Company's proprietary intellectual properties and for
      office space rent. Expenses to this related party are as follows.

<TABLE>
<CAPTION>
                                            2005         2004         2003       CUMULATIVE
                                          ----------   ----------   ----------   ----------
<S>                                       <C>          <C>          <C>          <C>
      Research and development:
        Consulting                        $  457,561   $2,675,553   $  449,560   $4,530,321
        Expense reimbursements                 8,732       28,698       38,872      152,001
        Engineering development               47,155    1,543,018      704,307    3,839,931
                                          ----------   ----------   ----------   ----------
          Total R&D to related parties       513,448    4,247,269    1,192,739    8,522,253
                                          ----------   ----------   ----------   ----------

      General and administrative:
        Consulting                           112,640      863,702      107,017    1,119,080
        Rent                                  12,000       12,000       12,000       57,300
        Expense reimbursements                 6,467       10,748          500      111,260
                                          ----------   ----------   ----------   ----------
                                             131,107      886,450      119,517    1,287,640
                                          ----------   ----------   ----------   ----------

      Total expenses to related parties   $  644,555   $5,133,719   $1,312,256   $9,809,893
                                          ==========   ==========   ==========   ==========
</TABLE>


                                      F-21

<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2005


6     MAJOR VENDORS
-------------------

      In addition to the concentration of expenses to the related party
      described above, one vendor comprises approximately 39% in 2005, 25% in
      2004 and 16% in 2003 of the Company's research and development
      expenditures to third parties. The loss of this vendor would have an
      impact on the operations of the Company; however, management does not
      foresee the loss of this vendor in the near future.

7.    SELECTED QUARTERLY DATA (UNAUDITED)
-----------------------------------------


<TABLE>
<CAPTION>
                                    DEC. 31      SEPT. 30      JUNE 30      MAR. 31
                                   -----------------------   -----------------------

2004 QUARTERS ENDED
<S>                                <C>          <C>          <C>          <C>
Net revenues                       $       --   $       --   $       --   $       --
Gross profit                               --           --           --           --
Loss from operations                4,887,632    1,528,465      792,121    1,180,865
Net loss                           $4,872,124   $1,510,986   $  772,863   $1,158,282
Basic and diluted loss per share   $     0.74   $     0.24   $     0.13   $     0.20

2005 QUARTERS ENDED
Net revenues                       $       --   $       --   $       --   $       --
Gross profit                               --           --           --           --
Loss from operations                  395,940      455,308      390,853      442,502
Net loss                           $  380,940   $  439,583   $  374,610   $  430,383
Basic and diluted loss per share   $     0.06   $     0.08   $     0.07   $     0.08
</TABLE>


                                      F-22

<PAGE>

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

         None.

ITEM 9A. CONTROLS AND PROCEDURES

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

         Our management, including our principal executive and principal
financial officers, is responsible for establishing and maintaining adequate
internal control over financial reporting (as defined in Rules 13a-15(f), and
15d-15(f) under the Securities Exchange Act of 1934). As defined by the SEC,
internal control over financial reporting is a process designed by, or under the
supervision of, a company's principal executive and principal financial officers
and effected by the company's board of directors, management and other
personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. We were
required to evaluate our internal control over financial reporting as of
December 31, 2005, however, as described below, we did not commence our
evaluation on timely basis nor were able to complete the required evaluation.

         Our management, including our principal executive and principal
financial officers, does not expect that our disclosure controls and procedures
or our internal control over financial reporting will prevent all errors and all
fraud. A control system, no matter how well designed and operated, can provide
only reasonable, but not absolute, assurance that the objectives of the control
system are met. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within our company have been detected.

         IMPLEMENTATION OF EVALUATION OF INTERNAL CONTROLS

         Under the supervision and with the participation of the our management,
including our principal executive officer and principal financial officer, we
commenced and partially completed the performance an evaluation of our internal
control over financial reporting as of December 31, 2005 based on the framework
in INTERNAL CONTROL-INTEGRATED FRAMEWORK issued by the Committee of Sponsoring
Organizations of the Treadway Commission. In December 2004, our management began
the process of evaluating our internal control over financial reporting in place
during 2004. During 2005, our management began the implementation of its
evaluation of our internal control over financial reporting by selecting the
framework in INTERNAL CONTROL-INTEGRATED FRAMEWORK issued by the Committee of
Sponsoring Organizations of the Treadway Commission, gathering information about
the controls in place over the various "processes" identified by management, and
determining which of these "processes" were significant and would require
testing. In addition, our management made inquiries and performed certain tests
to assure itself that controls were in place and were being followed.

         We planned to complete our evaluation of internal control over
financial reporting by the end of 2005. However, in March 2005, management
consulted with counsel and concluded that we were not required to evaluate our
internal control over financial reporting for the period ending December 31,
2005. Therefore, we cut back our efforts to evaluate our internal control over
financial reporting and did not complete our evaluation in 2005, nor did we
retain our independent registered public accountants in fiscal 2005 to perform
an audit of our assessment of internal control over financial reporting as of
December 31, 2005.

         During 2005, our management commenced the documentation of our internal
control over financial reporting and conducted a substantial amount of testing
of those internal controls under the INTERNAL CONTROL-INTEGRATED FRAMEWORK
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In April 2006, management completed its documentation of a significant portion
of its internal control processes. Our management did not complete testing as
contemplated by the INTERNAL CONTROL-INTEGRATED FRAMEWORK issued by the
Committee of Sponsoring Organizations of the Treadway Commission and did not
document the results of inquiries and other tests that were performed. While no
material weaknesses were noted, our management concluded that our internal
control over financial reporting as of December 31, 2005 was not effective under
the framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission, since not enough of the process was completed to determine
otherwise.

         In April 2006, we engaged our independent registered public accountants
to perform an audit of our assessment of internal control over financial
reporting as of December 31, 2005. However, since we did not complete all the
procedures our independent registered public accountants were unable to perform
all the procedures necessary in order for them to form an opinion on
management's assessment of internal control over financial reporting and our
independent registered public accountants have disclaimed an opinion on the
effectiveness management's assessment of internal control over financial
reporting.


                                      -15-

<PAGE>

      CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

         During the year ended December 31, 2005, there were no significant
changes in our internal controls or in other factors that could significantly
affect these controls subsequent to the last day they were evaluated.

CONCLUSION REGARDING THE EFFECTIVENESS OF DISCLOSURE CONTROLS AND PROCEDURES

         During 2005, our principal executive and financial officer commenced an
evaluation of the effectiveness of our disclosure controls and procedures, as
such term is defined under Rule 13a-15(e) promulgated under the Exchange Act.
However, our management did not complete testing as contemplated by the INTERNAL
CONTROL-INTEGRATED FRAMEWORK issued by the Committee of Sponsoring Organizations
of the Treadway Commission and did not document the results of inquiries and
other tests that were performed. While no material weaknesses were noted, our
management concluded that our internal control over financial reporting as of
December 31, 2005 was not effective under the framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission, since not enough of the
process was completed to determine otherwise. Our management has commenced the
process of documenting and testing our internal control over financial reporting
for fiscal 2006, and we expect to complete all necessary documentation and
testing on a timely basis for the current fiscal year.


ITEM 9B. OTHER INFORMATION

         Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS.

Set forth below are our directors and officers.

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

Rod A. Shipman              55      President, Secretary, Treasurer and Director
Rafe Cohen                  58      Director
William C. Lievense         58      Director

         Mr. Shipman has been our president and chief executive officer since
January 1997, became secretary in July 1997 and treasurer in September 2000 and
has been a director of our 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 our director since July 1998. 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 our director 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.

                                      -16-

<PAGE>

KEY CONSULTANTS TO THE COMPANY

         The CTM Group, Inc., has a consulting contract to provide strategic
planning services to our company. Mr. Paul Shabty is the key consultant from the
CTM Group, Inc. who provides these consulting services. Mr. Shabty is a founder
of our company and served as our president, treasurer and chairman of the board
from April 1996 to January 1997. Mr. Shabty was a member of the Board of
Trustees of Columbia/Doctors Hospital of Sarasota, Florida. He is a former
director of TD Technologies, Inc., a private engineering and software company,
and Advanced Technologies Management Corporation, a medical software and
management company. Mr. Shabty has been involved in the medical and
manufacturing industries since 1970. He was the founder, chairman of the board
and chief executive officer of Medical Clinic Unlimited, Inc., which specialized
in both the provision of outpatient dialysis services and the manufacturing of
medical devices, equipment and supplies. From October 1993 to September 1994,
Mr. Shabty served as executive vice president of U.S. Diagnostic Labs, Inc., a
physician practice management provider specializing in diagnostic imaging
centers. Mr. Shabty received a Bachelor of Arts degree in Accounting from the
University of Tel Aviv. We made payments to CTM Group amounting to $644,555 in
2005 and $5,133,719 in 2004.

AUDIT COMMITTEE FINANCIAL EXPERT

         We do not have an audit committee nor do we have a financial expert.

CODE OF ETHICS

         We have adopted a code of ethics that applies to the principal
executive officer and principal financial and accounting officer. We will
provide to any person without charge, upon request, a copy of our code of
ethics. Requests may be directed to our principal executive offices at 6336 17th
Street Circle East, Sarasota, Florida 34243.

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, 2005, all Section 16(a) filing
requirements applicable to our officers, directors and greater than 10%
beneficial owners were complied with.

                                      -17-

<PAGE>

ITEM 11.          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, 2005, 2004 and
2003.

<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,             2005   $570,194    -0-        -0-            -0-            -0-             -0-
 President and Chief         2004   $422,220   58,344      -0-            -0-          275,000           -0-
 Executive Officer           2003   $381,557  175,000     9,000           -0-            -0-             -0-


                                     OPTION/SAR GRANTS IN 2005 FISCAL YEAR
                                                INDIVIDUAL GRANTS
-------------------------------------------------------------------------------------------------------------------
          NAME                   NUMBER OF          % OF TOTAL OPTIONS/SARS      EXERCISE OR      EXPIRATION DATE
                                 SECURITIES         GRANTED TO EMPLOYEES IN       BASE PRICE
                                 UNDERLYING               FISCAL YEAR               ($/SH)
                                OPTIONS/SARS
                                GRANTED (#)
-------------------------------------------------------------------------------------------------------------------

                                      None.


                            AGGREGATED OPTION/SAR EXERCISES IN 2005 FISCAL YEAR
                                       AND FY-END OPTION/SAR VALUES

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

Rod A. Shipman, President and          180,194            $3,351,532         1,115,052/400,000      $14,551,428/
Chief Executive Officer                                                                            $5,220,000(1)
</TABLE>

(1) Based on a closing price of $15.55 per share for our common stock as quoted
on the OTC Bulletin Board on December 30, 2005.


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

         EMPLOYMENT AGREEMENTS. On April 23, 1998, we entered into an Employment
Agreement with Rod A. Shipman to serve as our president and chief executive
officer. Pursuant to the terms of that employment agreement, Mr. Shipman
received an annual salary of $120,000. Effective April 1, 1999, Mr. Shipman and
we 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. Effective January 1, 2003, Mr.


                                      -18-

<PAGE>

Shipman and we further amended the agreement to increase annual compensation to
$354,312. In May 2005, Mr. Shipman and we further amended the agreement to
provide for annual increases in annual compensation as follows: to $570,194
effective as January 1, 2005; to $627,213 effective as of January 1, 2006; and
to $689,934 effective as January 1, 2007.

         Pursuant to his employment agreement with us, in April 1998 Mr. Shipman
received options to purchase 2,000,000 shares of our common stock at an exercise
price of $2.50 per share, which vest and first become exercisable in 200,000
share installments commencing on April 22, 1998 and on each of the next nine
anniversaries of such date. The options expire on April 22, 2008. The Employment
Agreement is for a term of ten years, subject to automatic renewals for
additional five year periods unless either party elects not to renew the
agreement.

         In July 2000, our board of directors approved, and caused our
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 derived from two of its
three patents. Mr. Shipman was to initially 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, our board of directors 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. In October 2004, our board
of directors approved a further amendment to the royalty agreement between Med
Enclosure and Mr. Shipman. Pursuant to that amendment, in the event of a change
in control of either Med Enclosure or CPC of America, Med Enclosure shall be
obligated to pay Mr. Shipman minimum royalty payments of $4,000,000 per year. In
October 2002, our board of directors approved, and caused our wholly-owned
subsidiary, Med Close Corp., to award a bonus to Mr. Shipman in the form of a
royalty in the amount of two and one-half percent (2.5%) on all net sales of
products of Med Close Corp.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The following table sets forth certain information regarding the
beneficial ownership of the shares of our common stock as of March 3, 2006 by
(i) each person who is known by us to be the beneficial owner of more than five
percent (5%) of the issued and outstanding shares of our common stock, (ii) each
of our directors and executive officers and (iii) all directors and executive
officers as a group.

          NAME AND ADDRESS              NUMBER OF SHARES     PERCENTAGE OWNED
                                       ------------------  ---------------------

 Rod A. Shipman(1) (2)                      1,745,402             19.1%
 Rafe Cohen(1)                                 60,000              (*)
 William C. Lievense(1)                        65,000              (*)
 CTM Group, Inc.(3)(4)                      3,165,416             32.4%
 Leslie J. Kessler(5)                         544,568              7.1%
 All officers and directors as a
 group (three persons)                      1,870,402             20.4%
_______________

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

(2)  Includes options granted to Mr. Shipman to purchase 1,426,431 shares of
     common stock. Does not include options to purchase 400,000 shares of common
     stock, which are subject to vesting.

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

(4)  Includes options granted to the CTM Group to purchase 2,043,331 shares of
     common stock. Does not include options to purchase 400,000 shares of common
     stock, which are subject to vesting.

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

(*)  Less than one percent.


                                      -19-

<PAGE>

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

         The following table sets forth certain information as of December 31,
2005 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              1,081,191                       $16.42                      2,635,534
approved by shareholders

Equity compensation plan              3,542,714                       $2.50                          N/A
not approved by
shareholders (1)
</TABLE>

-----------------------
(1) Represents shares of common stock issuable to Rod Shipman and CTM Group,
Inc. pursuant to option agreements entered into with us.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         In 1998, we entered into a Consulting Agreement with CTM Group, Inc. In
May 2005, CTM Group and we amended the consulting agreement to provide for
annual increases in annual compensation as follows: to $570,194 effective as
January 1, 2005; to $627,213 effective as of January 1, 2006; and to $689,934
effective as January 1, 2007.

         In July 2000, our board of directors approved, and caused our
subsidiary, Med Enclosure LLC, to award, bonuses to our chief executive officer,
Rod A. Shipman and CTM Group, Inc in the form of a royalty on the net sale of
products of Med Enclosure derived from two of its three patents. Under the
original royalty agreements, Mr. Shipman and CTM Group were to each receive a
royalty in the amount of three-quarters of one percent (.75%) on all net sales
of products subject to the royalty agreement. In July 2001, our board of
directors approved amendments to the royalty agreements increasing the royalties
payable to Mr. Shipman and CTM Group to one and one-half percent (1.5%) on all
net sales. In October 2004, our board of directors approved further amendments
to the royalty agreements with Mr. Shipman and CTM Group. Pursuant to those
amendments, in the event of a change in control of either Med Enclosure or CPC
of America, Med Enclosure shall be obligated to pay Mr. Shipman and CTM Group
each minimum royalty payments of $4,000,000 per year. CTM Group beneficially
owns approximately 32.4% of our outstanding common shares.

         In October 2002, our board of directors approved, and caused our
wholly-owned subsidiary, Med Close Corp., to award a bonus to Mr. Shipman and
CTM Group each in the form of a royalty in the amount of two and one-half
percent (2.5%) on all net sales of products of Med Close Corp.

         During 2002 and 2003, we entered into various agreements with CTM Group
for research and development of additional various applications of our
proprietary intellectual property. We made payments to CTM Group amounting to
$644,555 in 2005 and $5,133,719 in 2004.

                                      -20-

<PAGE>

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

         Our board of directors has selected Cacciamatta Accountancy Corporation
as our independent accountants to audit our consolidated financial statements
for the fiscal year 2005. Cacciamatta Accountancy Corporation previously audited
our consolidated financial statements for the two fiscal years ended December
31, 2004 and 2003.

AUDIT AND NON-AUDIT FEES

         Aggregate fees for professional services rendered to us by Cacciamatta
Accountancy Corporation for the years ended December 31, 2005 and 2004 were as
follows:

              Services Provided                         2005         2004
              -------------------------------------  ----------  ------------
              Audit Fees...........................   $63,000      $63,000
              Audit Related Fees...................     -0-          -0-
              Tax Fees.............................     -0-          -0-
              All Other Fees.......................     -0-          -0-
                                                     ----------  ------------
                      Total........................   $63,000      $63,000


         AUDIT FEES. The aggregate fees billed for the years ended December 31,
2005 and 2004 were for the audits of our financial statements and reviews of our
interim financial statements included in our annual and quarterly reports.

         AUDIT RELATED FEES. There were no fees billed for the years ended
December 31, 2005 and 2004 for the audit or review of our financial statement
that are not reported under Audit Fees.

         TAX FEES. There were no fees billed for the years ended December 31,
2005 and 2004 for professional services for tax compliance, tax advice and tax
planning.

         ALL OTHER FEES. There were no billed for the years ended December 31,
2005 and 2004 for services other than the services described above.

PRE-APPROVAL POLICIES AND PROCEDURES

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

                                      -21-

<PAGE>

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

         (a)  LIST OF FINANCIAL STATEMENTS.

              Report of Independent Registered Public Accounting Firm........F-1
              Consolidated Balance Sheets at December 31, 2005 and 2004......F-2
              Consolidated Statements of Operations for the three years
                 ended December 31, 2005 and cumulative from inception
                 (April 11, 1996) to December 31, 2005.......................F-3
              Consolidated Statements of Cash Flows for the three years
                 ended December 31, 2005 and cumulative from inception
                 (April 11, 1996) to December 31, 2005.......................F-4
              Notes to Consolidated Financial Statements.....................F-5


         (b)  INDEX TO EXHIBITS

         3.1    Articles of Incorporation of the Company (1)

         3.2    Certificate of Amendment of Articles of Incorporation (2)

         3.3    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 (5)

         4.3    Certificate of Designations of the Company's Series B Preferred
                Stock (8)

         4.4    Certificate of Designations of the Company's Series C Preferred
                Stock (8)

         4.5    Certificate of Designations of the Company's Series D Preferred
                Stock (10)

         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 (3)

         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. (3)

         10.6   Agreement dated November 17, 1998 between the Company and
                Automated Specialties Enterprises, Inc. (4)

         10.7   Agreement dated November 17, 1998 between the Company and
                Metropolitan Health Services, Inc. (4)

         10.8   Amendment to Employment Agreement dated April 1, 1999 between
                the Company and Rod A. Shipman (5)

                                      -22-

<PAGE>

         10.9   Amendment to Consulting Agreement dated April 1, 1999 between
                the Company and CTM Group, Inc. (5)

         10.10  Letter Agreement between the Company and Leslie J. Kessler dated
                May 18, 1999 (6)

         10.11  Amended and Restated Operating Agreement for Med Enclosures LLC
                (7)

         10.12  Royalty Agreement dated July 28, 2000 between Med Enclosures LLC
                and Rod A. Shipman (7)

         10.13  Royalty Agreement dated July 28, 2000 between Med Enclosures LLC
                and CTM Group, Inc. (7)

         10.14  Amendment No. 1 dated July 13, 2001 to Royalty Agreement between
                Med Enclosure LLC and Rod A. Shipman (8)

         10.15  Amendment No. 1 dated July 13, 2001 to Royalty Agreement between
                Med Enclosure LLC and CTM Group, Inc. (8)

         10.16  Product Development Services Agreement between Biomed Research,
                Inc. and Med Enclosure LLC (9)

         10.17  Membership Interest Purchase Agreement dated September 30, 2002
                between Gene Myers Enterprises, Inc. and the Company (10)

         10.18  Amendment No. 2 to Royalty Agreement dated October 29, 2002
                between Med Enclosure, LLC and CTM Group, Inc. (10)

         10.19  Amendment No. 2 to Royalty Agreement dated October 29, 2002
                between Med Enclosure, LLC and Rod A. Shipman (10)

         10.20  Royalty Agreement dated October 29, 2002 between MED Close Corp.
                and CTM Group, Inc. (10)

         10.21  Royalty Agreement dated October 29, 2002 between MED Close Corp.
                and Rod A. Shipman (10)

         10.22  Agreement dated October 29, 2002 between Med Close Corp. and Med
                Enclosure LLC (10)

         10.23  Amendment No. 2 dated January 1, 2003 to Employment Agreement
                dated April 23, 1998 between the Company and Rod A. Shipman (11)

         10.24  Amendment No. 2 dated January 1, 2003 to Consulting Agreement
                dated April 23, 1998 between the Company and CTM Group, Inc.
                (11)

         10.25  Amendment No. 3 dated October 15, 2004 to Royalty Agreement
                between Med Enclosure, LLC and Rod A. Shipman (12)

         10.26  Amendment No. 3 dated October 15, 2004 to Royalty Agreement
                between Med Enclosure, LLC and CTM Group, Inc. (12)

         10.27  Membership Interest Purchase Agreement dated November 30, 2004
                between Gene Myers Enterprises, Inc. and the Company (13)

         10.28  Membership Interest Purchase Agreement dated January 31, 2005
                between Gene Myers Enterprises, Inc. and the Company (13)

         10.29  Amendment No. 3 dated May 31, 2005 to Employment Agreement dated
                April 23, 1998 between the Company and Rod A. Shipman (14)

                                      -23-

<PAGE>

         10.30  Amendment No. 3 dated May 31, 2005 to Consulting Agreement dated
                April 23, 1998 between the Company and CTM Group, Inc. (14)

         21.1   List of Subsidiaries (14)

         23.1   Consent of Independent Certified Public Accountants

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

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

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

_______________

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

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

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

(4)  Previously filed as part of the Company's annual report on Form 10-KSB for
     the year ended December 31, 1998 filed with the Securities and Exchange
     Commission on March 31, 1999.

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

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

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

(8)  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.

(9)  Previously filed as part of the Company's annual report on Form 10-KSB for
     the year ended December 31, 2001 filed with the Securities and Exchange
     Commission on April 1, 2002.

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

(11) Previously filed as part of the Company's annual report on Form 10-KSB for
     the year ended December 31, 2002.

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

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

(14) Previously filed as part of the Company's annual report on Form 10-K for
     the year ended December 31, 2005.

         (c)  FINANCIAL STATEMENT SCHEDULES

         None.

                                      -24-

<PAGE>

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has caused this Amendment No. 2 report to be signed on its behalf by
the undersigned, thereunto duly authorized.

                                        CPC OF AMERICA, INC.

Date:  May 9, 2006                      By: /s/ Rod A. Shipman
                                            -----------------------------------
                                            Rod A. Shipman, President and Chief
                                            Executive Officer



                                      -25-