U.S.
SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K








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




For the
fiscal year ended       December 31, 2008




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 as specified in its charter)





Nevada
            11-3320709(State
      or other jurisdiction of
              incorporation
      or organization)
            (I.R.S.
      Employer
              Identification
      No.)5348
      Vegas Drive, #89
              Las
      Vegas, Nevada
            89108(Address
      of principal executive offices)
            (Zip
      Code)





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




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





Title
      of each class
              to
      be so registered
            Name
      of each exchange on which
              each
      class is to be registeredNone
            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 [  ]





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





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





Large
      accelerated filer [  ]
            Accelerated
      filer  [X]Non-accelerated
      filer [  ]
            Smaller
      reporting company [  ]





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 common equity held by
non-affiliates of the registrant, computed by reference to the price at which
the common equity was last sold or the average bid and asked price of such
common equity, as of June 30, 2008 was approximately $51,331,233.





The
number of shares of the common stock outstanding as of March 5, 2009 was
9,325,436.





DOCUMENTS
INCORPORATED BY REFERENCE.





Portions
of the registrant’s definitive proxy statement to be filed with the Securities
and Exchange Commission (the “SEC”) pursuant to Regulation 14A in
connection  with the 2009 annual meeting of stockholders are
incorporated herein by reference into Part III of this report. Such
definitive proxy statement will be filed with the SEC not later than
120 days after December 31, 2008.
















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, and
CPCA2000, Inc., 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 known as "MedClose." As
of the date of this report, we have not commenced revenue producing operations.
Our operations to date have predominately consisted of the design and
development of our MedClose device and our counterpulsation units, and the
raising of capital.





In order
to meet our general working capital requirements and to fund the commercial
exploitation of the MedClose, in September 2007, we commenced a private
placement of our Series E Preferred Stock, pursuant to Rule 506 under the
Securities Act of 1933 ("1933 Act"). We are offering 1,666,667 shares of our
Series E Preferred Stock, at $6.00 per share. As of March 5, 2009, we have sold
546,703 shares of Series E Preferred Stock for the gross proceeds of $3,280,220
and issued an additional 6,667 shares in lieu of $40,000 salary to our chief
financial officer. The Series E Preferred Stock has no voting rights and has a
10% annual dividend payable in cash or common stock at our option. Each Series E
Preferred share was convertible into our common shares at a conversion price of
$6.00 per share until August 31, 2008, when the conversion price was adjusted to
the lower of 75% of the average last sale price of the common stock for the 30
trading days immediately preceding such date on any stock exchange or $4.50 per
share; provided that the conversion price could not be adjusted to an amount
below $3.92 per share.  At August 31, 2008, the conversion price
was deemed to be $4.50 per share. Subsequently, our board of directors approved
an amendment to the Series E Preferred Stock to set the conversion price at
$3.92 per share.  Each outstanding share of our preferred stock,
including our Series E Preferred Stock, is convertible into a number of shares
of our common stock equal to the private placement sale price of such preferred
share divided by the conversion price of such preferred share in effect at the
time of conversion.





The
shares of Series E Preferred Stock have not been, and will not be, registered
under the 1933 Act and may not be offered or sold in the United States absent
registration or an applicable exemption from the registration requirements. The
Series E preferred shares are being sold by our executive officers and the
proceeds of the offering are expected to be used for clinical trials, regulatory
compliance, manufacturing and marketing relating to the MedClose device, and
working capital.





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





At the
present time, we have no intention of commencing operations based on our
counterpulsation technologies, and we are no longer pursuing the potential sale
of CPCA 2000, Inc. While we believe that our counterpulsation technologies
continue to retain value, we do not believe we will be able to negotiate a sale
of CPCA 2000, Inc. or its counterpulsation technologies that will result in a
meaningful return to us or our shareholders until such time as the reimbursable
patient costs for counterpulsation treatments under the Medicare program are
significantly increased. We have historically charged to expense all research
and development costs and expenses associated with our counterpulsation
technologies. As of December 31, 2008, we had no assets on our consolidated
balance sheet relating to our counterpulsation products or technologies, other
than trademarks of less than $1,200.





-1-


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





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. We are currently engaged in the
development of the MedClose internal puncture closing delivery system device.
MedClose utilizes any approved biological or synthetic sealants  to
close puncture wounds following surgical procedures utilizing arterial puncture
access.





MedClose
is in the development stage and has not been approved for sale in the United
States or any foreign jurisdiction. We are currently pursuing the required
regulatory approvals for the sale and distribution of the MedClose in the United
States and the European Union.  We believe that we may obtain
regulatory approval in the EU as early as the first quarter of 2010. We do not
expect to obtain regulatory approval in the United States until late 2010 or
early 2011.





Internal
Puncture Closure Device: "Medclose"





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





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





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





-2-


On
November 30, 2007, we submitted to the FDA an investigational device exemption,
or IDE, application to clinically investigate the MedClose device in the U.S.
Absent an effective exemption from the IDE regulations or a finding that the
device is a non-significant, low risk device, compliance with the FDA’s IDE
regulations is required before a medical device product can proceed to the last
phase of the FDA regulatory process, human testing of the device.  In
December 2007, the FDA responded to our IDE application with a disapproval
letter. We have since filed three IDE supplements to address deficiencies cited
by the FDA and the third of these was submitted on September 5,
2008.  In October 2008, the FDA responded to our September 2008 IDE
supplement with a disapproval letter citing two remaining deficiencies, both of
which related to the third party biological sealant currently used in the
application of the MedClose device.





We are in
the process of responding to the FDA’s comment letter and hope to resolve the
two remaining deficiencies relating to the third party biological sealant,
however we are dependent on the participation of the third party manufacturer of
the sealant in responding to the FDA’s remaining concerns and to date we have
been unable to obtain the third party manufacturer’s cooperation. In the
meantime, we are actively pursuing our acquisition or development of our own
proprietary sealant.  In March 2009, we entered into a product
development agreement with Dr. Olex Hnojewyj, a holder of 13 patents in the
field of vascular closure and other medical devices, pursuant to which Dr.
Hnojewyj has been retained by us to develop a synthetic sealant on our behalf
suitable for utilization with the MedClose device.





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





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





We expect
to commence revenue producing operations subject to our receipt of US or foreign
regulatory approvals of MedClose.  As of the date of this report, we
believe that we are likely to receive foreign regulatory approval of the
MedClose device sooner than US approval, and we are currently focusing our
development efforts on the approval of the MedClose device in the European
Union.  Regulatory approval of the MedClose in the EU is not expected
to occur until the first quarter of  2010 at the
earliest.





Marketing
and Distribution





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





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


-3-





Government
Regulation and Supervision





United
States





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





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





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





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


-4-







International




The
European Union has adopted rules which require that medical products receive the
right to affix the CE mark, an international symbol of adherence to quality
assurance standards and compliance with applicable European medical device
directives. As part of the CE mark compliance, manufacturers are required to
comply with the European quality systems standards. We have recently commenced
the process for applying for the CE mark approval for our MedClose device and
certification of our quality system.  We believe that we may obtain
regulatory approval in the EU as early as the first quarter of
2010.





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





Competition





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





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





Patents
and Trademarks





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





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


-5-





Research
and Development





Since
inception through December 31, 2008, our research and development expenses have
amounted to approximately $21,626,034, including $1,986,790, $1,628,203 and
$1,600,818 spent on research and development in 2008, 2007 and 2006,
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 two persons consisting of our chief executive
officer and chief financial officer. We contract with various consultants and
professionals to provide services to us including engineering, software,
testing, regulatory, quality control, quality certifications, commercial
applications/approvals, product development, medical and clinical affairs,
clinical trials, clinical research, data management, data analysis, and
statistical analysis  on a project by project basis.





Financial
Information About Geographic Area





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





Available
Information





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





Executive
Officers





Our
executive officers as of March 5, 2009 are as follows:





Name
            
            Age
            
            PositionRod
      A. Shipman
            
            58
            
            President,
      Chief Executive Officer and SecretaryMarcia
      J. Hein
            
            50
            
            Chief
      Financial Officer and Treasurer





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





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





ITEM
1A.  RISK FACTORS.





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





-6-


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





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





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





We will require additional capital in
the future in order to further develop or market our products, but we do not
have any commitments to obtain such capital and we cannot assure you that we
will be able to obtain adequate capital as and when required. As of
December 31, 2008, we had a working capital deficit of ($1,565,026), which
includes accrued dividends of $2,715,584 payable on our outstanding shares of
Series C, Series D and Series E preferred stock as of such date. In
September 2007, we commenced a private placement of our Series E Preferred
Stock, and since December 31, 2007, we have sold 546,703 shares of Series E
Preferred shares for the gross proceeds of $3,310,220. We believe that we will
require a minimum of $2.5 million of additional  working capital in
order to fund our proposed operations over the 12 months following the date of
this report, assuming we do not receive requests for a substantial amount of
dividend payments in cash. In the event we receive substantial requests for
dividend payments in cash or we encounter a material amount of unexpected
expenses, we may require in excess of $2.5 million additional capital over the
next 12 months.  We will seek to obtain additional 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 such
working capital. Consequently, there can be no assurance we will be able to
access capital as and when needed or, if so, that the terms of any available
financing will be subject to commercially reasonable terms.





The
report of our independent registered public accounting firm for the fiscal year
ended December 31, 2008 states that due to our working capital deficiency at
December 31, 2008 there is a substantial doubt about our ability to continue as
a going concern.





We have issued over time multiple
series of preferred stock, which as of December 31, 2008  have accrued
dividends in the aggregate amount of $2,715,584.Our board of
directors has the authority to issue up to 5,000,000 shares of preferred stock
and to determine the price, rights, preferences and privileges of those shares
without any further vote or action by our stockholders.  As of
December 31, 2008, we had issued five series of preferred shares (Series A
through E), of which all of the Series A and Series B shares had been converted
into common shares as of such date and 288,575 shares of Series C Preferred
Stock, 624,283 of Series D Preferred Stock and 551,703 of Series E Preferred
Stock were issued and outstanding as of such date.





-7-


As of
December 31, 2008, our outstanding shares of preferred stock had accrued
dividends of $2,715,584. Our Series C and Series D preferred stock both have a
5% annual dividend payable in cash or shares of our common stock, at the option
of the holder. Our Series E preferred stock has a 10% annual dividend payable in
cash or shares of our common stock, at the option of our company. Dividends on
our outstanding shares of preferred stock are only payable at the time those
shares are converted into shares of our common stock. To date, all dividends to
the  holders of our Series C and D preferred shares have been paid in
common shares.  However, there can be no assurance that our Series C
and D preferred share holders will continue to elect to receive dividends in
common shares instead of cash. As of December 31, 2008, we had cash and cash
equivalents of $1,480,506 and a working capital deficit of
($1,565,026).  In the event the holders of a significant number of our
Series C and D preferred shares convert their preferred shares and in doing so
elect to take their dividends in cash, our working capital will be materially
adversely affected.





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





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





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





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





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





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





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





-8-


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





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





The market for our stock is limited
and may not provide investors with either liquidity or a market based valuation
of our common stock. Our common stock is traded on the OTC Bulletin Board
market under the symbol "CPCF.OB". As of March 5, 2009, the last reported sale
price of our common stock on the OTCBB was $2.41 per share. However, we consider
our common stock to be "thinly traded" and any last reported sale prices may not
be a true market-based valuation of the common stock. Also, the present volume
of trading in our common stock may not provide investors sufficient liquidity in
the event they wish to sell their common shares. There can be no assurance that
an active market for our common stock will develop. In addition, the stock
market in general, and early stage public companies in particular, have
experienced extreme price and volume fluctuations that have often been unrelated
or disproportionate to the operating performance of such companies. If we are
unable to develop a market for our common shares, you may not be able to sell
your common shares at prices you consider to be fair or at times that are
convenient for you, or at all.





We will be subject to risks of
product safety and product liability in the event of our use of a biologic
sealant. Currently, our MedClose device utilizes a biologic sealant derived
from human plasma.  Blood based products carry the risk of
transmitting infectious diseases, including, but not limited to, hepatitis, HIV
and Creutzfeldt-Jakob disease. The sealant utilized by our MedClose device is
manufactured by a leading international healthcare company, and has been
approved by the FDA. The FDA has reviewed safety data for the third party
manufacturer sealant and has issued a biologic products license to the
manufacturer which permits the safe use of this product for contact with
blood.  The sealant continues to be made available for commercial
distribution with no information to suggest that risks relating to viruses,
bacteria or prions are likely. Nevertheless, the risk that screening and testing
processes might fail, or that new pathogens may be undetected by them, cannot be
completely eliminated. There is currently no test to detect the pathogen
responsible for Creutzfeldt-Jakob disease. If patients are infected by known or
unknown pathogens, claims may exceed insurance coverage and materially and
adversely impact our financial condition. We are currently pursuing the
development of a proprietary synthetic sealant, however, there can be no
assurance that we will be successful in this endeavor.





-9-


We have issued over time multiple
series of preferred stock, each of which has rights senior to our common stock
including the right to be paid approximately $14.3 million of liquidation
preferences.Our board of directors
has the authority to issue up to 5,000,000 shares of preferred stock and to
determine the price, rights, preferences and privileges of those shares without
any further vote or action by our stockholders.  As of December 31,
2008, we had issued five series of preferred shares (Series A through E), of
which all of the Series A and Series B shares had been converted into common
shares as of such date and 288,575 shares of Series C Preferred Stock, 624,283
of Series D Preferred Stock and 551,703 of Series E Preferred Stock were issued
and outstanding as of such date. In the event of the liquidation, dissolution or
winding up of our corporation, each holder of our preferred shares shall be
paid, prior to any payments to the holders of our common stock, a liquidation
preference, plus all accrued and unpaid dividends.  The Series C,
Series D and Series E preferred shares are to be paid a liquidation preference
of $8.90 per share, $9.15 per share and $6.00 per share, respectively. The
aggregate amount of liquidation preferences, plus accrued dividends, as of
December 31, 2008 was $14,306,309. Any additional preferred stock issued by our
board of directors may contain similar liquidation preferences and other rights
and preferences adverse to the voting power and other rights of the holders of
common stock.





We have not held annual meetings of
stockholders and, as a result, our stockholders have had no participation in the
election of our directors. Article II, Section 2 of our corporate bylaws
requires our board of directors to hold an annual meeting of stockholders at
which, among other things, the holders of our voting securities elect a slate of
directors to hold office for a designated term. However, we have not held an
annual meeting of stockholders in the history of our corporation, and from the
inception of our corporation to date all directors have been appointed to serve
by way of the board of directors' authority, set forth in Article III, Section 5
of our bylaws, to appoint members to vacancies on the board. While we are not
subject to any statutory penalties or fines for failure to hold an annual
meetings of stockholders, our decision to not hold annual meetings of
stockholders has effectively disenfranchised the holders of our voting
securities. We intend to hold an annual meeting of stockholders in the spring or
summer of 2009 at which the holders of our voting securities will be asked to
approve a slate of nominees to serve on our board of directors.





ITEM
1B.  UNRESOLVED STAFF COMMENTS.





During
the 180 days preceding December 31, 2008, we received comments from the SEC’s
Division of Corporation Finance on our previously filed annual report on Form
10-K for the fiscal year ended December 31, 2007 and quarterly reports on Form
10-Q for the periods ended March 31, 2008, June 30, 2008 and September 30, 2008,
that as of the date of this report are still unresolved, relating
to:




·
            Our
      policies with regard to the review of related party
      transactions;


·
            Our
      accounting for certain beneficial conversion features on our outstanding
      preferred shares in accordance with EITF 98-5 and
  00-27;


·
            The
      terms for payment of dividends on our outstanding preferred shares;
      and


·
            Our
      prior disclosure regarding the appointment of a member to our board of
      directors.





We expect
to resolve all outstanding comments in a timely fashion.  Also, we
have considered the SEC’s comments in preparing this report and believe that the
disclosure contained herein adequately responds to all outstanding comments of
the staff.





ITEM
2.  DESCRIPTION OF PROPERTY.





Our
executive offices are located in Las Vegas, Nevada and we also maintain
warehouse space in Sarasota, Florida. Both facilities are leased by us on a
month to month basis.





-10-


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, 2008.





-11-


PART
II





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





Market
Information





Our
common stock is listed on the OTC Bulletin Board under the symbol "CPCF.OB" Set
forth below are high and low closing prices for our common stock for each
quarter during the two fiscal years ended December 31, 2008. 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
            LowMarch
      31, 2007
            $24.50
            $15.25June
      30, 2007
            $19.20
            $15.00September
      30, 2007
            $17.00
            $13.00December
      31, 2007
            $13.00
            $ 5.15March
      31, 2008
            $ 8.65
            $ 4.70June
      30, 2008
            $ 9.65
            $ 7.25September
      30, 2008
            $ 8.45
            $ 5.55December
      31, 2008
            $ 6.00
            $ 2.15





Holders





As of
March 5, 2009, there were 238 record holders of our common stock.





Dividends





We have
not paid any cash dividends on our common stock since our inception and do not
contemplate paying dividends in the foreseeable future. It is anticipated that
earnings, if any, will be retained for the operation of our business. Pursuant
to our certificates of designations, holders of shares of our Series C preferred
stock and Series D preferred stock are entitled to dividends at a rate of
5% per annum, payable at the option of the holders, in either cash or shares of
common stock. In addition, the holders of our Series E preferred stock are
entitled to dividends at the rate of 10% per annum, payable at our option, in
cash or common stock. Dividends on preferred stock are only payable at the time
the preferred shares are converted into shares of common stock. During 2008, we
paid no cash dividends on the shares of our preferred stock.





-12-


Securities
Authorized for Issuance Under Equity Compensation Plans





Equity
Compensation Plans





The
following table sets forth certain information as of December 31, 2008
concerning our equity compensation plans:





Plan
      Category
            
            Number
      of Common
              Shares
      to Be Issued
              Upon
      Exercise of
              Outstanding
      Options
            
            Weighted-Average
              Exercise
      Price of
              Outstanding
      Options
            
            Number
      of Common
              Shares
      Remaining
              Available
      for IssuanceEquity
      compensation plans approved by shareholders
            
            625,000
            
            $21.53
            
            2,560,534Equity
      compensation plans not approved by shareholders (1)
            
            3,152,505
            
            $7.90
            
            N/A





(1)
Represents shares of common stock issuable to Rod Shipman and CTM Group, Inc.
pursuant to option agreements entered into in April 2008. The options vest
immediately and expire on April 24, 2013.








Sales
of Unregistered Securities





During
the fiscal year ended December 31, 2008, we sold 546,703 shares of Series E
Preferred Stock to 39 accredited investors for the gross proceeds of $3,280,220.
In addition, we issued 5,000 shares of Series E Preferred Stock to our chief
financial officer in lieu of $30,000 of salary. The offer and sale of our Series
E Preferred Stock is being made pursuant to Section 4(2) of the Securities Act
of 1933, as amended (“1933 Act”) and Rule 506 thereunder.  All sales
are being made to “accredited investors, as defined under Rule 501(a) under the
1933 Act.  The Series E preferred shares are being sold by our
executive officers and there is no underwriter involved in the
issuance.  The shares of Series E Preferred Stock have not been, and
will not be, registered under the 1933 Act and may not be offered or sold in the
United States absent registration or an applicable exemption from the
registration requirements.





In
addition, during the fiscal year ended December 31, 2008, we issued 8,045 shares
of common stock upon the conversion 4,826 shares of our Series D Preferred
Stock, and related accrued dividends, by the holders of such preferred shares.
The shares of common stock issued upon the conversion of our Series D Preferred
Stock were issued pursuant to Section 4(2) of the 1933 Act and Rule 506
thereunder.





-13-


Stock
Performance





The
following graph shows a comparison of cumulative total returns for our common
stock, the NASDAQ Stock Market Index (U.S.) and the NASDAQ Medical Industry
Index (Medical Devices, Instruments and Supplies), over the five year period
ended December 31, 2008. Although our common stock does not trade on the
NASDAQ, we consider the two NASDAQ indexes to provide the most meaningful
comparative information. The graph assumes the investment of $100 in our common
stock and each index on December 31, 2003 and the reinvestment of dividends, if
any. We have not paid or declared any cash dividends on our common stock and do
not anticipate paying any cash dividends in the foreseeable future. Prices and
shareholder returns over the indicated periods should not be considered
indicative of future stock prices or shareholder returns.




Comparison
Of Cumulative Total Return For


The
Five Year Period Ended December 31, 2008

















-14-


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:





2008
            
            
            2007
            
            
            2006
            
            
            2005
            
            
            2004Statement
      of Operations Data:Revenue
            
            $
            --
            
            
            $
            --
            
            
            $
            --
            
            
            $
            --
            
            
            $
            --Research
      and development
            
            
            1,986,790
            
            
            
            1,628,203
            
            
            
            1,600,818
            
            
            
            1,266,093
            
            
            
            6,699,714General
      and administrative
            
            
            9,168,935
            
            
            
            902,094
            
            
            
            1,372,079
            
            
            
            882,292
            
            
            
            1,689,369Operating
      loss
            
            
            (11,155,725
            )
            
            
            (2,530,297
            )
            
            
            (2,972,897
            )
            
            
            (2,148,385
            )
            
            
            (8,389,083
            )Interest
      expense
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --Interest
      income
            
            
            24,034
            
            
            
            2,496
            
            
            
            44,297
            
            
            
            59,087
            
            
            
            74,828Increase
      in cash surrender value
              of
      insurance
            
            
            --
            
            
            
            92,027
            
            
            
            116,745
            
            
            
            463,782
            
            
            
            --Net
      loss
            
            
            (11,131,691
            )
            
            
            (2,435,774
            )
            
            
            (2,811,855
            )
            
            
            (1,625,516
            )
            
            
            (8,314,255
            )Basic
      and diluted net loss per share
            
            
            (1.54
            )
            
            
            (0.33
            )
            
            
            (0.40
            )
            
            
            (0.29
            )
            
            
            (1.31
            )Basic
      and diluted weighted average
              number
      of common shares
              outstanding
            
            
            9,244,602
            
            
            
            8,643,140
            
            
            
            8,143,130
            
            
            
            7,323,397
            
            
            
            6,723,101Balance
      Sheet Data:Total
      assets
            
            
            1,870,193
            
            
            
            1,382,977
            
            
            
            1,742,164
            
            
            
            2,842,770
            
            
            
            3,494,578Total
      liabilities
            
            
            3,157,948
            
            
            
            2,872,970
            
            
            
            2,000,816
            
            
            
            1,421,689
            
            
            
            995,342Total
      shareholders’ equity (deficit)
            
            
            (1,287,755
            )
            
            
            (1,489,993
            )
            
            
            (258,652
            )
            
            
            1,421,081
            
            
            
            2,499,236








-15-


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





General





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





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





At the
present time, we have no intention of commencing operations based on our
counterpulsation technologies, and we are no longer pursuing the potential sale
of CPCA 2000, Inc. While we believe that our counterpulsation technologies
continue to retain value, we do not believe we will be able to negotiate a sale
of CPCA 2000, Inc. or its counterpulsation technologies that will result in a
meaningful return to us or our shareholders until such time as the reimbursable
patient costs for counterpulsation treatments under the Medicare program are
significantly increased. We have historically charged to expense all research
and development costs and expenses associated with our counterpulsation
technologies. As of December 31, 2008, we had no assets on our consolidated
balance sheet relating to our counterpulsation products or technologies, other
than trademarks of less than $1,200.





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





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





We expect
to commence revenue producing operations subject to US or foreign regulatory
approval of the MedClose device. We do not expect to purchase or sell
significant plant or equipment during 2009, nor do we expect a significant
change in the number of our employees during the year.





-16-


In order
to meet our general working capital requirements and to fund the commercial
exploitation of the MedClose, in September 2007, we commenced a private
placement of our Series E Preferred Stock. We are offering 1,666,667 shares of
our Series E Preferred Stock, at $6.00 per share. As of March 5, 2009, we
have sold 546,703 shares of Series E Preferred shares for the gross proceeds of
$3,280,220 and issued an additional 6,667 shares in lieu of $40,000 of salary to
our chief financial officer. The Series E Preferred stock has no voting rights
and has a 10% annual dividend payable in cash or common stock at our option.
Each Series E Preferred share was convertible into our common shares at a
conversion price of $6.00 per share until August 31, 2008, when the conversion
price was adjusted to the lower of 75% of the average last sale price of the
common stock for the 30 trading days immediately preceding such date on any
stock exchange or $4.50 per share; provided that the conversion price could not
be adjusted to an amount below $3.92 per share. At August 31, 2008, the
conversion price was deemed to be $4.50 per share.  Subsequently, our
board of directors approved an amendment to the Series E Preferred Stock to
set the conversion price at $3.92 per share.The shares of
Series E Preferred Stock have not been, and will not be, registered under the
1933 Act and may not be offered or sold in the United States absent registration
or an applicable exemption from the registration requirements. The Series E
preferred shares are being sold by our executive officers and the proceeds of
the offering are expected to be used for clinical trials, regulatory compliance,
manufacturing and marketing relating to the MedClose device, and working
capital.





Results
of Operations





During
the 2008 fiscal year, we incurred $1,986,790 of research and development
expenses compared to $1,628,203 during fiscal 2007 and $1,600,818 during fiscal
2006. Research and development expenses relate to our ongoing development and
testing of our internal puncture closure device and technique known as
"MedClose." Our research and development costs were higher in 2008 than in 2007
or 2006 due to our movement toward obtaining regulatory approval in Europe. We
were also able to increase research and development expenses in 2008 due to the
additional capital we raised from the Series E Preferred share offering
described above. We expect our research and development costs to increase as we
get further into human trials and proceed towards the submission of applications
for CE Mark/European commercial approval and eventually a FDA pre-market
approval thereafter.





During
fiscal 2008, we incurred $9,168,935 of general and administrative expenses,
compared to administrative expenses of $902,094 in fiscal 2007 and $1,372,079,
in fiscal 2006. General and administrative expenses in fiscal 2008 increased by
$8,266,841 over fiscal 2007. The increase consisted primarily of increases of
$7,689,553 in stock option expenses, $215,981 in legal fees as we move toward
obtaining approvals for the MedClose device in Europe, $297,515 in professional
fees as a result of hiring public relations consultants to help us raise
awareness of CPC of America in general and the MedClose device in particular and
$60,000 in officers’ salaries as a result of hiring a chief financial officer in
July 2008.





Financial
Condition





As of
December 31, 2008, we had a working capital deficit of ($1,565,026), which
includes accrued dividends of $2,715,584 payable on our outstanding shares of
Series C, Series D and Series E preferred stock as of such date. Our Series C
and Series D preferred stock both have a 5% annual dividend payable in cash or
shares of our common stock, at the option of the holder. Those dividends are
convertible into our common shares at the rate of $3.57 per share in the case of
the Series C preferred stock and $6.86 per share in the case of the Series D
preferred stock. Our Series E preferred stock has a 10% annual dividend payable
in cash or shares of our common stock, at the option of our company. The
dividends on Series E preferred stock are convertible into our common shares at
the rate of $3.92 per share.  Dividends on our outstanding shares of
preferred stock are only payable at the time those shares are converted into
shares of our common stock. To date, all dividends to the holders of our Series
C and D preferred shares have been paid in common shares.  However,
there can be no assurance that our Series C and D preferred share holders will
continue to elect to receive dividends in common shares instead of
cash.





We
believe that we will require a minimum of $2.5 million of additional working
capital in order to fund our proposed operations over the 12 months following
the date of this report, assuming we do not receive requests for a substantial
amount of dividend payments in cash. In the event we receive substantial
requests for dividend payments in cash or we encounter a material amount of
unexpected expenses, we may require in excess of $2.5 million additional capital
over the next 12 months. We will seek to obtain additional 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 such
working capital. Consequently, there can be no assurance we will be able to
access to capital as and when needed or, if so, that the terms of any available
financing will be subject to commercially reasonable terms.





-17-


The
report of our independent registered public accounting firm for the fiscal year
ended December 31, 2008 states that due to our working capital deficiency at
December 31, 2008 there is a substantial doubt about our ability to continue as
a going concern.





As noted
above, we are currently analyzing our options for moving forward with the
commercial exploitation of the MedClose, including licensing or sale of the
product and our manufacturing, marketing and sale of the product directly. If we
pursue the direct manufacturing and marketing of the MedClose product, we will,
in all likelihood require up to $40 million of additional capital in order to
(i) complete clinical trials and regulatory approvals in Europe, North America
and other designated foreign markets; (ii) commence manufacturing of the device;
and (iii) commence marketing and sales of the device, including the development
of a internal infrastructure necessary to support manufacturing and
marketing.





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





Off-Balance
Sheet Arrangements





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








ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





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.





-18-


ITEM
8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





INDEX TO
FINANCIAL STATEMENTS





Report
      of Independent Registered Public Accounting Firm
            F-1Consolidated
      Balance Sheets at December 31, 2008 and 2007
            F-2Consolidated
      Statements of Operations for the three years ended December 31, 2008
      and cumulative from inception (April 11, 1996) to December 31,
      2008
            F-3Consolidated
      Statements of Shareholders' Equity (Deficit) from inception (April 11,
      1996) to December 31, 2008
            F-4Consolidated
      Statements of Cash Flows for the three years ended December 31,
      2008 and cumulative from inception (April 11, 1996) to December 31,
      2008
            F-10Notes
      to Consolidated Financial Statements
            F-12


















-19-







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,
2008 and 2007, 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, 2008 and for the period from inception (April 11,
1996) to December 31, 2008.  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.





The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern.  As discussed in Note 1
to the financial statements, the Company had a net capital deficiency at
December 31, 2008, which raises substantial doubt about its ability to continue
as a going concern.  Management’s plans in regard to these matters are
also included in Note 1.  The consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company as
of December 31, 2008 and 2007, and the results of its consolidated operations
and cash flows for each of the years in the three year period ended December 31,
2008 and for the period from inception (April 11, 1996) to December 31, 2008, in
conformity with accounting principles generally accepted in the United States of
America.





We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), CPC of America, Inc. and subsidiaries’ internal
control over financial reporting as of December 31, 2008, based on criteria
established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), and our report dated March 9,
2009 expressed an unqualified opinion.










/s/
CACCIAMATTA ACCOUNTANCY CORPORATION





Santa
Ana, California


March 9,
2009








F-1


CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)


Consolidated
Balance Sheets







December
      31,2008
              
              
              2007ASSETSCurrent
      assetsCash
      and equivalents
              
              $
              1,480,506
              
              
              $
              220,319Prepaid
      expenses
              
              
              112,416
              
              
              
              839,451Total
      current assets
              
              
              1,592,922
              
              
              
              1,059,770Patents,
      net of accumulated amortization of $281,333 in 2008 and $235,813 in
      2007
              
              
              276,167
              
              
              
              321,687Trademark,
      net of accumulated amortization of $5,128 in 2008 and $4,711 in
      2007
              
              
              1,104
              
              
              
              1,520TOTAL
      ASSETS
              
              $
              1,870,193
              
              
              $
              1,382,977LIABILITIES
      AND SHAREHOLDERS' DEFICITCurrent
      liabilitiesLoan
      from officer
              
              $
              -
              
              
              $
              289,448Accounts
      payable
              
              
              167,789
              
              
              
              23,000Accrued
      payroll and related taxes
              
              
              274,575
              
              
              
              471,390Accrued
      dividends payable
              
              
              2,715,584
              
              
              
              2,089,132Total
      current liabilities
              
              
              3,157,948
              
              
              
              2,872,970Commitments
      and contingencies
              
              
              -
              
              
              
              -Shareholders'
      deficitConvertible
      preferred stock, 5,000,000 shares authorized, $.001 par
    value,Series
      C - 288,575 shares issued and outstandingat
      December 31, 2008 and 2007, respectively
              
              
              288
              
              
              
              288Series
      D - 624,283 and 629,109 shares issued and outstandingat
      December 31, 2008 and 2007, respectively
              
              
              624
              
              
              
              629Series
      E - 551,703 and 0 shares issued and outstandingat
      December 31, 2008 and 2007, respectively
              
              
              552
              
              
              
              -Common
      stock, 20,000,000 shares authorized, $.0005 par value,9,286,694
      and 9,124,499 shares issued and outstanding atDecember
      31, 2008 and 2007, respectively
              
              
              4,643
              
              
              
              4,562Additional
      paid-in capital - preferred
              
              
              15,096,629
              
              
              
              10,008,612Additional
      paid-in capital - common
              
              
              29,144,025
              
              
              
              20,438,782Deficit
      accumulated during the development stage
              
              
              (45,534,516
              )
              
              
              (31,942,866
              )Total shareholders'
      deficit
              
              
              (1,287,755
              )
              
              
              (1,489,993
              )TOTAL LIABILITIES &
      SHAREHOLDERS' DEFICIT
              
              $
              1,870,193
              
              
              $
              1,382,977






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





F-2





CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)


Consolidated
Statements of Operations





Cumulative
                  from
      inception
                  (April 11,
      1996)
                  toYear ended December
      31
                
                
                December
      31,2008
                
                
                2007
                
                
                2006
                
                
                2008Costs
      and expenses:Research
      and development - related party
                
                $
                551,948
                
                
                $
                566,894
                
                
                $
                501,769
                
                
                $
                9,842,864Research
      and development - other
                
                
                1,434,842
                
                
                
                1,061,309
                
                
                
                1,099,049
                
                
                
                11,783,1701,986,790
                
                
                
                1,628,203
                
                
                
                1,600,818
                
                
                
                21,626,034General
      and administrative - related party
                
                
                152,269
                
                
                
                144,801
                
                
                
                137,823
                
                
                
                1,722,533General
      and administrative - other
                
                
                9,016,666
                
                
                
                757,293
                
                
                
                1,234,256
                
                
                
                16,507,3439,168,935
                
                
                
                902,094
                
                
                
                1,372,079
                
                
                
                18,229,876Operating
      loss
                
                
                (11,155,725
                )
                
                
                (2,530,297
                )
                
                
                (2,972,897
                )
                
                
                (39,855,910
                )Other
      income (expense):Interest
      expense
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (8,954
                )Interest
      income
                
                
                24,034
                
                
                
                2,496
                
                
                
                44,297
                
                
                
                330,092Increase
      in cash surrender value of insurance
                
                
                -
                
                
                
                92,027
                
                
                
                116,745
                
                
                
                790,91024,034
                
                
                
                94,523
                
                
                
                161,042
                
                
                
                1,112,048Net
      loss
                
                $
                (11,131,691
                )
                
                $
                (2,435,774
                )
                
                $
                (2,811,855
                )
                
                $
                (38,743,862
                )Loss
      per share calculation:Net
      loss
                
                $
                (11,131,691
                )
                
                $
                (2,435,774
                )
                
                $
                (2,811,855
                )Beneficial
      conversion feature
                
                
                (2,459,959
                )
                
                
                -
                
                
                
                -Preferred
      dividend
                
                
                (637,465
                )
                
                
                (434,044
                )
                
                
                (430,176
                )Numerator
                
                $
                (14,229,115
                )
                
                $
                (2,869,818
                )
                
                $
                (3,242,031
                )Basic
      and diluted weighted average numberof
      common shares outstanding - Denominator
                
                
                9,244,602
                
                
                
                8,643,140
                
                
                
                8,143,130Basic
      and diluted net loss per share
                
                $
                (1.54
                )
                
                $
                (0.33
                )
                
                $
                (0.40
                )Maximum
      number of common shares (not included in denominator of diluted loss per
      share calculation due to theiranti-dilutive
      nature) attributable to exercise/conversion of:Outstanding
      options
                
                
                3,777,505
                
                
                
                3,406,655
                
                
                
                4,028,206Preferred
      stock
                
                
                2,287,701
                
                
                
                1,558,534
                
                
                
                1,601,569





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





F-3




CPC
      OF AMERICA, INC. AND SUBSIDIARIES(A
      Development Stage Company)Consolidated Statements
      of Shareholders' Equity (Deficit)From
      inception (April 11, 1996) to December 31, 2008Preferred
      Stock
              
              
              Common
      Stock
              
              
              
              
              
              Additional
              
              
              Additional
              
              
              Deficit
                Accumulated
              
              
              TotalSeries
      A
              
              
              Series
      B
              
              
              
              
              
              
              
              
              Stock
              
              
              Paid-in
              
              
              Paid-in
              
              
              During
      the
              
              
              Shareholders'Numberof
      Shares
              
              
              Total
              
              
              Numberof
      Shares
              
              
              Total
              
              
              Numberof
      Shares
              
              
              Total
              
              
              OptionCosts
              
              
              Capital-
                Common
              
              
              Capital-
                Preferred
              
              
              Development
                Stage
              
              
              Equity(Deficit)Initial
      capitalization
              
              
              -
              
              
              $
              -
              
              
              
              -
              
              
              $
              -
              
              
              
              2,400,000
              
              
              $
              1,200
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              1,200Issuance
      of common stock for a note
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              300,000
              
              
              
              150
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              150Issuance
      of common stock for cash
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              100,000
              
              
              
              50
              
              
              
              -
              
              
              
              4,950
              
              
              
              -
              
              
              
              -
              
              
              
              5,000Issuance
      of common stock for services
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              764,000
              
              
              
              382
              
              
              
              -
              
              
              
              37,818
              
              
              
              -
              
              
              
              -
              
              
              
              38,200Net
      loss for 1996
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (59,079
              )
              
              
              (59,079
              )Balance,
      December 31, 1996
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              3,564,000
              
              
              
              1,782
              
              
              
              -
              
              
              
              42,768
              
              
              
              -
              
              
              
              (59,079
              )
              
              
              (14,529
              )Exercise
      of options
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              26,666
              
              
              
              13
              
              
              
              -
              
              
              
              29,987
              
              
              
              -
              
              
              
              -
              
              
              
              30,000Issuance
      of common stock for cashand
      conversion of note payable ($77,000)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              640,000
              
              
              
              320
              
              
              
              -
              
              
              
              927,680
              
              
              
              -
              
              
              
              -
              
              
              
              928,000Net
      loss for 1997
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (457,829
              )
              
              
              (457,829
              )Balance,
      December 31, 1997
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              4,230,666
              
              
              
              2,115
              
              
              
              -
              
              
              
              1,000,435
              
              
              
              -
              
              
              
              (516,908
              )
              
              
              485,642Exercise
      of options
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              57,000
              
              
              
              29
              
              
              
              -
              
              
              
              114,971
              
              
              
              -
              
              
              
              -
              
              
              
              115,000Issuance
      of common stock for cash
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              40,000
              
              
              
              20
              
              
              
              -
              
              
              
              57,980
              
              
              
              -
              
              
              
              -
              
              
              
              58,000Issuance
      of preferred stock for cash
              
              
              8,824
              
              
              
              9
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              74,991
              
              
              
              -
              
              
              
              75,000Valuation
      of beneficial conversionfeature
      on Series A Preferred
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              25,000
              
              
              
              (25,000
              )
              
              
              -Contribution
      of officer's salary
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              80,000
              
              
              
              -
              
              
              
              -
              
              
              
              80,000Net
      loss for 1998
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (640,580
              )
              
              
              (640,580
              )Balance,
      December 31, 1998
              
              
              8,824
              
              
              
              9
              
              
              
              -
              
              
              
              -
              
              
              
              4,327,666
              
              
              
              2,164
              
              
              
              -
              
              
              
              1,253,386
              
              
              
              99,991
              
              
              
              (1,182,488
              )
              
              
              173,062Exercise
      of warrants
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              209,490
              
              
              
              105
              
              
              
              -
              
              
              
              366,503
              
              
              
              -
              
              
              
              -
              
              
              
              366,608Exercise
      of options
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              146,904
              
              
              
              73
              
              
              
              -
              
              
              
              177,289
              
              
              
              -
              
              
              
              -
              
              
              
              177,362Issuance
      of preferred stock for cash
              
              
              70,469
              
              
              
              70
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              598,930
              
              
              
              -
              
              
              
              599,000Preferred
      stock dividend
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (25,725
              )
              
              
              -
              
              
              
              (25,725
              )Valuation
      of beneficial conversionfeature
      on Series A Preferred
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              199,486
              
              
              
              (199,486
              )
              
              
              -Repurchase
      of common shares
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (560,000
              )
              
              
              (280
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              (280
              )Net
      loss for 1999
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,329,328
              )
              
              
              (1,329,328
              )Balance,
      December 31, 1999
              
              
              79,293
              
              
              $
              79
              
              
              
              -
              
              
              $
              -
              
              
              
              4,124,060
              
              
              $
              2,062
              
              
              $
              -
              
              
              $
              1,797,178
              
              
              $
              872,682
              
              
              $
              (2,711,302
              )
              
              $
              (39,301
              )


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


F-4




CPC
      OF AMERICA, INC. AND SUBSIDIARIES(A
      Development Stage Company)Consolidated Statements
      of Shareholders' Equity (Deficit)From
      inception (April 11, 1996) to December 31, 2008Preferred
      Stock
              
              
              Common
      Stock
              
              
              
              
              
              
              
              
              
              
              
              DeficitSeries
      A
              
              
              Series
      B
              
              
              Series
      C
              
              
              Series
      D
              
              
              
              
              
              
              
              
              
              
              
              Additional
              
              
              Additional
              
              
              Accumulated
              
              
              TotalNumber
              
              
              
              
              
              Number
              
              
              
              
              
              Number
              
              
              
              
              
              Number
              
              
              
              
              
              Number
              
              
              
              
              
              Stock
              
              
              Paid-in
              
              
              Paid-in
              
              
              During
      the
              
              
              Shareholders'of
      Shares
              
              
              Total
              
              
              of
      Shares
              
              
              Total
              
              
              of
      Shares
              
              
              Total
              
              
              of
      Shares
              
              
              Total
              
              
              of
                Shares
              
              
              Total
              
              
              Option
                Costs
              
              
              Captial-
                Common
              
              
              Captial-
                Preferred
              
              
              Development
                Stage
              
              
              Equity
      (Deficit)Balance,
      December 31, 1999
              
              
              79,293
              
              
              $
              79
              
              
              
              -
              
              
              $
              -
              
              
              
              -
              
              
              $
              -
              
              
              
              -
              
              
              $
              -
              
              
              
              4,124,060
              
              
              $
              2,062
              
              
              $
              -
              
              
              $
              1,797,178
              
              
              $
              872,682
              
              
              $
              (2,711,302
              )
              
              $
              (39,301
              )Exercise
      of warrants
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              365,500
              
              
              
              183
              
              
              
              -
              
              
              
              639,442
              
              
              
              -
              
              
              
              -
              
              
              
              639,625Exercise
      of options
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              223,832
              
              
              
              113
              
              
              
              -
              
              
              
              258,528
              
              
              
              -
              
              
              
              -
              
              
              
              258,641Issuance
      of preferred stock for cash
              
              
              -
              
              
              
              -
              
              
              
              71,429
              
              
              
              71
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              624,929
              
              
              
              -
              
              
              
              625,000Valuation
      of beneficial conversionfeature
      on Series B Preferred
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              208,125
              
              
              
              (208,125
              )
              
              
              -Conversion
      of Series A Preferredinto
      common shares
              
              
              (70,469
              )
              
              
              (70
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              131,996
              
              
              
              66
              
              
              
              -
              
              
              
              624,659
              
              
              
              (598,930
              )
              
              
              -
              
              
              
              25,725Beneficial
      conversion feature onSeries  A
      Preferred shares
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              199,486
              
              
              
              (199,486
              )
              
              
              -
              
              
              
              -Settlement
      of lawsuit
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              33,333
              
              
              
              17
              
              
              
              -
              
              
              
              199,983
              
              
              
              -
              
              
              
              -
              
              
              
              200,000Purchase
      of patent
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              47,042
              
              
              
              24
              
              
              
              -
              
              
              
              235,184
              
              
              
              -
              
              
              
              -
              
              
              
              235,208Stock
      option costs
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (280,000
              )
              
              
              280,000
              
              
              
              -
              
              
              
              -
              
              
              
              -Amortization
      of stock option costs
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              105,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              105,000Cancellation
      of common shares
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (89,000
              )
              
              
              (45
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (45
              )Net
      loss for 2000
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,749,444
              )
              
              
              (1,749,444
              )Balance,
      December 31, 2000
              
              
              8,824
              
              
              $
              9
              
              
              
              71,429
              
              
              $
              71
              
              
              
              -
              
              
              $
              -
              
              
              
              -
              
              
              $
              -
              
              
              
              4,836,763
              
              
              $
              2,420
              
              
              $
              (175,000
              )
              
              $
              4,234,460
              
              
              $
              907,320
              
              
              $
              (4,668,871
              )
              
              $
              300,409


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


F-5




CPC
      OF AMERICA, INC. AND SUBSIDIARIES(A
      Development Stage Company)Consolidated
      Statements of Shareholders' Equity (Deficit)From
      inception (April 11, 1996) to December 31, 2008Preferred
      Stock
                
                
                Common
      Stock
                
                
                
                
                
                
                
                
                
                
                
                DeficitSeries
      A
                
                
                Series
      B
                
                
                Series
      C
                
                
                Series
      D
                
                
                
                
                
                
                
                
                
                
                
                Additional
                
                
                Additional
                
                
                Accumulated
                
                
                TotalNumber
                
                
                
                
                
                Number
                
                
                
                
                
                Number
                
                
                
                
                
                Number
                
                
                
                
                
                Number
                
                
                
                
                
                Stock
                
                
                Paid-in
                
                
                Paid-in
                
                
                During
      the
                
                
                Shareholders'of
      Shares
                
                
                Total
                
                
                of
      Shares
                
                
                Total
                
                
                of
      Shares
                
                
                Total
                
                
                of
      Shares
                
                
                Total
                
                
                of
                  Shares
                
                
                Total
                
                
                Option
                  Costs
                
                
                Captial-
                  Common
                
                
                Captial-
                  Preferred
                
                
                Development
                  Stage
                
                
                Equity
      (Deficit)Balance,
      December 31, 2000
                
                
                8,824
                
                
                $
                9
                
                
                
                71,429
                
                
                $
                71
                
                
                
                -
                
                
                $
                -
                
                
                
                -
                
                
                $
                -
                
                
                
                4,836,763
                
                
                $
                2,420
                
                
                $
                (175,000
                )
                
                $
                4,234,460
                
                
                $
                907,320
                
                
                $
                (4,668,871
                )
                
                $
                300,409Exercise
      of options
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                360,394
                
                
                
                180
                
                
                
                -
                
                
                
                413,483
                
                
                
                -
                
                
                
                -
                
                
                
                413,663Issuance
      of common stock for services
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                100,000
                
                
                
                50
                
                
                
                -
                
                
                
                255,450
                
                
                
                -
                
                
                
                -
                
                
                
                255,500Issuance
      of preferred stock for cash
                
                
                -
                
                
                
                -
                
                
                
                113,715
                
                
                
                114
                
                
                
                95,123
                
                
                
                95
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,841,392
                
                
                
                -
                
                
                
                1,841,601Valuation
      of beneficial conversionfeature
      on Series B Preferred
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                331,636
                
                
                
                (331,636
                )
                
                
                -Valuation
      of beneficial conversionfeature
      on Series C Preferred
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                282,233
                
                
                
                (282,233
                )
                
                
                -Conversion
      of  preferredstock
      and accrued dividends into common shares
                
                
                (8,824
                )
                
                
                (9
                )
                
                
                (113,715
                )
                
                
                (114
                )
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                330,327
                
                
                
                165
                
                
                
                -
                
                
                
                1,081,316
                
                
                
                (1,069,887
                )
                
                
                
                
                
                
                11,471Preferred
      stock dividend
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (63,397
                )
                
                
                
                
                
                
                (63,397
                )Issuance
      of common stockoptions
      for services
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                20,000
                
                
                
                -
                
                
                
                -
                
                
                
                20,000Amortization
      of stock option costs
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                140,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                140,000Net
      loss for 2001
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,968,471
                )
                
                
                (1,968,471
                )Balance,
      December 31, 2001
                
                
                -
                
                
                $
                -
                
                
                
                71,429
                
                
                $
                71
                
                
                
                95,123
                
                
                $
                95
                
                
                
                -
                
                
                $
                -
                
                
                
                5,627,484
                
                
                $
                2,815
                
                
                $
                (35,000
                )
                
                $
                6,004,709
                
                
                $
                2,229,297
                
                
                $
                (7,251,211
                )
                
                $
                950,776
 The
accompanying notes are an integral part of these consolidated financial
statements.
 F-6
  CPC
      OF AMERICA, INC. AND SUBSIDIARIES(A
      Development Stage Company)Consolidated
      Statements of Shareholders' Equity (Deficit)From
      inception (April 11, 1996) to December 31, 2008Preferred
      Stock
                  
                  
                  Common
      Stock
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  DeficitSeries
      A
                  
                  
                  Series
      B
                  
                  
                  Series
      C
                  
                  
                  Series
      D
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  Additional
                  
                  
                  Additional
                  
                  
                  Accumulated
                  
                  
                  TotalNumber
                  
                  
                  
                  
                  
                  Number
                  
                  
                  
                  
                  
                  Number
                  
                  
                  
                  
                  
                  Number
                  
                  
                  
                  
                  
                  Number
                  
                  
                  
                  
                  
                  Stock
                  
                  
                  Paid-in
                  
                  
                  Paid-in
                  
                  
                  During
      the
                  
                  
                  Shareholders'of
      Shares
                  
                  
                  Total
                  
                  
                  of
      Shares
                  
                  
                  Total
                  
                  
                  of
      Shares
                  
                  
                  Total
                  
                  
                  of
      Shares
                  
                  
                  Total
                  
                  
                  of
                    Shares
                  
                  
                  Total
                  
                  
                  Option
                    Costs
                  
                  
                  Captial-
                    Common
                  
                  
                  Captial-
                    Preferred
                  
                  
                  Development
                    Stage
                  
                  
                  Equity
      (Deficit)Balance,
      December 31, 2001
                  
                  
                  -
                  
                  
                  $
                  -
                  
                  
                  
                  71,429
                  
                  
                  $
                  71
                  
                  
                  
                  95,123
                  
                  
                  $
                  95
                  
                  
                  
                  -
                  
                  
                  $
                  -
                  
                  
                  
                  5,627,484
                  
                  
                  $
                  2,815
                  
                  
                  $
                  (35,000
                  )
                  
                  $
                  6,004,709
                  
                  
                  $
                  2,229,297
                  
                  
                  $
                  (7,251,211
                  )
                  
                  $
                  950,776Exercise
      of options
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  282,480
                  
                  
                  
                  140
                  
                  
                  
                  -
                  
                  
                  
                  317,650
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  317,790Conversion
      of  preferredstock
      and accrued dividends into common shares
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (71,429
                  )
                  
                  
                  (71
                  )
                  
                  
                  (18,576
                  )
                  
                  
                  (19
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  241,627
                  
                  
                  
                  120
                  
                  
                  
                  -
                  
                  
                  
                  790,205
                  
                  
                  
                  (783,495
                  )
                  
                  
                  -
                  
                  
                  
                  6,740Valuation
      of beneficialconversion
      feature on Series C & D Preferred
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,122,521
                  
                  
                  
                  (1,122,521
                  )
                  
                  
                  -Cancellations
      of shares
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (535,933
                  )
                  
                  
                  (268
                  )
                  
                  
                  -
                  
                  
                  
                  (199,732
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (200,000
                  )Issuance
      of preferred stock for cash
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  264,657
                  
                  
                  
                  265
                  
                  
                  
                  110,627
                  
                  
                  
                  111
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  3,367,233
                  
                  
                  
                  -
                  
                  
                  
                  3,367,609Amortization
      of stock option costs
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  35,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  35,000Preferred
      stock dividend
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (122,861
                  )
                  
                  
                  
                  
                  
                  
                  (122,861
                  )Purchase
      of Med Enclosure Stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  10,000
                  
                  
                  
                  5
                  
                  
                  
                  -
                  
                  
                  
                  53,495
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  53,500Net
      loss for 2002
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (3,460,574
                  )
                  
                  
                  (3,460,574
                  )Balance,December
      31, 2002
                  
                  
                  -
                  
                  
                  $
                  -
                  
                  
                  
                  -
                  
                  
                  $
                  -
                  
                  
                  
                  341,204
                  
                  
                  $
                  341
                  
                  
                  
                  110,627
                  
                  
                  $
                  111
                  
                  
                  
                  5,625,658
                  
                  
                  $
                  2,812
                  
                  
                  $
                  -
                  
                  
                  $
                  6,966,327
                  
                  
                  $
                  5,812,695
                  
                  
                  $
                  (11,834,306
                  )
                  
                  $
                  947,980
 The
accompanying notes are an integral part of these consolidated financial
statements.
 F-7


CPC
      OF AMERICA, INC. AND SUBSIDIARIES(A
      Development Stage Company)Consolidated
      Statements of Shareholders' Equity (Deficit)From
      inception (April 11, 1996) to December 31, 2008Preferred
      Stock
              
              
              Common
      Stock
              
              
              
              
              
              
              
              
              
              
              
              DeficitSeries
      A
              
              
              Series
      B
              
              
              Series
      C
              
              
              Series
      D
              
              
              
              
              
              
              
              
              
              
              
              Additional
              
              
              Additional
              
              
              Accumulated
              
              
              TotalNumber
              
              
              
              
              
              Number
              
              
              
              
              
              Number
              
              
              
              
              
              Number
              
              
              
              
              
              Number
              
              
              
              
              
              Stock
              
              
              Paid-in
              
              
              Paid-in
              
              
              During
      the
              
              
              Shareholders'of
                Shares
              
              
              Total
              
              
              of
                Shares
              
              
              Total
              
              
              of
                Shares
              
              
              Total
              
              
              of
                Shares
              
              
              Total
              
              
              of
                Shares
              
              
              Total
              
              
              Option
                Costs
              
              
              Capital-
                Common
              
              
              Capital-
                Preferred
              
              
              Development
                Stage
              
              
              Equity
      (Deficit)Balance,
      December 31, 2002
              
              
              -
              
              
              $
              -
              
              
              
              -
              
              
              $
              -
              
              
              
              341,204
              
              
              $
              341
              
              
              
              110,627
              
              
              $
              111
              
              
              
              5,625,658
              
              
              $
              2,812
              
              
              $
              -
              
              
              $
              6,966,327
              
              
              $
              5,812,695
              
              
              $
              (11,834,306
              )
              
              $
              947,980Exercise
      of options
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              775,117
              
              
              
              388
              
              
              
              -
              
              
              
              1,351,807
              
              
              
              -
              
              
              
              -
              
              
              
              1,352,195Conversion
      of  preferredstock
      and accrued dividends into common shares
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (26,786
              )
              
              
              (27
              )
              
              
              -
              
              
              
              -
              
              
              
              73,800
              
              
              
              37
              
              
              
              -
              
              
              
              263,034
              
              
              
              (244,973
              )
              
              
              -
              
              
              
              18,071Valuation
      of beneficialconversion
      feature on Series D Preferred
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              2,161,694
              
              
              
              (2,161,694
              )
              
              
              -Issuance
      of preferred stock for cash
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              708,709
              
              
              
              709
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              6,484,373
              
              
              
              -
              
              
              
              6,485,082Preferred
      stock dividend
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (390,289
              )
              
              
              
              
              
              
              (390,289
              )Net
      loss for 2003
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (2,759,466
              )
              
              
              (2,759,466
              )Balance,
      December 31, 2003
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              314,418
              
              
              
              314
              
              
              
              819,336
              
              
              
              820
              
              
              
              6,474,575
              
              
              
              3,237
              
              
              
              -
              
              
              
              8,581,168
              
              
              
              13,823,500
              
              
              
              (16,755,466
              )
              
              
              5,653,573Exercise
      of options
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              460,775
              
              
              
              230
              
              
              
              -
              
              
              
              1,082,034
              
              
              
              -
              
              
              
              -
              
              
              
              1,082,264Conversion
      of  preferredstock
      and accrued dividends into common shares
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (11,236
              )
              
              
              (11
              )
              
              
              (27,873
              )
              
              
              (28
              )
              
              
              70,918
              
              
              
              36
              
              
              
              -
              
              
              
              383,428
              
              
              
              (354,961
              )
              
              
              -
              
              
              
              28,464Preferred
      stock dividend
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (478,594
              )
              
              
              
              
              
              
              (478,594
              )Stock
      option costs
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              4,527,784
              
              
              
              -
              
              
              
              -
              
              
              
              4,527,784Net
      loss for 2004
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (8,314,255
              )
              
              
              (8,314,255
              )Balance,
      December 31, 2004
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              303,182
              
              
              
              303
              
              
              
              791,463
              
              
              
              792
              
              
              
              7,006,268
              
              
              
              3,503
              
              
              
              -
              
              
              
              14,574,414
              
              
              
              12,989,945
              
              
              
              (25,069,721
              )
              
              
              2,499,236Exercise
      of options
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              470,393
              
              
              
              235
              
              
              
              -
              
              
              
              777,724
              
              
              
              -
              
              
              
              -
              
              
              
              777,959Conversion
      of  preferredstock
      and accrued dividends into common shares
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (6,180
              )
              
              
              (6
              )
              
              
              (106,922
              )
              
              
              (107
              )
              
              
              176,405
              
              
              
              88
              
              
              
              -
              
              
              
              1,150,457
              
              
              
              (1,033,109
              )
              
              
              -
              
              
              
              117,323Preferred
      stock dividend
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (501,921
              )
              
              
              
              
              
              
              (501,921
              )Issuance
      of common stock for patent
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              4,000
              
              
              
              2
              
              
              
              -
              
              
              
              153,998
              
              
              
              -
              
              
              
              -
              
              
              
              154,000Net
      loss for 2005
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,625,516
              )
              
              
              (1,625,516
              )Balance,
      December 31, 2005
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              297,002
              
              
              
              297
              
              
              
              684,541
              
              
              
              685
              
              
              
              7,657,066
              
              
              
              3,828
              
              
              
              -
              
              
              
              16,656,593
              
              
              
              11,454,915
              
              
              
              (26,695,237
              )
              
              
              1,421,081Exercise
      of options
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              732,699
              
              
              
              367
              
              
              
              -
              
              
              
              1,187,471
              
              
              
              -
              
              
              
              -
              
              
              
              1,187,838Conversion
      of  preferredstock
      and accrued dividends into common shares
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (5,618
              )
              
              
              (6
              )
              
              
              (28,418
              )
              
              
              (28
              )
              
              
              60,219
              
              
              
              30
              
              
              
              -
              
              
              
              358,881
              
              
              
              (309,966
              )
              
              
              -
              
              
              
              48,911Preferred
      stock dividend
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (430,176
              )
              
              
              -
              
              
              
              (430,176
              )Stock
      option costs
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              264,297
              
              
              
              -
              
              
              
              -
              
              
              
              264,297Expenses
      paid by officer/shareholder
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              61,252
              
              
              
              -
              
              
              
              -
              
              
              
              61,252Net
      loss for 2006
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (2,811,855
              )
              
              
              (2,811,855
              )Balance,
      December 31, 2006
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              291,384
              
              
              
              291
              
              
              
              656,123
              
              
              
              657
              
              
              
              8,449,984
              
              
              
              4,225
              
              
              
              -
              
              
              
              18,528,494
              
              
              
              10,714,773
              
              
              
              (29,507,092
              )
              
              
              (258,652
              )Exercise
      of options
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              621,551
              
              
              
              311
              
              
              
              -
              
              
              
              1,553,566
              
              
              
              -
              
              
              
              -
              
              
              
              1,553,877Conversion
      of  preferredstock
      and accrued dividends into common shares
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (2,809
              )
              
              
              (3
              )
              
              
              (27,014
              )
              
              
              (28
              )
              
              
              52,964
              
              
              
              26
              
              
              
              -
              
              
              
              333,659
              
              
              
              (272,117
              )
              
              
              -
              
              
              
              61,537Preferred
      stock dividend
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (434,044
              )
              
              
              -
              
              
              
              (434,044
              )Stock
      option costs
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              23,063
              
              
              
              -
              
              
              
              -
              
              
              
              23,063Net
      loss for 2007
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (2,435,774
              )
              
              
              (2,435,774
              )Balance,December
      31, 2007
              
              
              -
              
              
              $
              -
              
              
              
              -
              
              
              $
              -
              
              
              
              288,575
              
              
              $
              288
              
              
              
              629,109
              
              
              $
              629
              
              
              
              9,124,499
              
              
              $
              4,562
              
              
              $
              -
              
              
              $
              20,438,782
              
              
              $
              10,008,612
              
              
              $
              (31,942,866
              )
              
              $
              (1,489,993
              )


The
accompanying notes are an integral part of these consolidated financial
statements.
 F-8


CPC
      OF AMERICA, INC. AND SUBSIDIARIES(A
      Development Stage Company)Consolidated
      Statements of Shareholders' Equity (Deficit)From
      inception (April 11, 1996) to December 31, 2008Preferred
      Stock
                
                Common
      Stock
                
                
                
                
                
                
                
                DeficitSeries
      C
                
                Series
      D
                
                Series
      E
                
                
                
                
                
                
                
                Additional
                
                Additional
                
                Accumulated
                
                TotalNumber
                
                
                
                Number
                
                
                
                Number
                
                
                
                Number
                
                
                
                Stock
                
                Paid-in
                
                Paid-in
                
                During
      the
                
                Shareholders'of
                  Shares
                
                Total
                
                of
                  Shares
                
                Total
                
                of
                  Shares
                
                Total
                
                of
                  Shares
                
                Total
                
                Option
                  Costs
                
                Capital-
                  Common
                
                Capital-
                  Preferred
                
                Development
                  Stage
                
                Equity
      (Deficit)Balance,
      December 31, 2007
                288,575
                
                $         288
                
                629,109
                
                $         629
                
                -
                
                $              -
                
                9,124,499
                
                $      4,562
                
                $              -
                
                $
      20,438,782
                
                $
      10,008,612
                
                $(31,942,866)
                
                $    (1,489,993)Exercise
      of options
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                154,150
                
                77
                
                -
                
                592,502
                
                -
                
                -
                
                592,579Conversion
      ofpreferred
      stock and accrued dividends into common shares
                -
                
                -
                
                (4,826)
                
                (5)
                
                -
                
                -
                
                8,045
                
                4
                
                -
                
                55,159
                
                (44,145)
                
                -
                
                11,013Valuation
      ofbeneficial
      conversion feature on Series E Preferred
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                2,459,959
                
                (2,459,959)
                
                -Issuance
      of preferred stock for cash
                -
                
                -
                
                -
                
                -
                
                551,703
                
                552
                
                -
                
                -
                
                -
                
                -
                
                3,309,668
                
                -
                
                3,310,220Preferred stock dividend
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                (637,465)
                
                
                
                (637,465)Stock
      option costs
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                7,712,616
                
                -
                
                -
                
                7,712,616Contribution
      of officer's salary
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                344,966
                
                -
                
                -
                
                344,966Net
      loss
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                -
                
                (11,131,691)
                
                (11,131,691)Balance,
      December 31, 2008
                288,575
                
                $         288
                
                624,283
                
                $         624
                
                551,703
                
                $         552
                
                9,286,694
                
                $      4,643
                
                $               -
                
                $
      29,144,025
                
                $
      15,096,629
                
                $(45,534,516)
                
                $    (1,287,755)
  The
accompanying notes are an integral part of these consolidated financial
statements.
 F-9


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





Year
      ended December 31,
              
              
              Cumulative
                from
      inception
                (April
      11, 1996)
                to
                December
      31,2008
              
              
              2007
              
              
              2006
              
              
              2008Cash
      flows from operating activities:Net
      loss
              
              $
              (11,131,691
              )
              
              $
              (2,435,774
              )
              
              $
              (2,811,855
              )
              
              $
              (38,743,862
              )Adjustments
      to reconcile net loss to net cashused
      by operating activities:Depreciation
      and amortization
              
              
              45,936
              
              
              
              45,936
              
              
              
              46,471
              
              
              
              319,113Contribution
      of officer's salary/expenses paid by officer
              
              
              344,966
              
              
              
              -
              
              
              
              61,252
              
              
              
              486,218Issuance
      of common stock and options for services
              
              
              8,015,747
              
              
              
              1,446,355
              
              
              
              1,148,635
              
              
              
              16,827,284Issuance
      of preferred stock for services
              
              
              30,000
              
              
              
              -
              
              
              
              -
              
              
              
              30,000Changes
      in operating assets and liabilitiesDecrease
      (increase) in other assets
              
              
              727,035
              
              
              
              (420,392
              )
              
              
              (396,345
              )
              
              
              (58,643
              )Increase
      (decrease) in accounts and other payable
              
              
              144,789
              
              
              
              (104,332
              )
              
              
              86,751
              
              
              
              168,965(Decrease)
      increase in accrued expenses
              
              
              (196,815
              )
              
              
              314,531
              
              
              
              111,111
              
              
              
              462,302Net
      cash used by operating activities
              
              
              (2,020,033
              )
              
              
              (1,153,676
              )
              
              
              (1,753,980
              )
              
              
              (20,508,623
              )Cash
      flows from investing activities:Purchase
      of patent
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (114,795
              )Redemption
      of cash surrender value of life insurance
              
              
              -
              
              
              
              790,910
              
              
              
              -
              
              
              
              790,910Increase
      in cash surrender value of life insurance
              
              
              -
              
              
              
              (92,027
              )
              
              
              (235,101
              )
              
              
              (790,910
              )Capital
      expenditures
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (148,016
              )Net
      cash provided (used) by investing activities
              
              
              -
              
              
              
              698,883
              
              
              
              (235,101
              )
              
              
              (262,811
              )Cash
      flows from financing activities:Proceeds
      from shareholder notes
              
              
              -
              
              
              
              444,050
              
              
              
              -
              
              
              
              517,200Payments
      on note payable to shareholder
              
              
              -
              
              
              
              (99,017
              )
              
              
              -
              
              
              
              (102,017
              )Exercise
      of options and warrants
              
              
              -
              
              
              
              75,000
              
              
              
              303,500
              
              
              
              4,853,421Issuance
      of preferred stock
              
              
              3,280,220
              
              
              
              -
              
              
              
              -
              
              
              
              16,273,512Issuance
      of common stock
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              915,200Dividends
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (5,051
              )Cancellation
      of common stock
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (200,325
              )Net
      cash provided by financing activities
              
              
              3,280,220
              
              
              
              420,033
              
              
              
              303,500
              
              
              
              22,251,940Net
      increase (decrease) in cash
              
              
              1,260,187
              
              
              
              (34,760
              )
              
              
              (1,685,581
              )
              
              
              1,480,506Cash,
      beginning of period
              
              
              220,319
              
              
              
              255,079
              
              
              
              1,940,660
              
              
              
              -Cash,
      end of period
              
              $
              1,480,506
              
              
              $
              220,319
              
              
              $
              255,079
              
              
              $
              1,480,506





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





F-10







CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)


Consolidated
Statements of Cash Flows (continued)


Year
      ended December 31,
                
                
                Cumulative
                  from
      inception
                  (April
      11, 1996)
                  to
                  December
      31,2008
                
                
                2007
                
                
                2006
                
                
                2008Non-cash
      investing and financing activities:Issuance
      of common stock for note receivable
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                150Debt
      to equity conversion
                
                $
                289,448
                
                
                $
                55,585
                
                
                $
                -
                
                
                $
                422,033Acquisition
      of minority interest
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                33,250Sale
      of Tercero - elimination of goodwill
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                (40,000
                )Preferred
      dividends accrued
                
                $
                637,465
                
                
                $
                434,044
                
                
                $
                430,176
                
                
                $
                2,480,927Conversion
      of preferred stock and preferred dividendspaid
      through issuance of common stock
                
                $
                55,163
                
                
                $
                333,685
                
                
                $
                48,911
                
                
                $
                528,115Acquisition
      of Med Enclosures for note payable
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                250,000Acquisition
      of patent paid by issuance of common stock
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                288,708Settlement
      of lawsuit by issuance of common stock
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                200,000Valuation
      of beneficial conversion features
                
                $
                2,459,959
                
                
                $
                -
                
                
                $
                -
                
                
                $
                6,790,654Issuance
      of promissory note against cash surrendervalue
      of life insurance to satisfy insurance premium
                
                $
                -
                
                
                $
                (166,928
                )
                
                $
                166,928
                
                
                $
                -


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





F-11
 CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2008











1.Organization
and summary of significant accounting policies





Organization


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





Nature of
Operations


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





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





Liquidity and management’s
plans


The
accompanying consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America,
which contemplate continuation of the Company as a going concern. The Company
has not generated any revenues from operations and there is no assurance that
the Company will generate revenues in the future. The Company’s ability to
generate revenue primarily depends on its success in completing development and
obtaining regulatory approvals for the commercialization of its MedClose
vascular closure system.  The Company incurred a net loss of
($11,131,691) during the year ended December 31, 2008. Also, the Company had a
cash balance of $1,480,506, a working capital deficit of ($1,565,026) and a
stockholders’ deficit of ($1,287,755) at December 31, 2008.





The
Company will require a minimum of $2.5 million of additional working capital in
order to fund its proposed operations over the next 12 months, assuming that
Series C and D shareholders do not make requests for a substantial amount of
dividend payments in cash.  In the event the Company receives
substantial requests for dividend payments in cash or encounter a material
amount of unexpected expenses, additional working capital in excess of $2.5
million may be required.  The Company has historically been able to
issue shares or stock options to pay for operating expenses; however, there can
be no guarantees the Company can issue shares or options at favorable terms in
the future.








F-12
 CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2008








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





Liquidity and management’s
plans (continued)


Management
plans to continue to seek other sources of financing on favorable terms;
however, there are no assurances that any such financing can be obtained on
favorable terms, if at all.  Management expects to monitor and control
the Company’s operating costs until cash is available through financing or
operating activities.  There are no assurances that the Company will
be successful in achieving these plans.  The Company anticipates that
losses will continue until such time, if ever, as the Company is able to
generate sufficient revenues to support its operations.





Principles of
consolidation


The
accompanying consolidated financial statements include the accounts of the
Company and its subsidiaries.  All significant intercompany
transactions and balances have been eliminated in consolidation.  At
December 31, 2008, the only active subsidiary is Med Enclosures, LLC
(“MED”).





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


The
Company considers all liquid investments with an original maturity of three
months or less that are readily convertible into cash to be cash
equivalents.  The Company places its cash equivalents with high credit
quality financial institutions.  Accounts at banks are insured by the
Federal Deposit Insurance Corporation (FDIC) up to $250,000, and amounts at
brokerage affiliates of the banks are insured by the Secrities Investor
Protection Corporation (SIPC) up to $500,000.  At December 31, 2008,
the company had approximately $800,000 of balances which were in excess of
insured limits.  The Company performs ongoing evaluations of these
institutions to limit its concentration of risk exposure.  Management
believes this risk is not significant due to the financial strength of the
financial institutions utilized by the Company.





No income
taxes have been paid since inception.  Payments of $8,954 for interest
have been made since inception; none in 2006, 2007 or 2008.





Patents and
trademarks


Patents
and trademarks are stated at cost and amortized using the straight line method
over their economic useful life, which is estimated at fifteen
years.  Amortization expense was $45,936 in 2008, 2007 and
2006.





Equipment


Depreciation
expense is provided over the estimated useful life of 5 years using straight
line and accelerated methods.  All remaining equipment was disposed of
in 2007.  Depreciation expense was $535 in 2006.








F-13
 CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2008











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





Use of
estimates


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





Reclassifications


Certain
items in the 2007 and 2006 financial statements have been reclassified to
conform to the 2008 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.  As of December 31, 2008, the Company expects these assets to
be fully recoverable.





Patents
              
              2008
              
              
              2007
              
              
              2006Gross
      carrying amount
              
              $
              557,500
              
              
              $
              557,500
              
              
              $
              557,500Accumulated
      amortization
              
              $
              281,333
              
              
              $
              235,813
              
              
              $
              190,293Amortization
      expense
              
              $
              45,520
              
              
              $
              45,520
              
              
              $
              45,520TrademarkGross
      carrying amount
              
              $
              6,232
              
              
              $
              6,232
              
              
              $
              6,232Accumulated
      amortization
              
              $
              5,128
              
              
              $
              4,712
              
              
              $
              4,296Amortization
      expense
              
              $
              416
              
              
              $
              416
              
              
              $
              416




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





Income
taxes


The
Company reports certain expenses differently for financial and tax reporting
purposes and, accordingly, provides for the related deferred
taxes.  Income taxes are accounted for under the liability method in
accordance with 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-14
 CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2008











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 2008, 2007, and 2006 all common stock equivalents were
anti-dilutive.





Share-based
payments


The
Company adopted the provisions of SFAS 123(R), Share-Based Payments, on
January 1, 2006.  Accordingly, compensation costs for all share-based
awards to employees are measured based on the grant date fair value of those
awards and recognized over the period during which the employee is required to
perform service in exchange for the award (generally over the vesting period of
the award). We have no awards with market or performance conditions. Excess tax
benefits, as defined by SFAS 123(R), will be recognized as an addition to
additional paid-in-capital.





Share-based
compensation expense recognized during the period is based on the value of the
portion of share-based payment awards that is ultimately expected to vest during
the period. Share-based compensation expense recognized in our consolidated
statement of operations for the years ended December 31, 2007 and 2006 also
includes compensation expense for share-based payment awards granted prior to,
but not yet vested as of, December 31, 2005, amortized under the straight-line
method prescribed by SFAS 123. As share-based compensation expense recognized
for the years ended December 31, 2008, 2007 and 2006 is based on awards
ultimately expected to vest, it has been reduced for estimated forfeitures. SFAS
123(R) requires forfeitures to be estimated at the time of grant and revised, if
necessary, in subsequent periods if actual forfeitures differ from those
estimates. Based on our historical experience, our forfeitures were expected to
be 50% on grants after April 2008 and zero prior to that time.





Total
share-based compensation expenses recognized under SFAS 123R for the years ended
December 31, 2008, 2007 and 2006 were $7,712,616, $23,063 and $264,297,
respectively, and are included in general and administrative
expenses.  The incremental share-based compensation caused our net
loss to increase by the same amounts.  Basic and diluted loss per
share caused loss per share to increase by $.83, $.00 and $.03 in the years
ended December 31, 2008, 2007 and 2006, respectively.








F-15
 CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2008











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





Share-based payments
(continued)


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





2008
              
              2006Risk
      free interest rate
              2.5%
      - 2.875%
              
              4.625%Volatility
              66%
      - 68%
              
              49%Term
              5
      years
              
              3
      yearsExpected
      dividend yield
              none
              
              none




Since we
have a net operating loss carryforward as of December 31, 2008, no excess tax
benefits for the tax deductions related to share-based awards were recognized in
the consolidated statement of operations.  Additionally, no
incremental tax benefits were recognized from stock options exercised in the
years ended December 31, 2008, 2007 and 2006.





Recent accounting
pronouncements


In
February 2007, the FASB issued SFAS 159 – The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of FASB Statement No.
115(SFAS 159).  SFAS 159 permits entities to choose to measure
eligible items at fair value at specified election dates and report unrealized
gains and losses on items for which the fair value option has been elected in
earnings at each subsequent reporting date. SFAS 159 is effective for fiscal
years beginning after November 15, 2007 and interim periods within those fiscal
years. Early adoption, as of the beginning of an entity’s fiscal year, is also
permitted, provided interim financial statements have not yet been issued. The
Company has implemented this statement in the current fiscal year and there is
no material effect.








F-16
 CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2008











2.Shareholders’
equity (deficit)





Series A Preferred
stock


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





Series B Preferred
stock


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





Series C Preferred
stock


In
October 2001, the Company commenced the private placement sale of Series C
preferred stock at $8.90 per share.  The Company sold 359,780 shares
for proceeds of $3,202,042.  The Company recorded a beneficial
conversion feature totaling $1,067,337 at the date of issuance.  The
Series C Preferred stock has no voting rights and has a 5% annual dividend
payable in cash or common stock.  Each Series C share was convertible
into one common share until June 30, 2002, when the conversion price was
adjusted to the lower of $6.68 or 75% of the average last sale price of the
common stock for the 30 trading days immediately preceding such date as reported
on any stock exchange, according to the terms of the original
agreement.  At June 30, 2002, the conversion price was adjusted to
$3.57 per share.  Accrued dividends of $862,932 on the 288,575 shares
outstanding at December 31, 2008 remain unpaid.








F-17
 CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2008











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.  Accrued dividends of
$1,631,250 on the 624,283 outstanding shares remain unpaid at December 31,
2008.





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





#
      of
              
              
              
              
              
              #
      of
              
              
              
              
              
              #
      ofSeries
      C
              
              
              Accrued
              
              
              Series
      D
              
              
              Accrued
              
              
              CommonShares
              
              
              Dividends
              
              
              Shares
              
              
              Dividends
              
              
              SharesYear
              
              Converted
              
              
              Converted
              
              
              Converted
              
              
              Converted
              
              
              Issued2002
              
              
              18,576
              
              
              $
              6,625
              
              
              
              -
              
              
              $
              -
              
              
              
              46,3142003
              
              
              26,786
              
              
              $
              18,071
              
              
              
              -
              
              
              $
              -
              
              
              
              73,8002004
              
              
              11,236
              
              
              $
              11,758
              
              
              
              27,873
              
              
              $
              16,706
              
              
              
              70,9182005
              
              
              6,180
              
              
              $
              9,500
              
              
              
              106,922
              
              
              $
              107,823
              
              
              
              176,4052006
              
              
              5,618
              
              
              $
              9,520
              
              
              
              28,418
              
              
              $
              39,390
              
              
              
              60,2192007
              
              
              2,809
              
              
              $
              7,137
              
              
              
              27,014
              
              
              $
              54,000
              
              
              
              52,9642008
              
              
              -
              
              
              $
              -
              
              
              
              4,826
              
              
              $
              11,013
              
              
              
              8,045Totals
              
              
              71,205
              
              
              $
              62,611
              
              
              
              195,053
              
              
              $
              228,932
              
              
              
              488,665





F-18
 CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2008














2. Shareholders’ equity
(deficit) (continued)





Series E Preferred
stock


In
September 2007, the Company commenced the private placement sale of Series E
preferred stock at $19.75 per share.  The Series E Preferred stock has
no voting rights and has a 10% annual dividend payable in cash or common stock
at the option of the Company.  Each Series E share was convertible
into one common share until August 31, 2008, when the conversion price would
have been adjusted to the lower of $14.80 or 75% of the average last sale price
of the common stock for the 30 trading days immediately preceding such date on
any stock exchange; provided that the conversion price would not have been
adjusted to an amount below $13.00 per share.  At December 31, 2007,
the Company had not sold any of these shares, and on January 16, 2008, the terms
of the Series E private placement were amended to reduce the share price to
$6.00.  Each Series E share was convertible into one common share
until August 31, 2008, when the conversion price was adjusted to the lower of
$4.50 or 75% of the average last sale price of the common stock for the 30
trading days immediately preceding such date on any stock exchange; provided
that the conversion price shall not be adjusted to an amount below $3.92 per
share.  The conversion price on August 31 was $4.50 per
share.  The board of directors subsequently adjusted the conversion to
$3.92 to be effective December 31, 2008.  During the year ended
December 31, 2008, the Company issued 546,703 shares of Series E preferred
shares for cash proceeds of $3,280,220, and another 5,000 shares in payment of
$30,000 of the CFO’s salary.  A beneficial conversion feature totaling
$2,459,959 has been recorded in accordance with guidance issued by the FASB’s
Emerging Issues Task Force regarding Accounting for Convertible Securities with
a Beneficial Conversion Feature or Contingently Adjustable Conversion
Ratios.  The Company recognized and measured the embedded beneficial
conversion feature by allocating a portion of the proceeds equal to the
intrinsic value of the embedded beneficial conversion feature to additional
paid-in capital.  Intrinsic value was calculated as the difference
between the conversion price and the fair value of the common stock into which
the preferred stock is convertible, multiplied by the number of shares into
which the preferred stock is convertible.  As of December 31, 2008,
the outstanding number of shares of Series E Preferred Stock was 551,703 and the
amount of accrued dividends was $221,402.





Common
stock


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





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





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








F-19
 CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2008








2. Shareholders’ equity
(deficit) (continued)





Common stock
(continued)


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





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





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





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





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.





As
December 31, 2008 and 2007, the number of shares of common stock issued and
outstanding was 9,286,694 and 9,124,499, respectively.








F-20
 CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2008











2. Shareholders’ equity
(deficit) (continued)





Stock
options


The
Company has granted options to purchase its common stock.  The option
prices at the time of grant were at or above the fair value of the Company’s
common stock.  The following information applies to all options
outstanding at December 31, 2008:




Exercise
                Price
              
              
              Options
                Outstanding
              
              
              Average
                Remaining
                Life
      (years)
              
              
              Weighted
                Average
                Exercise
                price
              
              
              Number
                exercisable
              
              
              Weighted
                average
                exercise
                price$
              4.45
              
              
              
              100,000
              
              
              
              4.75
              
              
              $
              4.45
              
              
              
              100,000
              
              
              $
              4.45$
              5.05
              
              
              
              100,000
              
              
              
              4.11
              
              
              $
              5.05
              
              
              
              100,000
              
              
              $
              5.05$
              7.90
              
              
              
              3,152,505
              
              
              
              4.33
              
              
              $
              7.90
              
              
              
              3,152,505
              
              
              $
              7.90$
              29.12
              
              
              
              275,000
              
              
              
              1.75
              
              
              $
              29.12
              
              
              
              275,000
              
              
              $
              29.12$
              30.00
              
              
              
              150,000
              
              
              
              1.75
              
              
              $
              30.00
              
              
              
              150,000
              
              
              $
              30.00





The
following information applies to employee options outstanding at December 31,
2008:




Exercise
              Price
            
            
            Options
              Outstanding
            
            
            Average
              Remaining
              Life
      (years)
            
            
            Weighted
              Average
              Exercise
              price
            
            
            Number
              exercisable
            
            
            Weighted
              average
              exercise
              price


$
              4.45
              
              
              
              50,000
              
              
              
              4.75
              
              
              $
              4.45
              
              
              
              50,000
              
              
              $
              4.45$
              7.90
              
              
              
              1,569,194
              
              
              
              4.33
              
              
              $
              7.90
              
              
              
              1,569,194
              
              
              $
              7.90





A summary
of stock option activity since inception follows:




Number
      of
              
              
              ExerciseOptions
              
              
              Price
              
              
              ExpirationInception
      (April 11, 1996)
              
              
              -
              
              
              
              -
              
              
              -Granted
              
              
              4,420,000
              
              
              $
              1.125
      - 1.25
              
              
              1997
      - 2006Outstanding
      at December 31, 1996
              
              
              4,420,000
              
              
              $
              1.125
      - 1.25
              
              
              1997
      - 2006Exercised
              
              
              (26,666
              )
              
              $
              1.125Expired
              
              
              (200,000
              )
              
              $
              1.18Outstanding
      at December 31, 1997
              
              
              4,193,334
              
              
              $
              1.125
      - 1.25
              
              
              2006Granted
              
              
              4,152,000
              
              
              $
              1.25
      - 9.00
              
              
              2008Exercised
              
              
              (57,000
              )
              
              $
              1.125
      - 2.50Canceled
              
              
              (1,173,334
              )
              
              $
              1.125Outstanding
      at December 31, 1998
              
              
              7,115,000
              
              
              $
              1.125
      - 9.00
              
              
              2003
      - 2008





F-21
 CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2008








2. Shareholders’ equity
(deficit) (continued)





Stock options
(continued)




Number
      of
              
              
              ExerciseOptions
              
              
              Price
              
              
              ExpirationOutstanding
      at December 31, 1998
              
              
              7,115,000
              
              
              $
              1.125
      - 9.00
              
              
              2003
      - 2008Granted
              
              
              25,000
              
              
              $
              5.50
              
              
              2004Exercised
              
              
              (146,904
              )
              
              $
              1.125
      - 2.50Canceled
              
              
              (490,000
              )
              
              $
              1.125Outstanding
      at December 31, 1999
              
              
              6,503,096
              
              
              $
              1.125
      - 9.00
              
              
              2003
      - 2008Granted
              
              
              175,000
              
              
              $
              5.00
      - $5.75Exercised
              
              
              (223,832
              )
              
              $
              1.125
      - 2.50Outstanding
      at December 31, 2000
              
              
              6,454,264
              
              
              $
              1.125
      - 9.00
              
              
              2003
      - 2008Granted
              
              
              15,800
              
              
              $
              2.50
              
              
              2004Exercised
              
              
              (360,394
              )
              
              $
              1.125
      - 2.50Outstanding
      at December 31, 2001
              
              
              6,109,670
              
              
              $
              1.125
      - 9.00
              
              
              2003
      - 2008Exercised
              
              
              (282,480
              )
              
              $
              1.125Canceled
              
              
              (100,000
              )
              
              $
              5.50Outstanding
      at December 31, 2002
              
              
              5,727,190
              
              
              $
              1.125
      - 9.00
              
              
              2003
      - 2008Exercised
              
              
              (775,117
              )
              
              $
              1.125
      - 9.00Canceled
              
              
              (10,000
              )
              
              $
              8.00Outstanding
      at December 31, 2003
              
              
              4,942,073
              
              
              $
              1.125
      - 5.75
              
              
              2004
      - 2008Granted
              
              
              550,000
              
              
              $
              29.12
              
              
              2009Exercised
              
              
              (460,775
              )
              
              $
              1.125
      - 5.75Outstanding
      at December 31, 2004
              
              
              5,031,298
              
              
              $
              1.125
      - 29.12
              
              
              2006
      - 2009Exercised
              
              
              (470,393
              )
              
              $
              1.125
      - 2.50Outstanding
      at December 31, 2005
              
              
              4,560,905
              
              
              $
              1.125
      - 29.12
              
              
              2006
      - 2009Granted
              
              
              200,000
              
              
              $
              30.00
              
              
              2009Exercised
              
              
              (732,699
              )
              
              $
              1.125
      - 2.50Outstanding
      at December 31, 2006
              
              
              4,028,206
              
              
              $
              2.50
      - 30.00
              
              
              2008
      - 2009Exercised
              
              
              (621,551
              )
              
              $
              2.50
              
              
              2008Outstanding
      at December 31, 2007
              
              
              3,406,655
              
              
              $
              2.50
      - 30.00
              
              
              2008
      - 2009Granted
              
              
              3,390,876
              
              
              $
              4.45
      - 7.90
              
              
              2013Exercised
              
              
              (154,150
              )
              
              $
              2.50
      - 7.90
              
              
              2008
      - 2013Canceled/Expired
              
              
              (2,865,876
              )
              
              $
              2.50
      - 30.00
              
              
              2008
      - 2009Outstanding
      at December 31, 2008
              
              
              3,777,505
              
              
              $
              4.45
      - 30.00
              
              
              2009
      - 2013Exercisable
      at December 31, 2008
              
              
              3,777,505
              
              
              $
              4.45
      - 30.00
              
              
              2009
      - 2013





F-22
 CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2008








2. Shareholders’ equity
(deficit) (continued)





Stock options
(continued)


The
aggregate intrinsic value was zero on all outstanding options at December 31,
2008, since the Company’s stock was trading at a lower value than any of the
options granted.  At December 31, 2008, all compensation costs have
been recognized and all remaining options are vested.





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





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





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.  In May 2008, the Company’s CEO (one of the board members
mentioned above) cancelled his 275,000 options.





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.











F-23
 CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2008








2. Shareholders’ equity
(deficit) (continued)





Stock options
(continued)


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





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





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





Of the
$1,553,877 in options exercised during 2007, the Company received $75,000 in
cash and the other exercises were in exchange for services and expenses as
follows:  consulting services for the Company’s strategic consultant
totaling $1,379,876 (of which $689,938 is prepaid), rent from the same
consultant totaling $25,940 (of which $14,280 is prepaid), expenses paid by the
consultant in the amount of $17,476 and a loan payment of $55,585 to the
Company’s only employee.  The consultant elected not to receive cash
for the consulting services, rent and expenses but exercised options totaling
$1,423,292.  The $1,423,292 of total non-cash exercises of option is
included in the line item “issuance of common stock and options for services” in
the statement of cash flows.  Similarly, the Company’s only employee
elected not to receive cash for part of his loan repayment, but exercised
options in the amount of $55,585, which is included in the caption “debt to
equity conversion” in the statement of cash flows.





Of the
$1,187,838 in options exercised during 2006, the Company received $303,500 in
cash and the other exercises were in exchange for compensation to the Company’s
only employee, and consulting services for the Company’s strategic consultant
totaling $884,338.  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 $302,126.  Similarly,
the consultant elected not to receive cash for $582,212 of services, but
exercised options in that amount.  The $884,338 of total non-cash
exercises of option is included in the line item “issuance of common stock and
options for services” in the statement of cash flows.





F-24
 CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2008








3. Cash value of life
insurance





The
Company was the owner and beneficiary of a $5 million “key-person” life
insurance policy on its CEO.  Premiums paid on the policy totaled
$323,798 in 2006, 2005 and 2004.  In November 2007, the Company cashed
in the insurance policy, repaid a loan of $161,899 against the policy from the
cash surrender value, and the remaining $790,910 was remitted to the
Company.





4. Income
taxes





The
Company recognizes deferred tax assets and liabilities for temporary differences
between the financial reporting and tax bases of its assets and
liabilities.  At December 31, 2008 the Company has an estimated net
operating loss carryforward for federal tax purposes of $26,000,000, which, if
unused to offset future taxable income, will begin to expire in 2012 and
continue through 2029. The Company had deferred tax assets of approximately
$9,100,000, $7,900,000, and $7,000,000 at December 31, 2008, 2007 and 2006,
respectively, relating to its net operating loss.  A 100% valuation
allowance, which increased by $1,200,000 in 2008 and $900,000 in 2007, has been
recognized to offset the entire related deferred tax asset due to the
uncertainty of realizing the benefit.





5.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 to provide for
annual increases in annual compensation as follows: to $570,194 effective as of
January 1, 2005; to $627,213 effective as of January 1, 2006; and to $698,934
effective as of January 1, 2007.  The 2005 amendment also requires the
consultant to be personally responsible for travel, entertainment or other
business expenses incurred by the consultant in connection with the performance
of his duties on behalf of the Company. The agreement expires on April 23, 2009,
subject to automatic renewals for additional five year periods unless either
party elects not to renew the agreement.  In addition, options to
purchase 2,000,000 shares of common stock at $2.50 per share were also granted
under the April 1998 amendment.  The options vest and become
exercisable in ten equal installments of 200,000 shares each year starting at
the grant date. The unexercised options of 1,258,565 expired on April 22,
2008.





F-25
 CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2008








5.Commitments and
contingencies (continued)





Consulting agreements
(continued)


Subsequent
to year end the strategic consultant notified the Company that it would not seek
to renew the consulting contract.  The Company does not expect the
non-renewal of this contract to have an adverse affect on its efforts to develop
the MedClose device.





Employment agreement -
CEO


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
to provide for annual increases in annual compensation as follows: to $570,194
effective as of January 1, 2005; to $627,213 effective as of January 1, 2006;
and to $698,934 effective as of January 1, 2007.  The 2005 amendment
also requires the CEO to be personally responsible for travel, entertainment or
other business expenses incurred by the CEO in connection with the performance
of his duties on behalf of the Company.  The agreement expires on
April 23, 2009, subject to automatic renewals for additional five year periods
unless either party elects not to renew the agreement.





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





Employment agreement -
CFO


Effective
July 1, 2008, the Company entered into a three year employment agreement with
its CFO.  The agreement provides for a base salary of $5,000 per month
beginning July 2008.  In addition the Company shall issue to the CFO
30,000 shares of the Company’s Series E Preferred Stock to vest ratably over the
term of the agreement.  The agreement also requires the CFO to be
personally responsible for travel, entertainment or other business expenses
incurred by the CFO in connection with the performance of her duties on behalf
of the Company.











F-26
 CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2008








5.Commitments and
contingencies (continued)





Royalty
agreements


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





Office
lease


The
Company leases its office space under a one-year lease at $1,190 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 $14,280 in 2008 and
2007, and $12,380 in 2006.





6.Related party
transactions





The
Company has a consulting agreement with its strategic consultant, a related
party (see note 5).  The Company has also entered into various
agreements with its strategic consultant for the research and development of
additional applications of the Company’s proprietary intellectual properties and
for office rent.  The Company incurred expenses under these agreements
as follows:





Year
      ended December 31,
              
              
              Cumulative2008
              
              
              2007
              
              
              2006
              
              
              from
      inceptionResearch
      and development:Consulting
              
              $
              551,948
              
              
              $
              551,948
              
              
              $
              501,769
              
              
              $
              6,135,986Expense
      reimbursement
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              152,001Engineering
      development
              
              
              -
              
              
              
              14,946
              
              
              
              -
              
              
              
              3,554,877Total
      R&D to related parties
              
              
              551,948
              
              
              
              566,894
              
              
              
              501,769
              
              
              
              9,842,864General
      and administrative:Consulting
              
              
              137,989
              
              
              
              127,992
              
              
              
              125,443
              
              
              
              1,510,504Rent
              
              
              14,280
              
              
              
              14,280
              
              
              
              12,380
              
              
              
              98,240Expense
      reimbursements
              
              
              -
              
              
              
              2,529
              
              
              
              -
              
              
              
              113,789152,269
              
              
              
              144,801
              
              
              
              137,823
              
              
              
              1,722,533Total
      expenses to related parties
              
              $
              704,217
              
              
              $
              711,695
              
              
              $
              639,592
              
              
              $
              11,565,397








F-27
 CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2008








7.Selected quarterly data
(unaudited)





Quarters
      EndedDec.
      31
              
              
              Sept.
      30
              
              
              June
      30
              
              
              Mar.
      312007Net
      revenues
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Gross
      profit
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Loss
      from operations
              
              
              702,817
              
              
              
              536,821
              
              
              
              499,181
              
              
              
              791,478Net
      loss
              
              $
              680,126
              
              
              $
              467,347
              
              
              $
              499,007
              
              
              $
              789,294Basic
      and diluted loss per share
              
              $
              0.08
              
              
              $
              0.07
              
              
              $
              0.07
              
              
              $
              0.112008Net
      revenues
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Gross
      profit
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Loss
      from operations
              
              
              1,125,324
              
              
              
              863,646
              
              
              
              8,296,595
              
              
              
              870,160Net
      loss
              
              $
              1,118,046
              
              
              $
              855,626
              
              
              $
              8,288,914
              
              
              $
              869,105Basic
      and diluted loss per share
              
              $
              0.18
              
              
              $
              0.26
              
              
              $
              0.94
              
              
              4
              0.16





8.Subsequent
events





On March
8, 2008, the Company entered into a Product Development Agreement with Dr.
Olexander Hnojewyj to assist in the development of proprietary synthetic
sealants to be used with MedClose.  The development agreement provides
for an hourly rate for services plus issuance of the Company’s common shares to
Dr. Hnojewyj upon reaching the following milestones:





·
            $225,000
      shares of common stock upon the first U.S. patent application in
      connection with a synthetic sealant to be used in arterial and venous
      closure;


·
            $125,000
      shares of common stock for each subsequent U.S. patent application in
      connection with a synthetic sealant to be used in arterial and venous
      closure;


·
            $125,000
      shares of common stock for each U.S. patent application in connection with
      a synthetic sealant to be used in biopsy closures, spinal repair, and
      adhesion barrier in all surgeries;


·
            $125,000
      shares of common stock upon the issuance of each patent (Peg Patent) with
      respect to the patent applications mentioned above;
  and


·
            Upon
      receipt of revenue by the Company from the sale or licensing of products
      or technology underlying each PEG Patent in each Country, $25,000 of
      common stock for each Country.





F-28
 CPC
OF AMERICA, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2008











9.Restatement of quarterly
data (unaudited)





The
Company is restating its quarterly information for the quarters ended March 31,
2008, June 30, 2008 and September 30, 2008 to correct the accounting for its
beneficial conversion feature on its Series E Preferred Stock.  The
Company had not properly applied FASB’s Emerging Issues Task Force regarding
Accounting for Convertible Securities with a Beneficial Conversion Feature or
Contingently Adjustable Conversion Ratios.





Quarter
                
                
                Year
      to DatePreviously
                  Reported
                
                
                Adjustments
                
                
                Restated
                
                
                Previously
                  Reported
                
                
                Adjustments
                
                
                RestatedQuarter ended
      March 31, 2008Balance
      sheet:APIC
      - preferred stock
                
                
                
                
                
                
                
                
                
                
                $
                12,067,167
                
                
                $
                (460,855
                )
                
                $
                11,606,312Accumulated
      deficit
                
                
                
                
                
                
                
                
                
                
                
                (33,362,981
                )
                
                
                460,855
                
                
                
                (32,902,126
                )Statement
      of operations:Basic
      and diluted loss per share
                
                $
                (0.11
                )
                
                $
                (0.01
                )
                
                $
                (0.12
                )
                
                $
                (0.11
                )
                
                $
                (0.01
                )
                
                $
                (0.12
                )Quarter
      ended June 30, 2008Balance
      sheet:APIC
      - preferred stock
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                12,489,863
                
                
                $
                (407,271
                )
                
                $
                12,082,592Accumulated
      deficit
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (41,859,558
                )
                
                
                407,271
                
                
                
                (41,452,287
                )Statement
      of operations:Basic
      and diluted loss per share
                
                $
                (0.94
                )
                
                $
                -
                
                
                $
                (0.94
                )
                
                $
                (1.10
                )
                
                $
                0.04
                
                
                $
                (1.06
                )Quarter
      ended Sept. 30, 2008Balance
      sheet:APIC
      - preferred stock
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                13,885,443
                
                
                $
                626,707
                
                
                $
                14,512,150Accumulated
      deficit
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (43,049,918
                )
                
                
                (626,707
                )
                
                
                (43,676,625
                )Statement
      of operations:Basic
      and diluted loss per share
                
                $
                (0.15
                )
                
                $
                (0.11
                )
                
                $
                (0.26
                )
                
                $
                (1.25
                )
                
                $
                (0.07
                )
                
                $
                (1.32
                )








F-29





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





None.





ITEM
9A.  CONTROLS AND PROCEDURES





Management's
Report On Internal Control Over Financial Reporting





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





Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we evaluated our
internal control over financial reporting as of December 31, 2008 based on the
framework in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on this evaluation,
management concluded that our internal control over financial reporting was
effective as of December 31, 2008. Our independent registered accountants,
Cacciamatta Accountancy Corp., have audited this assessment of our internal
control over financial reporting and their report is included in this Item
9A.





During
the fiscal quarter ended December 31, 2008, there were no changes in our
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.





Evaluation
Of Disclosure Controls And Procedures





We
maintain disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15(d)-15(e)) designed to ensure that information we are required
to disclose in the reports we file with the SEC is recorded, processed,
summarized and reported within the time periods specified in the rules of the
SEC. These disclosure controls and procedures are designed and maintained by or
under the supervision of our chief executive officer and chief financial
officer, as required by the rules of the SEC. Our chief executive officer and
chief financial officer are responsible for evaluating the effectiveness of the
disclosure controls and procedures. Based on their evaluation of our disclosure
controls and procedures as of the end of the period covered by this report, our
chief executive officer and chief financial officer believe that our disclosure
controls and procedures were effective as of December 31, 2008.





-20-


REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


ON INTERNAL CONTROL OVER FINANCIAL
REPORTING





The Board of Directors and
Shareholders


CPC
of America, Inc.




We have
audited management's assessment, included in the accompanying Management's
Report on Internal Control over Financial Reporting appearing above, that CPC of
America, Inc. maintained effective internal control over financial reporting as
of December 31, 2008, based on criteria established in INTERNAL CONTROL --
INTEGRATED FRAMEWORK issued by the Committee of Sponsoring Organizations of the
Treadway Commission (the COSO criteria). CPC of America, Inc.'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. Our responsibility is to express an opinion on management's
assessment and an opinion on the effectiveness of the company's internal control
over financial reporting based on our audit.





We
conducted our audit in accordance with the 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 effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.





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.





In our
opinion, management's assessment that CPC of America, Inc. maintained effective
internal control over financial reporting as of December 31, 2008, is fairly
stated, in all material respects, based on the COSO criteria. Also, in our
opinion, CPC of America, Inc. maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2008, based on the
COSO criteria.





We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the accompanying consolidated balance sheets of
CPC of America, Inc. as of December 31, 2008 and 2007, and the related
consolidated statements of operations, shareholders' equity (deficit), and cash
flows for each of the three years in the period ended December 31, 2008 of CPC
of America, Inc. Our report dated March 9, 2009 expressed an unqualified
opinion noting, as discussed in Note 1 to the financial statements, that the
Company has a net capital deficiency at December 31, 2008, which raises
substantial doubt about its ability to continue as a going concern.





/s/
CACCIAMATTA ACCOUNTANCY CORPORATION





Santa
Ana, California


March 9,
2009


-21-





ITEM
9B. OTHER INFORMATION





Not
applicable.





-22-


PART
III





Except as
set forth below, the information required by Items 10 through 14 is set forth
under the captions “Election of Directors,” “Ratification of Independent
Registered Public Accounting Firm,” “Security Ownership of Certain Beneficial
Owners and Management,” “Executive Compensation,” “Certain Relationships and
Related Transactions With The Company” and “Section 16(a) Beneficial Ownership
Reporting Companies” in CPC of America, Inc.’s definitive Proxy Statement for
its 2009 Annual Meeting of Stockholders, to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A of the Securities Exchange
Act of 1934, as amended, which sections are incorporated herein by reference as
if set forth in full.








ITEM
10. DIRECTORS AND EXECUTIVE OFFICERS





Except as
set forth below, the information required by this Item is incorporated by
reference to our definitive proxy statement.





Code
of Ethics





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








ITEM
11.   EXECUTIVE COMPENSATION





Except as
provided below, the information required by this Item is incorporated by
reference to our definitive proxy statement.





Information
relating to securities authorized for issuance under our equity compensation
plans is set forth in “Item 5, Market for Registrant’s Common Stock,
Related Stockholder Matters and Registrant’s Purchases of Equity Securities”
above in this annual report.








ITEM
12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT





The
information required by this Item is incorporated by reference to our definitive
proxy statement.





-23-





ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS





The
information required by this Item is incorporated by reference to our definitive
proxy statement.








ITEM
14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES





The
information required by this Item is incorporated by reference to our definitive
proxy statement.








ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES





(a)  List
of Financial Statements.





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





(b)  Index
to Exhibits





3.1
            Articles
      of Incorporation of the Company (1)3.2
            Certificate
      of Amendment of Articles of Incorporation (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)4.6
            Certificate
      of Designations of the Company's Series E Preferred Stock
    (15)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)


-24-





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


-25-





10.29
            Amendment
      No. 3 dated May 31, 2005 to Employment Agreement dated April 23, 1998
      between the Company and Rod A. Shipman (14)10.30
            Amendment
      No. 3 dated May 31, 2005 to Consulting Agreement dated April 23, 1998
      between the Company and CTM Group, Inc. (14)10.31
            Employment
      Agreement dated February 4, 2009 between the Company and Marcia J. Hein
      (16)10.32
            Product
      Development Agreement dated March 9, 2009 between the Company and Olex
      Hnojewyj (17)10.33
            Product
      Development Services Agreement - Second Amendment dated June 2, 2006
      between Med Enclosures, LLC and BioMed Research, Inc.21.1
            List
      of Subsidiaries (14)23.1
            Consent
      of Independent Certified Public Accountants31.1
            Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200231.2
            Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200232.1
            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 ExchangeCommission
      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.


-26-





(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.





(15)
            Previously
      filed as part of the Company’s annual report on Form 10-K for the year
      ended December 31, 2007.





(16)
            Previously
      filed as part of the Company’s current report on Form 8-K filed with the
      Securities and Exchange Commission on February 6,
  2009.





(17)
            Previously
      filed as part of the Company’s current report on  Form 8-K filed
      with the Securities and Exchange Commission on March 13,
    2009.





(c)  Financial
Statement Schedules





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








-27-


SIGNATURES








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








CPC
      OF AMERICA, INC.Date:
      March 13, 2009By:
      /s/ Rod A.
      ShipmanRod
      A. Shipman, President,Chief
      Executive Officer








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








Name
            Capacity
            Date








/s/ Rod A. Shipman
              Rod A.
      Shipman
            Chairman
      of the Board, President
              and
      Chief Executive officer
            March
      13, 2009/s/ Marcia J. Hein
              
              Marcia
      J. Hein
            Chief
      Financial Officer, Treasurer
              and
      Director
            March
      13, 2009





/s/ Rafe Cohen
              
              Rafe
      Cohen
            Director
            March
      13, 2009





/s/ William Lievense
              
              William
      Lievense
            Director
            March
      13, 2009/s/ Ronald P. Cenko
              
              Ronald
      P. Cenko
            Director
            March
      13, 2009












-28-