<PAGE>

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


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

For the fiscal year ended  December 31, 2002

                                       OR

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

For the transition period from                     to

Commission file number 0-24053


                              CPC OF AMERICA, INC.
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)


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


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

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

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

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

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



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

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

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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes  X  No
             ---    ---
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K contained in this form, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ X ]
                   ---

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

The aggregate market value of the voting and non-voting stock held by
non-affiliates of the registrant as of March 26, 2003 was approximately
$29,272,620.

The number of shares of the Common Stock outstanding as of March 26, 2003 was
5,626,582.

                   DOCUMENTS INCORPORATED BY REFERENCE: NONE.

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PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

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

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

         CPC of America, Inc. was formed under the laws of the State of Nevada
on April 11, 1996 to develop and acquire cardiology medical devices, therapeutic
devices and disposable products. To date, we have 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, we
have acquired a controlling interest in Med Enclosure, LLC, a development stage
company engaged in the business of developing a patented internal puncture
closing device and technique known as "MedClose." As of the date of this report,
we have not commenced revenue producing operations. Our operations to date have
consisted of the design and development of our counterpulsation units and
MedClose, and the raising of capital.

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

         In April 2000, we commenced a private placement of shares of our Series
B Preferred Stock, at a price of $8.75 per share, pursuant to Rule 506 under the
1933 Act. Each share of Series B Preferred Stock was initially convertible into
Common Stock at a conversion price of $8.75 per share; however, as required
pursuant to the terms of the subscription agreement, on June 30, 2001, the
conversion price was adjusted to $3.20 per share, such amount representing the
LOWER of (i) seventy-five percent (75%) of the average last ask price of the
Common Stock for the thirty (30) trading days immediately preceding such date as
reported on any stock exchange or (ii) $6.56 per share. The Series B Preferred
Stock has no voting rights. In addition, the holders of the shares of Series B
Preferred Stock are entitled to an annual dividend of 5%, payable in either cash
or shares of Common Stock. Proceeds from the sale of the shares were applied
towards working capital and the research and development of our two cardiology
products. During 2000 and 2001, a total of 185,144 shares of Series B Preferred
Stock were issued for proceeds of $1,620,010. During 2001, 113,715 shares of
Series B Preferred Stock were converted into a total of 314,037 shares of Common
Stock, including shares issued in payment of the 5% dividend. In March 2002, the
remaining 71,429 shares of Series B Preferred Stock were converted into 195,313
shares of Common Stock.

         In October 2001, we commenced a private placement of shares of our
Series C Preferred Stock, at a price of $8.90 per share, pursuant to Rule 506
under the 1933 Act. Each share of Series C Preferred Stock was initially
convertible into Common Stock at a conversion price of $8.90 per share; however,
as required pursuant to the terms of the subscription agreement, on June 30,
2002 the conversion price was adjusted to $3.57 per share, such amount
representing the LOWER of (i) seventy-five percent (75%) of the average last ask
price of the Common Stock for the thirty (30) trading days immediately preceding
such date as reported on any stock exchange or (ii) $6.68 per share. The Series
C Preferred Stock has no voting rights. In addition, the holders of the shares
of Series C Preferred Stock are entitled to an annual dividend of 5%, payable in
either cash or shares of Common Stock. During 2002, we sold a total of 264,657
shares of Series C Preferred Stock for the gross proceeds of $2,355,359. During
the fourth quarter of 2002, 18,576 shares of Series C Preferred Stock were
converted into 46,314 shares of Common Stock, including shares issued in payment

                                      -1-
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of the 5% dividend. We applied the proceeds from the sale of the shares towards
working capital and the research and development of our cardiology products.

         In November 2002, we commenced a private placement of shares of our
Series D Preferred Stock, at a price of $9.15 per share, pursuant to Rule 506
under the 1933 Act. Each share of Series D Preferred Stock is convertible into
Common Stock at an initial conversion price of $9.15 per share; however, on June
30, 2003 the conversion price will be adjusted to an amount representing the
lower of (i) seventy-five percent (75%) of the average last ask price of the
Common Stock for the thirty (30) trading days immediately preceding such date as
reported on any stock exchange or (ii) $6.86 per share. The Series D Preferred
Stock has no voting rights. In addition, the holders of the shares of Series D
Preferred Stock are entitled to an annual dividend of 5%, payable in either cash
or shares of Common Stock. During 2002, we sold a total of 110,627 shares of
Series D Preferred Stock to 26 accredited investors for the gross proceeds of
$1,012,250. During the first quarter of 2003, we sold an additional 124,590
shares of Series D Preferred Stock to 16 accredited investors for the gross
proceeds of $1,140,000. We applied the proceeds from the sale of the shares
towards working capital and the research and development of our cardiology
products.

         In November 1999, we acquired a 73.3% interest in Med Enclosure, LLC, a
limited liability company organized under the laws of the State of Nevada.
Pursuant to the terms of an Operating Agreement dated November 5, 1999, we
received a 73.3% interest in Med Enclosure in exchange for our promissory note
in the original principal amount of $250,000. On April 25, 2000, we retired the
note in full by paying $255,208 to Med Enclosure. In September 2002, we entered
into a purchase agreement with the minority owner of Med Enclosure pursuant to
which we acquired from the minority owner an additional 7% membership interest
in Med Enclosure in exchange for our issuance of 10,000 shares of our Common
Stock. In October 2002, we organized Med Close Corp., a wholly-owned Nevada
corporation, for purposes of conducting the development and commercialization of
non-cardiac applications of the Med Close technology.

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


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

GENERAL

         CPC of America is engaged in the business of developing and acquiring
cardiology therapeutic and disposable devices and products as well as the
manufacture and distribution of these devices and products for the diagnosis and
treatment of coronary artery disease. To date, we have developed the CPCA 2000
counterpulsation devices and acquired a controlling interest in the MedClose
internal puncture closing device and technique.

         Our first product, the CPCA 2000 counterpulsation unit, is a
non-invasive, atraumatic and non-toxic method of treating certain coronary
disease states. We have completed the development of the CPCA 2000 and, in March
2003, we received FDA clearance to market the CPCA 2000 counterpulsation unit as
a Class III medical device. MedClose is an internal puncture closure device and
technique that utilizes a human glue deployment to close puncture wounds
following surgery. MedClose is in the development stage and has not been
approved for sale by the FDA. As of the date of this report, we have not
commenced revenue producing operations.

CORONARY ARTERY DISEASE AND TREATMENT

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

                                      -2-
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         A percentage of these patients undergo invasive surgical procedures
such as angioplasty, artery bypass surgery or cardiac catheterization, all of
which are designed to remedy coronary artery narrowing. Coronary angioplasty is
an invasive process whereby a small balloon attached to a catheter is inserted
into a clogged artery. The balloon is then inflated to compress plaque and to
open the narrowed artery. The estimated cost per successfully treated patient
using the angioplasty method approaches $16,000 and many patients fail multiple
attempts at angioplasty. Coronary artery bypass surgery involves supplementing
the original arteries on the surface of the heart with additional conduits, or
bypasses, which carry the blood around areas of blockage or narrowing. These
bypasses or detours are frequently created by using veins harvested from the
patient's leg or arteries harvested from the chest wall. This invasive procedure
requires more lengthy hospitalization than angioplasty, carries a higher risk of
complications, and can cost up to $50,000 per patient. Many bypass conduits
close in the years following surgery requiring a return to medications,
angioplasty, or repeat bypass attempts. Cardiac catheterization is an invasive
procedure that involves threading a catheter through an artery from a patient's
groin to the heart. While cardiac catheterization is invaluable in diagnosing
and treating coronary artery blockages, it carries a serious risk of
hemorrhaging following the procedure at the site where the artery is punctured.

COUNTERPULSATION TECHNOLOGY: "CPCA 2000"

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

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

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

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

                                      -3-
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         In 1998, results of a study regarding the effectiveness of
counterpulsation were reported in a section of the official program of the
American Heart Association's 71st Scientific Sessions. The study involved a
randomized, sham-controlled, double-blinded clinical trial of 139 patients with
chronic angina. The study used standardized methodology to determine whether
counterpulsation treatment had an effect on quality-of-life functions up to 12
months after completion of treatment. Of the 125 patients who entered the study,
the group who received counterpulsation treatment demonstrated a 23% improvement
in their quality-of-life 12 months after the completion of their treatment. The
group that did not receive the counterpulsation treatment showed no improvement.

         We have completed the development of the CPCA 2000 and, in March 2003,
we received FDA clearance to market the CPCA 2000 counterpulsation unit as a
Class III medical device. As of the date of this report, we are analyzing the
potential for the sale of CPCA 2000, Inc., our subsidiary that owns and operates
our counterpulsation technologies and products. Pending the outcome of
divestiture analysis, we intend to postpone the deployment of resources towards
the manufacturing and marketing of the CPCA 2000.

INTERNAL PUNCTURE CLOSURE DEVICES: "MEDCLOSE"

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

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

         We believe that a major advantage of MedClose is that it requires no
sutures and leaves no foreign matter in the artery thereby reducing the risk of
an embolism resulting from residual material left in the artery. In addition, we
believe that MedClose will significantly reduce the recovery time of patients
following catheterization procedures. Physicians traditionally have used sutures
to close puncture wounds following catheterization procedures. Using sutures
requires direct pressure to be applied to the wound for up to 45 minutes and for
the patient to remain still for up to 12 hours following the procedure to avoid
hemorrhaging. MedClose, by contrast, eliminates the need for direct pressure to
be applied to the wound and reduces the recovery time following the procedure to
approximately two hours. As a result, MedClose reduces the need for patients to
remain completely immobile following the catheterization procedure and limits
the recovery time and discomfort associated with the catheterization procedures.

         We have engaged Biomed Research, Inc., a medical device design and
testing firm located in Lutz, Florida, to conduct the development and testing of
the MedClose. As of the date of this report, Biomed has completed the
development of a product prototype and in March 2003 successfully concluded
animal testing. We expect that the completion of design and testing of the
MedClose, including the submission of the final product for FDA premarket
clearance, will take two years from the date of this report.

         On November 22, 1999, we formed Med Enclosures, LLC, as a Nevada
limited liability company, with Gene Myers Enterprises, Inc. We initially
received a 73.3% interest in Med Enclosures for a $250,000 promissory note,
which was retired in April 2000. Gene Myers Enterprises, Inc. contributed two
patents it had developed. Med Enclosures acquired a third patent from Gene Myers
Enterprises, Inc. in 2000. In September 2002, we entered into a purchase
agreement with Gene Myers Enterprises, Inc. pursuant to which we acquired from

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Gene Myers Enterprises, Inc. an additional 7% membership interest in Med
Enclosure in exchange for our issuance of 10,000 shares of our Common Stock.

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

MARKETING AND DISTRIBUTION

         COUNTERPULSATION TECHNOLOGY "CPCA 2000"

         As of the date of this report, we are analyzing the potential for the
sale of CPCA 2000, Inc., our subsidiary that owns and operates our
counterpulsation technologies and products. Pending the outcome of divestiture
analysis, we intend to postpone the deployment of resources towards the
manufacturing and marketing of the CPCA 2000. However, our previously defined
marketing strategy called for us to sell the CPCA 2000 counterpulsation units to
physicians, clinics and hospitals, with us receiving revenues from the proceeds
of the sale as well as from service fees and licensing fees. We would intend to
market the CPCA 2000 both directly and through third party distributors. We
currently do not have any distributor agreements in place. We anticipate that
such a marketing strategy would require approximately additional 10 full-time
employees to conduct direct sales, marketing and distribution efforts.

         INTERNAL PUNCTURE CLOSURE DEVICE " MEDCLOSE"

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

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

         Although we initially intend to concentrate our marketing efforts on
the U.S. domestic market, once domestic operations have been established, we
intend to expand our marketing efforts in various international markets. We
intend to market our counterpulsation units and puncture closing devices to
international customers through affiliations and agreements with international
partners.

GOVERNMENT REGULATION AND SUPERVISION

         FDA APPROVAL PROCESS

         Clinical testing, manufacture and sale of the CPCA 2000 and MedClose
are subject to regulation by numerous governmental authorities, principally the
FDA, and corresponding state and foreign regulatory agencies. Pursuant to the
federal Food, Drug and Cosmetic Act, and the regulations promulgated thereunder,
the FDA regulates the clinical testing, manufacturing, labeling, distribution
and promotion of medical devices. Under the Medical Device Act of 1976, the FDA
places medical devices into one of three classes called Class I, II, or III, on
the basis of the controls deemed necessary by the FDA to reasonably ensure their
safety and effectiveness. Class I devices are subject only to general controls,
including labeling, premarket notification and adherence to good manufacturing
practices. Class II devices are subject to general controls and performance
standards established by the FDA, including postmarket surveillance, patient
registries and FDA guidelines. Class III devices must receive premarket approval

                                      -5-
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by the FDA to ensure their safety and effectiveness. Class III devices generally
include life-sustaining, life-supporting and implantable devices, or new devices
which have been found to be substantially equivalent to devices currently on the
market. Both the CPCA 2000 and MedClose are considered by the FDA to be Class
III devices.

         Before a Class III medical device can be introduced to the market, the
manufacturer generally must obtain FDA clearance through either a "510(k)
premarket notification" or through a premarket approval application. Although
Class III devices normally require FDA clearance through the premarket approval
process, we were able to obtain FDA premarket approval for our CPCA 2000 as a
Class III medical device in March 2003. We believe that we will be able to
receive FDA clearance pursuant to a 510(k) premarket notification for MedClose
as well. Because puncture closure devices are already on the market, newer
versions, similar to the MedClose, have been permitted to be marketed pursuant
to the 510(k) premarket notification procedure. However, there is no assurance
that we will be eligible to utilize the 510(k) premarket notification process in
the future or that the FDA will not in the future require us to submit a
premarket application, which would be a more costly, lengthy and uncertain
approval process.

         Generally, 510(k) premarket notification clearance will be granted if
the proposed device is "substantially equivalent" to a legally marketed Class I
or Class II medical device, or to a preamendment Class III medical device for
which the FDA has not called for premarket approval applications. The FDA has
recently been requiring a more rigorous demonstration of substantial equivalence
than in the past, for example, by more frequently requiring clinical data. It
generally can take from 12 to 36 months or longer from submission of the product
to obtain 510(k) premarket clearance. The FDA may determine that a proposed
device is not substantially equivalent to a legally marketed device or that
additional data is needed before a substantial equivalence determination can be
made. A determination that a device is not substantially equivalent to a device
already on the market, or a request for additional data, would delay the market
introduction of our products and could have a material adverse effect on our
business, financial condition and results of operations. For any of our devices
that are cleared through the 510(k) process, modifications or enhancements that
could significantly affect the safety or effectiveness of the device or that
constitute a major change to the intended use of the device will require a new
510(k) submission. There can be no assurance that we will obtain 510(k)
premarket clearance within the above time frames, if at all, for MedClose or any
other device for which we may file a 510(k).

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

         THIRD-PARTY COVERAGE

         The commercial success of the CPCA 2000 is also dependent upon positive
coverage policies by the Health Care Financing Administration, which administers
the Medicare program, as well as by other third-party payors. In February 1999,
the HCFA extended Medicare coverage to external counterpulsation treatment for
patients with disabling angina who, in the opinion of a cardiologist or
cardiothoracic surgeon, are not readily amenable to surgical interventions. In
November 1999, the Health Care Financing Administration created a new code to
describe external counterpulsation technology. This new code, HCPCS code G0166,
is specific to Medicare beneficiaries and went into effect on January 1, 2000
for angina patients being treated by the counterpulsation. The allowable charge
under this HCPCS code for 35 one-hour treatments is $7,274. Certain patients may
require additional services, such as evaluation and management, which may be
billed separately. We expect third-party insurance companies to follow the lead
of Medicare and to adopt similar coverage policies for counterpulsation
treatment. Failure by these third-party payors to adopt coverage policies
similar to Medicare's, or the elimination of coverage entirely for
counterpulsation treatment, would seriously impact the demand for our
counterpulsation units.

                                      -6-
<PAGE>

         ANTI-KICKBACK STATUTES

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

COMPETITION

         COUNTERPULSATION TECHNOLOGY "CPCA 2000"

         At present, we are aware of four other companies that are currently
producing and marketing counterpulsation device similar to the CPCA 2000:
Vasomedical, Inc., Cardiomedics, Inc., Cardio-Vascular Electronics, Inc. and
NYCOR, Inc. We are also aware of three other companies that have received FDA
clearance to market counterpulsation devices: Solo Medical Devices, LLC, Living
Data Technology Corporation and Shanghai First People Hospital. Some of these
companies have already begun to market their counterpulsation units in the U.S.
and, accordingly, have already obtained some level of market acceptance. We
believe that these competitors have only a limited presence in the market and
that the market in general for counterpulsation devices is largely untapped.
There can be no assurance, however, that we will be able to compete initially or
on a continual basis with companies that are currently marketing
counterpulsation devices or those that presently seek to enter into the
counterpulsation device market.

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

         INTERNAL PUNCTURE CLOSURE DEVICE  " MEDCLOSE"

         We have several competitors that manufacture and market in the puncture
closure devices, including Perclose, Inc., Kensey Nash, Datascope Corp. and
Vascular Solutions, Inc. We believe our devices have competitive advantages over
other products because our product is superior in delivery of arterial site
closures that are safe, variable and cost effective. However, all of our
competitors have greater marketing and financial resources than we do and,
accordingly, there can be no assurance that we will be able to compete
effectively, if at all.

PATENTS AND TRADEMARKS

         In September 2002, we received a patent from the U.S. Patent and
Trademark Office on our CPCA 2000 counterpulsation unit. At present, we have
submitted domestic and international applications to patent the CPCA 2000 and
our counterpulsation technology and have already received a trademark on the
name "CPCA 2000." In addition, our subsidiary, Med Enclosure, LLC, holds three
patents from the USPTO for the MedClose device and procedure and we have applied
for a trademark for the name MedClose. Our ability to compete successfully
depends, in part, on our ability to protect the proprietary technology contained
in our products. We will rely upon a combination of patent, trade secret and

                                      -7-
<PAGE>

trademark laws, together with non-disclosure agreements, to establish and
protect proprietary rights in our counterpulsation devices and other technology,
as well as our trade names and other similar property. We also intend to enter
into confidentiality agreements with our employees, manufacturers, distributors,
customers and suppliers, and will limit access to and distribution of our
proprietary information. If and when implemented, these measures will only
afford us limited protection, as there can be no assurance that any steps taken
by us to protect these proprietary rights will be adequate to prevent
misappropriation of our technology or the independent development by others of
similar technology. In addition, although we believe that there currently are no
infringement claims against us and no grounds for the assertion of such claims,
the cost of responding to any claim could be significant.

RESEARCH AND DEVELOPMENT

         Since inception through December 31, 2002, our research and development
expenses have amounted to approximately $6,541,573, including $2,933,730 spent
on research and development in 2002. At present, none of these research and
development expenses have been borne by customers, as we have not begun to
market or sell our products and services. We acquired the technology for
MedClose in the 73.3% acquisition of Med Enclosure, LLC in November 1999.

EMPLOYEES

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

ITEM 2.  DESCRIPTION OF PROPERTY

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

ITEM 3.  LEGAL PROCEEDINGS.

         Neither the company nor our property are 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, 2002.

                                      -8-
<PAGE>

PART II

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

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

         The Company's Common Stock has been listed on the OTC Bulletin Board
under the symbol "CPCF" since February 18, 1998. Set forth below are high and
low closing prices for the Company's Common Stock for each quarter during the
two fiscal years ended December 31, 2002. The Company considers its Common Stock
to be thinly traded and that any reported bid or sale prices may not be a true
market-based valuation of the Common Stock.


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

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

         March 31, 2002                                       $ 6.80   $5.70
         June 30 , 2002                                       $ 6.17   $3.70
         September 30, 2002                                   $ 5.43   $3.45
         December 31, 2002                                    $ 8.55   $5.00


Holders
-------

         As of March 26, 2003, there were 76 record holders and approximately
560 beneficial owners of our Common Stock.

Dividends
---------

         We have not paid any cash dividends on our common stock since our
inception and do not contemplate paying dividends in the foreseeable future. It
is anticipated that earnings, if any, will be retained for the operation of our
business. Pursuant to our Certificate of Designations, holders of shares of
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock
are entitled to dividends at a rate of 5% per annum, payable at the option of
the holders, in either cash or shares of Common Stock. During 2002, we paid
$53,125 of cash dividends on the shares of Series B Preferred Stock.

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

         During the fiscal year ended December 31, 2002, we sold unregistered
shares of our securities in the following transactions:

         During 2002, we issued 195,313 shares of Common Stock upon the
conversion of 71,429 outstanding shares of Series B Preferred Stock. The common
shares were issued pursuant to Rule 506 under the Act. There was no underwriter
involved in this issuance.

         During 2002, we issued 10,000 shares of Common Stock to Gene Myers
Enterprises, Inc., the minority member of Med Enclosures, LLC, in exchange for a
seven percent (7%) membership interest in Med Enclosures. The shares were issued
pursuant to Section 4(2) of the Act. There was no underwriter involved in this
issuance.

         During 2002, we sold 264,657 shares of Series C Preferred Stock to 18
accredited investors for gross proceeds of $2,355,359. The shares were issued
pursuant to Rule 506 under the Act. There was no underwriter involved in this

                                      -9-
<PAGE>

issuance. During 2002, 18,576 shares of the Series C Preferred Stock were
converted into a total of 46,314 common shares.

         During 2002, we sold 110,627 shares of Series D Preferred Stock to 26
accredited investors for gross proceeds of $1,012,250. The shares were issued
pursuant to Rule 506 under the Act. There was no underwriter involved in this
issuance.

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

         The following table sets forth certain information as of December 31,
2002 concerning our equity compensation plans:

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

<S>                                   <C>                             <C>                         <C>
Equity compensation plan              1,727,191                       $1.52                       3,175,534
approved by shareholders

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

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


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

General
-------

         To date, our activities have included the market analysis and
development of our counterpulsation units, the acquisition of our controlling
interest in Med Enclosures, LLC and the raising of development and working
capital. We have developed and prepared for market our counterpulsation units,
including a stand-alone unit known as the CPCA 2000. In March 2003, we received
FDA clearance to market the CPCA 2000 counterpulsation unit as a Class III
medical device. We have also acquired a 80.3% interest in Med Enclosures, LLC, a
development stage company engaged in the business of developing a patented
internal puncture closure device and technique known as "MedClose".

         We have not commenced revenue producing operations. As of the date of
this report, we are analyzing the potential for the sale of CPCA 2000, Inc., our
subsidiary that owns and operates our counterpulsation technologies and
products. We expect to commence revenue producing operations subject to FDA
approval of MedClose or our decision to move forward with the manufacture and
sale of the CPCA 2000. We do not expect to purchase or sell plant or significant
equipment during 2003, nor do we expect a significant change in the number of
our employees during the year.

         We have financed our activities to date through the sale of our
securities. During 2002, we conducted the private placement sale of 264,657
shares of our Series C Preferred Stock, at a price of $8.90 per share, and
110,627 shares of our Series D Preferred Stock, at a price of $9.15 per share,
for the total gross proceeds of $3,367,609. During 2002, we also received
$317,790 of gross proceeds from the sale of shares of our Common Stock in
connection with the exercise of outstanding options.

                                      -10-
<PAGE>

         As of December 31, 2002, we had working capital of $903,303. Between
January 1, 2003 and March 28, 2003, we received an additional $1,140,000 of
capital from the sale of 124,590 shares of Series D Preferred Stock. We believe
that our working capital on hand as of the date of this report will be
sufficient in order to fund our plan of operations over the next 12 months. We
intend to pursue additional capital over the next 12 months from the sale of our
securities. However, we have no agreements or commitments concerning the sale of
our securities and there can be no assurance we will be able to obtain
sufficient additional capital through the sale of our securities as needed.

Controls and Procedures
-----------------------

         During the 90-day period prior to the filing date of this report,
management, including the our Chief Executive Officer and Chief Financial
Officer, evaluated the effectiveness of the design and operation of our
disclosure controls and procedures. Based upon, and as of the date of that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that the disclosure controls and procedures were effective, in all material
respects, to ensure that information required to be disclosed in the reports we
file and submit under the Exchange Act are recorded, processed, summarized and
reported as and when required.

         There have been no significant changes in our internal controls or in
other factors which could significantly affect internal controls subsequent to
the date our management carried out their evaluation. There were no significant
deficiencies or material weaknesses identified in the evaluation and therefore,
no corrective actions were taken.

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

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

                                      -11-
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

<TABLE>
                          INDEX TO FINANCIAL STATEMENTS

<CAPTION>
<S>                                                                                      <C>
Report of Independent Certified Public Accountants.......................................F-1
Consolidated Balance Sheet at December 31, 2002..........................................F-2
Consolidated Statements of Operations for the years ended December 31, 2002 and 2001
  and cumulative from inception (April 11, 1996) to December 31, 2002....................F-3
Consolidated Statements of Shareholders' Equity (Deficit)
  from inception (April 11, 1996) to December 31, 2002...................................F-4
Consolidated Statements of Cash Flows for the years ended December 31, 2002 and 2001
  and cumulative from inception (April 11, 1996) to December 31, 2002....................F-6
Notes to Consolidated Financial Statements...............................................F-7
</TABLE>

                                      -12-
<PAGE>

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


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

We have audited the accompanying consolidated balance sheet of CPC of America,
Inc. and subsidiaries (a development stage company) (the "Company") as of
December 31, 2002, and the related consolidated statements of operations,
shareholders' equity (deficit) and cash flows for each of the years in the two
year period ended December 31, 2002 and for the period from inception (April 11,
1996) to December 31, 2002. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes, on a test
basis, examination of evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of CPC of
America, Inc. and subsidiaries as of December 31, 2002, and the results of their
consolidated operations and cash flows for each of the years in the two year
period ended December 31, 2002 and for the period from inception (April 11,
1996) to December 31, 2002, in conformity with accounting principles generally
accepted in the United States of America.




                                             CACCIAMATTA ACCOUNTANCY CORPORATION

Irvine, California
March 11, 2003

<PAGE>

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

                           Consolidated Balance Sheet
<CAPTION>


                                                                    DECEMBER 31,
                                                                        2002
                                                                    -------------
<S>                                                                 <C>
                                     ASSETS
CURRENT ASSETS
   Cash and equivalents                                             $    961,507
   Prepaid expenses                                                      107,487
                                                                    -------------

      TOTAL CURRENT ASSETS                                             1,068,994

EQUIPMENT, NET OF ACCUMULATED DEPRECIATION OF $13,878                        530

PATENTS, NET OF ACCUMULATED AMORTIZATION OF $61,421                      240,407

TRADEMARK, NET OF ACCUMULATED AMORTIZATION OF $2,492                       3,740
                                                                    -------------
                                                                    $  1,313,671
                                                                    =============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts payable                                                 $     21,960
   Accrued expenses                                                       16,008
   Accrued dividends payable                                             127,723
                                                                    -------------
      TOTAL CURRENT LIABILITIES                                          165,691
                                                                    -------------

LONG TERM SETTLEMENT PAYABLE                                             200,000

COMMITMENTS AND CONTINGENCIES                                                 --

SHAREHOLDERS' EQUITY
   Preferred stock, 5,000,000 shares authorized, $.001 par value,
      Series C -  341,204 shares issued and outstanding                      341
      Series D -  110,627 shares issued and outstanding                      111
   Common stock, 20,000,000 shares authorized, $.0005 par value,
      5,626,582 shares issued and outstanding                              2,812
   Additional paid-in capital - preferred                              6,017,938
   Additional paid-in capital - common                                 6,966,327
   Deficit accumulated during the development stage                  (12,039,549)
                                                                    -------------
      TOTAL SHAREHOLDERS' EQUITY                                         947,980
                                                                    -------------
                                                                    $  1,313,671
                                                                    =============

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

                                      F-2
</TABLE>
<PAGE>

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

                      Consolidated Statements of Operations
<CAPTION>
                                                                          CUMULATIVE
                                                                        FROM INCEPTION
                                            Year ended December 31,    (APRIL 11, 1996)
                                           --------------------------   TO DECEMBER 31,
                                               2002          2001            2002
                                           ------------  ------------     ------------
<S>                                        <C>           <C>              <C>
Costs and expenses:

  Research and development                 $ 2,933,730   $   888,924      $ 6,541,573

  General and administrative                   535,531     1,089,128        3,174,356
                                           ------------  ------------     ------------

OPERATING LOSS                               3,469,261     1,978,052        9,715,929
                                           ------------  ------------     ------------

OTHER INCOME (EXPENSE):

  Interest expense                                  --           (12)          (8,954)

  Interest income                                8,687         9,593           58,458
                                           ------------  ------------     ------------

                                                 8,687         9,581           49,504
                                           ------------  ------------     ------------

LOSS BEFORE MINORITY INTEREST                3,460,574     1,968,471        9,666,425

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

NET LOSS                                   $ 3,460,574   $ 1,968,471      $ 9,665,305
                                           ============  ============     ============


BASIC AND DILUTED NET LOSS PER SHARE       $     (0.81)  $     (0.52)
                                           ============  ============

BASIC AND DILUTED WEIGHTED AVERAGE NUMBER
  OF COMMON SHARES OUTSTANDING               5,768,032     5,114,133
                                           ============  ============


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

                                      F-3
</TABLE>

<PAGE>

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

<CAPTION>
                                Consolidated Statements of Shareholders' Equity (Deficit)
                                  From inception (April 11, 1996) to December 31, 2002


                                                                            PREFERRED STOCK
                                            ------------------------------------------------------------------------------
                                                 SERIES A            SERIES B            SERIES C            SERIES D
                                            ------------------  ------------------  ------------------  ------------------
                                             NUMBER               NUMBER             NUMBER              NUMBER
                                            OF SHARES   TOTAL   OF SHARES   TOTAL   OF SHARES   TOTAL   OF SHARES   TOTAL
                                            ---------  -------  ---------  -------  ---------  -------  ---------  -------
<S>                                            <C>     <C>        <C>      <C>            <C>  <C>            <C>  <C>
Initial capitalization                            --   $   --         --   $   --         --   $   --         --   $   --
Issuance of common stock for a note               --       --         --       --         --       --         --       --
Issuance of common stock for cash                 --       --         --       --         --       --         --       --
Issuance of common stock for services             --       --         --       --         --       --         --       --
Net loss for 1996                                 --       --         --       --         --       --         --       --
                                            ---------  -------  ---------  -------  ---------  -------  ---------  -------
 BALANCE, DECEMBER 31, 1996                       --       --         --       --         --       --         --       --
Exercise of options                               --       --         --       --         --       --         --       --
Issuance of common stock for cash and
    conversion of note payable ($77,000)          --       --         --       --         --       --         --       --
Payment of note receivable
Net loss for 1997                                 --       --         --       --         --       --         --       --
                                            ---------  -------  ---------  -------  ---------  -------  ---------  -------
 BALANCE, DECEMBER 31, 1997                       --       --         --       --         --       --         --       --
Exercise of options                               --       --         --       --         --       --         --       --
Issuance of common stock for cash                 --       --         --       --         --       --         --       --
Issuance of preferred stock for cash           8,824        9         --       --         --       --         --       --
Valuation of beneficial conversion                --       --         --       --         --       --         --       --
    feature on Series A Preferred                 --       --         --       --         --       --         --       --
Contribution of officer's salary                  --       --         --       --         --       --         --       --
Net loss for 1998                                 --       --         --       --         --       --         --       --
                                            ---------  -------  ---------  -------  ---------  -------  ---------  -------
 BALANCE, DECEMBER 31, 1998                    8,824        9         --       --         --       --         --       --
Exercise of warrants                              --       --         --       --         --       --         --       --
Exercise of options                               --       --         --       --         --       --         --       --
Issuance of preferred stock for cash          70,469       70         --       --         --       --         --       --
Preferred stock dividend                          --       --         --       --         --       --         --       --
Valuation of beneficial conversion
    feature on Series A Preferred                 --       --         --       --         --       --         --       --
Repurchase of common shares                       --       --         --       --         --       --         --       --
Net loss for 1999                                 --       --         --       --         --       --         --       --
                                            ---------  -------  ---------  -------  ---------  -------  ---------  -------
 BALANCE, DECEMBER 31, 1999                   79,293   $   79         --   $   --         --   $   --         --   $   --
Exercise of warrants                              --       --         --       --         --       --         --       --
Exercise of options                               --       --         --       --         --       --         --       --
Issuance of preferred stock for cash              --       --     71,429       71         --       --         --       --
Valuation of beneficial conversion
    feature on Series B Preferred                 --       --         --       --         --       --         --       --
Conversion of Series A Preferred                  --       --         --       --         --       --         --       --
    into common shares                       (70,469)     (70)        --       --         --       --         --       --
Beneficial conversion feature on                  --       --         --       --         --       --         --       --
    Series  A Preferred shares                    --       --         --       --         --       --         --       --
Settlement of lawsuit                             --       --         --       --         --       --         --       --
Purchase of patent                                --       --         --       --         --       --         --       --
Stock option costs                                --       --         --       --         --       --         --       --
Amortization of stock option costs                --       --         --       --         --       --         --       --
Cancellation of common shares                     --       --         --       --         --       --         --       --
Net loss for 2000                                 --       --         --       --         --       --         --       --
                                            ---------  -------  ---------  -------  ---------  -------  ---------  -------
 BALANCE, DECEMBER 31, 2000                    8,824        9     71,429       71         --       --         --       --
                                                                                                                (CONTINUED)
</TABLE>


<TABLE>
<CAPTION>
                                                COMMON STOCK                    Additional   Additional   Accumulated       Net
                                          ------------------------    Stock      Paid-in      Paid-in     During the   Shareholders'
                                             Number                  Option      Capital-     Capital-    Development     Equity
                                           of Shares      Total       Costs     Preferred     Common         Stage       (Deficit)
                                          ------------  ----------  ----------  ----------  ------------  ------------  ------------
<S>                                         <C>         <C>         <C>         <C>         <C>           <C>           <C>
Initial capitalization                      2,400,000   $   1,200   $      --   $      --   $        --   $        --   $     1,200
Issuance of common stock for a note           300,000         150          --          --            --            --           150
Issuance of common stock for cash             100,000          50          --          --         4,950            --         5,000
Issuance of common stock for services         764,000         382          --          --        37,818            --        38,200
Net loss for 1996                                  --          --          --          --            --       (59,079)      (59,079)
                                          ------------  ----------  ----------  ----------  ------------  ------------  ------------
 Balance, December 31, 1996                 3,564,000       1,782          --          --        42,768       (59,079)      (14,529)
Exercise of options                            26,666          13          --          --        29,987            --        30,000
Issuance of common stock for cash and
    conversion of note payable ($77,000)      640,000         320          --          --       927,680            --       928,000
Payment of note receivable
Net loss for 1997                                  --          --          --          --            --      (457,829)     (457,829)
                                          ------------  ----------  ----------  ----------  ------------  ------------  ------------
 Balance, December 31, 1997                 4,230,666       2,115          --          --     1,000,435      (516,908)      485,642
Exercise of options                            57,000          29          --          --       114,971            --       115,000
Issuance of common stock for cash              40,000          20          --          --        57,980            --        58,000
Issuance of preferred stock for cash               --          --          --      74,991            --            --        75,000
Valuation of beneficial conversion
    feature on Series A Preferred                  --          --          --      25,000            --       (25,000)           --
Contribution of officer's salary                   --          --          --          --        80,000            --        80,000
Net loss for 1998                                  --          --          --          --            --      (640,580)     (640,580)
                                          ------------  ----------  ----------  ----------  ------------  ------------  ------------
 Balance, December 31, 1998                 4,327,666       2,164          --      99,991     1,253,386    (1,182,488)      173,062
Exercise of warrants                          209,490         105          --          --       366,503            --       366,608
Exercise of options                           146,903          73          --          --       177,289            --       177,362
Issuance of preferred stock for cash               --          --          --     598,930            --            --       599,000
Preferred stock dividend                        5,474           3          --          --        25,722       (25,725)           --
Valuation of beneficial conversion
    feature on Series A Preferred                  --          --          --     199,486            --      (199,486)           --
Repurchase of common shares                  (560,000)       (280)         --          --            --            --          (280)
Net loss for 1999                                  --          --          --          --            --    (1,329,328)   (1,329,328)
                                          ------------  ----------  ----------  ----------  ------------  ------------  ------------
 Balance, December 31, 1999                 4,129,533   $   2,065   $      --   $ 898,407   $ 1,822,900   $(2,737,027)  $   (13,576)
Exercise of warrants                          365,500         183          --          --       639,442            --       639,625
Exercise of options                           223,832         113          --          --       258,528            --       258,641
Issuance of preferred stock for cash               --          --          --     624,929            --            --       625,000
Valuation of beneficial conversion
    feature on Series B Preferred                  --          --          --     208,125            --      (208,125)           --
Conversion of Series A Preferred                   --          --          --          --            --            --            --
    into common shares                        127,447          64          --    (598,930)      598,936            --            --
Beneficial conversion feature on
    Series A Preferred shares                      --          --          --    (199,486)      199,486            --            --
Settlement of lawsuit                          33,333          17          --          --       199,983            --       200,000
Purchase of patent                             47,042          24          --          --       235,184            --       235,208
Stock option costs                                 --          --    (280,000)         --       280,000            --            --
Amortization of stock option costs                 --          --     105,000          --            --            --       105,000
Cancellation of common shares                 (89,000)        (45)         --          --            --            --           (45)
Net loss for 2000                                  --          --          --          --            --    (1,749,444)   (1,749,444)
                                          ------------  ----------  ----------  ----------  ------------  ------------  ------------
 Balance, December 31, 2000                 4,837,687       2,421    (175,000)    933,045     4,234,459    (4,694,596)      300,409


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

                                                          F-4
</TABLE>
<PAGE>


<TABLE>
                                          CPC OF AMERICA, INC. AND SUBSIDIARIES
                                              (A Development Stage Company)
                                Consolidated Statements of Shareholders' Equity (Deficit)
                                  From inception (April 11, 1996) to December 31, 2002

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

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

BALANCE, DECEMBER 31, 2001                           --         --     71,429         71     95,123         95         --        --

   Issuance of preferred stock for cash              --         --         --         --    264,657        265    110,627       111
   Valuation of beneficial conversion
       feature on Series C Preferred
   Conversion of  preferred stock and
       accrued dividends into common shares          --         --    (71,429)       (71)   (18,576)       (19)        --        --
   Valuation of beneficial conversion
       feature on Series D Preferred                 --         --         --         --         --         --         --        --
   Preferred stock dividend                          --         --         --         --         --         --         --        --
   Exercise of options                               --         --         --         --         --         --         --        --
   Cancellation of shares                            --         --         --         --         --         --         --        --
   Amortization of stock option costs                --         --         --         --         --         --         --        --
   Purchase 7% of Med Enclosure LLC                  --         --         --         --         --         --         --        --
   Amortization of stock options                     --         --         --         --         --         --         --        --
   Net loss for 2002                                 --         --         --         --         --         --         --        --
                                               ---------  ---------  ---------  ---------  ---------  ---------  --------- ---------

BALANCE, DECEMBER 31, 2002                           --   $     --         --         --    341,204   $    341    110,627  $    111
                                               =========  =========  =========  =========  =========  =========  ========= =========
                                                                                                                         (CONTINUED)
</TABLE>


<TABLE>
<CAPTION>
                                                COMMON STOCK                    Additional   Additional   Accumulated       Net
                                           -----------------------    Stock     Paid-in       Paid-in     During the   Shareholders'
                                              Number                 Option     Capital-      Capital-    Development     Equity
                                            of Shares     Total       Costs     Preferred      Common        Stage       (Deficit)
                                           -----------  ----------  ---------  ------------  -----------  ------------- ------------
<S>                                         <C>         <C>         <C>        <C>           <C>          <C>           <C>
BALANCE, DECEMBER 31, 2000                  4,837,687       2,421   (175,000)      933,045    4,234,459     (4,694,596)     300,409
   Exercise of options                        360,394         179         --            --      413,484             --      413,663
   Issuance of common stock for services      100,000          50         --            --      255,450             --      255,500
   Issuance of preferred stock for cash            --          --         --     1,841,392           --             --    1,841,601
   Valuation of beneficial conversion
       feature on Series B Preferred               --          --         --       331,636           --       (331,636)          --
   Valuation of beneficial conversion
       feature on Series C Preferred               --          --         --       282,233           --       (282,233)          --
   Conversion of  preferred stock and
       accrued dividends into common shares   330,327         165         --    (1,069,887)   1,081,316             --       11,471
  Preferred stock dividend                         --          --         --            --           --        (63,397)     (63,397)
  Issuance of common stock
     options for services                          --          --         --            --       20,000             --       20,000
   Amortization of stock option costs              --          --    140,000            --           --             --      140,000
   Net loss for 2001                               --          --         --            --           --     (1,968,471)  (1,968,471)
                                           -----------  ----------  ---------  ------------  -----------  ------------- ------------

BALANCE, DECEMBER 31, 2001                  5,628,408       2,815    (35,000)    2,318,419    6,004,709     (7,340,333)     950,776

   Issuance of preferred stock for cash            --          --         --     3,367,233           --             --    3,367,609
   Valuation of beneficial conversion
       feature on Series C Preferred               --          --         --       785,104           --       (785,104)          --
   Conversion of  preferred stock and
       accrued dividends into common shares   241,627         120         --      (790,235)     790,205             --           --
   Valuation of beneficial conversion
       feature on Series D Preferred               --          --         --       337,417           --       (337,417)          --
   Preferred stock dividend                        --          --         --            --           --       (116,121)    (116,121)
   Exercise of options                        282,480         140         --            --      317,650             --      317,790
   Cancellation of shares                    (535,933)       (268)        --            --     (199,732)            --     (200,000)
   Amortization of stock option costs              --          --         --            --           --             --           --
   Purchase 7% of Med Enclosure LLC            10,000           5         --            --       53,495             --       53,500
   Amortization of stock options                   --          --     35,000            --           --             --       35,000
   Net loss for 2002                               --          --         --            --           --     (3,460,574)  (3,460,574)
                                           -----------  ----------  ---------  ------------  -----------  ------------- ------------

BALANCE, DECEMBER 31, 2002                 5,626,582   $   2,812         --   $ 6,017,938   $6,966,327   $(12,039,549) $   947,980
                                           ===========  ==========  =========  ============  ===========  ============= ============

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

                                                           F-5
</TABLE>
<PAGE>

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

                                Consolidated Statements of Cash Flows

<CAPTION>
                                                                                             CUMULATIVE
                                                                                           FROM INCEPTION
                                                                YEAR ENDED DECEMBER 31,   (APRIL 11, 1996)
                                                              ---------------------------   TO DECEMBER
                                                                  2002           2001         31, 2002
                                                              ------------   ------------   ------------
<S>                                                           <C>            <C>            <C>
Cash flows from operating activities:
  Net loss                                                    $(3,460,574)   $(1,968,471)   $(9,665,305)
  Adjustments to reconcile net loss to net cash
    used by operating activities:
    Depreciation and amortization                                  31,728         28,305         96,207
    Amortization of stock option costs                             35,000        140,000        280,000
    Contribution of officer's salary                                   --             --         80,000
    Issuance of common stock and options for services                  --        275,500        313,700
    Other                                                              --             --         38,879
    Decrease (increase) in other assets                           (37,102)       (64,304)       (53,716)
    Increase (decrease) in accounts and other payable             204,717       (110,772)       222,445
    (Decrease) increase in accrued expenses                       (19,265)            --        203,735
                                                              ------------   ------------   ------------
    Net cash used by operating activities                      (3,245,496)    (1,699,742)    (8,484,055)
                                                              ------------   ------------   ------------

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

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from shareholder notes                                      --             --         73,150
  Payments on note payable to shareholder                              --             --         (3,000)
  Exercise of options and warrants                                317,790        413,663      2,318,689
  Issuance of preferred stock                                   3,367,609      1,841,601      6,508,210
  Issuance of common stock                                             --             --        915,200
  Dividends                                                            --         (5,051)        (5,051)
  Cancellation of common stock                                   (200,000)            --       (200,325)
                                                              ------------   ------------   ------------
    Net cash provided by financing activities                   3,485,399      2,250,213      9,606,873
                                                              ------------   ------------   ------------

Net increase (decrease) in cash                                   239,903        548,374        961,507
CASH, BEGINNING OF PERIOD                                         721,604        173,230             --
                                                              ------------   ------------   ------------
CASH, END OF PERIOD                                           $   961,507    $   721,604    $   961,507
                                                              ============   ============   ============

NON-CASH INVESTING AND FINANCING ACTIVITIES:
  Issuance of common stock for note receivable                $        --    $        --    $       150
  Debt to equity conversion                                   $        --    $        --    $    77,000
  Acquisition of minority interest                            $        --    $        --    $    33,250
  Sale of Tercero - elimination of goodwill                   $        --    $        --    $   (40,000)
  Preferred dividends accrued                                 $    80,848    $    46,875    $   127,723
  Preferred dividends paid through issuance of common stock   $     6,625    $    11,471    $    43,821
  Acquisition of Med Enclosures for note payable              $        --    $        --    $   250,000
  Acquisition of patent paid by issuance of common stock      $    53,500    $        --    $   288,708
  Settlement of lawsuit by issuance of common stock           $        --    $        --    $   200,000
  Valuation of beneficial conversion features                 $ 1,122,521    $   613,869    $ 2,169,001

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

                                                 F-6
</TABLE>
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

1.    ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-----------------------------------------------------------------

      Organization
      ------------

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

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

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

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

      On November 22, 1999, CPC formed Med Enclosures, LLC, a Nevada limited
      liability company, (MED) with Gene Myers Enterprises, Inc., (GME) a
      minority shareholder of CPC. CPC received a 73.3% interest in MED for a
      $250,000 promissory note, which was retired in April 2000. GME contributed
      two patents it developed that are recorded at GME's carrying value of
      zero. MED acquired its third patent from GME with the proceeds from the
      $250,000 promissory note. During 2002, the Company purchased an additional
      7% of MED through the issuance of 10,000 shares of common stock valued at
      $53,500.

                                      F-7
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

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

      Organization (continued)
      ------------------------

      During 2002, the Company formed Med Close Corp ("MCC"); operations have
      not commenced.

      Principles of consolidation
      ---------------------------

      The accompanying consolidated financial statements include the accounts of
      the Company and its subsidiaries, DSDS from July 1997 through November
      1998, CPCA from June 1998, MED and HeartMed LLC from November 1999, and
      Med Close from 2002. All significant intercompany transactions and
      balances have been eliminated in consolidation.

      Cash and equivalents and other cash flow statement supplemental
      ---------------------------------------------------------------
      information
      -----------

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

      No income taxes have been paid since inception. Payments of $8,954 for
      interest have been made since inception; none in 2002.

      Patents and trademarks
      ----------------------

      Patents and trademarks are stated at cost and amortized using the
      straight-line method over their economic useful life, which is estimated
      at ten and fifteen years, respectively. Amortization expense was $27,003
      in 2002 and $26,395 in 2001.

      Equipment
      ---------

      Depreciation expense is provided over the estimated useful life of 5 years
      using accelerated methods. Depreciation expense was $4,725 in 2002 and
      $1,910 in 2001.

      Use of estimates
      ----------------

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

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

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

      Income taxes
      ------------

      The Company reports certain expenses differently for financial and tax
      reporting purposes and, accordingly, provides for the related deferred
      taxes. Income taxes are accounted for under the liability method in
      accordance with SFAS 109.

                                      F-8
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

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

      Research and development costs
      ------------------------------

      Costs and expenses that can be clearly identified as research and
      development are charged to expense as incurred in accordance with FASB
      Statement No. 2, "Accounting for Research and Development Costs".

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

      Net loss per share is calculated in accordance with Statement of Financial
      Accounting Standards 128, Earnings Per Share ("SFAS 128"). Basic net loss
      per share is based upon the weighted average number of common shares
      outstanding. Diluted net loss per share is based on the assumption that
      all dilutive convertible shares and stock options were converted or
      exercised. Dilution is computed by applying the treasury stock method.
      Under this method, options and warrants are assumed to be exercised at the
      beginning of the period (or at the time of issuance, if later), and as if
      funds obtained thereby were used to purchase common stock at the average
      market price during the period. For 2002 and 2001 all common stock
      equivalents were anti-dilutive.

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

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

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

                                                        2002           2001
                                                    -------------  ------------
          Net loss
                 As reported                        $ (3,460,574)  $(1,968,471)
                 Pro forma                          $ (3,838,970)  $(2,495,516)
          Basic and fully diluted loss per share
                 As reported                             $ (0.81)      $ (0.52)
                 Pro forma                               $ (0.88)      $ (0.62)

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

                                      F-9
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

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

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

      On July 20, 2001, the FASB issued SFAS No. 141, "Business Combinations,"
      and SFAS No. 142, "Goodwill and Other Intangible Assets." These statements
      make significant changes to the accounting for business combinations,
      goodwill, and intangible assets. SFAS No. 141 establishes new standards
      for accounting and reporting requirements for business combinations and
      will require that the purchase method of accounting be used for all
      business combinations initiated after June 30, 2001. Use of
      pooling-of-interests method is prohibited. This statement is effective for
      business combinations completed after June 30, 2001. SFAS No. 142
      establishes new standards for goodwill acquired in a business combination
      and eliminates amortization of goodwill and instead sets forth methods to
      periodically evaluate goodwill for impairment. Intangible assets with a
      determinable useful life will continue to be amortized over that period.
      This statement was effective January 1, 2002. The impact of these
      pronouncements did not materially impact the Company's financial position
      or results of operations.

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

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

      In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
      Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
      Technical Corrections." SFAS No. 145 requires most gains and losses on
      extinguishment of debt to be classified as income or loss from continuing
      operations rather than as extraordinary items as previously required. SFAS
      No. 145 also amends SFAS No. 13 "Accounting for leases", to require
      certain lease modifications to be treated as sale-leaseback transactions.
      Certain provisions of SFAS No. 145 are effective for transactions
      occurring after May 15, 2002, while other provisions are effective for
      fiscal years beginning after May 15, 2002. We do not expect a material

                                      F-10
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

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

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

      impact on our results of operations or financial condition as a result of
      the adoption of SFAS No. 145.

      In July 2002, the FASB issued SFAS 146, "Accounting for Costs Associated
      with Exit or Disposal Activities" FAS 146 addresses financial accounting
      and reporting for costs associated with exit or disposal activities and
      nullifies the Emerging Issues Task Force Issue No. 94-3, LIABILITY
      RECOGNITION FOR CERTAIN EMPLOYEE TERMINATION BENEFITS AND OTHER COSTS TO
      EXIT AN ACTIVITY INCLUDING CERTAIN COSTS INCURRED IN A RESTRUCTURING. FAS
      146 requires that a liability for a cost associated with an exit or
      disposal activity be recognized when the liability is incurred, whereas
      EITF 94-3 had recognized the liability at the commitment date to an exit
      plan. The Company is required to adopt the provisions of FAS 146 effective
      for exit or disposal activities initiated after December 31, 2002 and
      therefore the adoption has no impact on the Company's financial position
      or results of operations or results of operations as of December 31, 2002.

      On December 31, 2002, the FASB issues SFAS 148, "Accounting for
      Stock-Based Compensation-Transition and Disclosure" (FAS 148). The Company
      currently utilized the intrinsic value method of accounting for its
      stock-based employee compensation described in APB Opinion No. 25,
      "Accounting for Stock-Based Compensation", to require companies to account
      for their employee stock-based awards using the fair value approach.
      However, the disclosure provisions are required for all companies with
      stock-based employee compensation, regardless of whether they utilize the
      fair value method of accounting as described in FAS 123 or the intrinsic
      value method described in APB Opinion No. 25. In addition, FAS 148 amends
      the disclosure provisions of FAS 123 to require disclosure in the summary
      of significant accounting policies of the effects of an entity's
      accounting policy with respect to stock-based employee compensation
      reported in net income and earnings per share in annual and interim
      financial statements.

      FAS 148 amends FAS 123 to provide alternative methods of transition to the
      fair value method of accounting for stock-based employee compensation
      should the Company decide to change its method of accounting from
      intrinsic value method to the fair value method. The three methods
      provided in FAS 148 include (1) the prospective method which is the method
      currently provided for in FAS 123, (2) the retroactive restatement method
      which would allow companies to restate all periods presented and (3) the
      modified prospective method which would allow companies to present the
      recognition provisions to all outstanding stock-based employee
      compensation instruments as of beginning of fiscal year of adoption. The
      Company believes that it has provided the disclosures required under FAS
      148 in these financial statements and has no current plans to change its
      accounting for stock-based compensation to the fair value method.

                                      F-11
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

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

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

      In November 1998, the Company offered in a private placement memorandum
      Series A preferred stock at $8.50 per share. As of November 15, 1999, the
      Company sold 79,293 shares for proceeds of $674,000. The Series A
      Preferred stock has no voting rights and has a 5% annual dividend which
      may be payable in cash or common stock. Each Series A share was
      convertible into one common share until December 31, 1999, when the
      conversion price was adjusted to the lower of $6.38 or 75% of the average
      last sale price of the common stock for the 30 trading days immediately
      preceding such date as reported on any stock exchange, according to the
      terms of the original agreement. At December 31, 1999 the conversion price
      was calculated at $4.70 per share. On December 31, 1999, a dividend of
      $25,725 was paid by issuing 5,474 shares of the Company's common stock. In
      January 2000, 70,469 Series A shares were converted into 127,447 common
      shares. In June 2001, the remaining 8,824 Series A shares and related
      accrued dividends of $1,563 were converted into 16,290 common shares.
      Additional accrued dividends of $3,750 were paid in cash.

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

      In April 2000, the Company offered in a private placement memorandum
      Series B preferred stock at $8.75 per share. As of December 31, 2001, the
      Company sold 185,144 shares for proceeds of $1,620,010. The Company
      recorded the beneficial conversion feature totaling $208,125 in 2000 and
      $331,636 in 2001 at the date of issuance. The Series B Preferred stock has
      no voting rights and has a 5% annual dividend which may be payable in cash
      or common stock. Each Series B share was convertible into one common share
      until June 30, 2001, when the conversion price was adjusted to the lower
      of $6.56 or 75% of the average last sale price of the common stock for the
      30 trading days immediately preceding such date as reported on any stock
      exchange, according to the terms of the original agreement. The conversion
      price was calculated at $3.20 per share. During the fourth quarter of
      2001, 113,715 Series B shares and related accrued dividends of $9,908 were
      converted into 314,037 common shares. In March 2002, the remaining 71,429
      Series B shares were converted into 195,313 common shares. Additional
      accrued dividends of $53,125 were paid in cash.

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

      In October 2001, the Company offered in a private placement memorandum
      Series C preferred stock at $8.90 per share. As of December 31, 2002, the
      Company sold 359,780 shares for proceeds of $3,202,042. The Company
      recorded the 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 which may be payable in cash or common stock. Each
      Series C share is convertible into one common share until June 30, 2002,
      when the conversion price will be adjusted to the lower of $6.68 or 75% of
      the average last sale price of the common stock for the 30 trading days
      immediately preceding such date as reported on any stock exchange,
      according to the terms of the original agreement.

                                      F-12
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

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

      Series C Preferred stock (continued)
      ------------------------------------

      The conversion price was calculated at $3.57 per share. During the fourth
      quarter of 2002, 18,576 Series C shares and related accrued dividends of
      $6,625 were converted into 46,314 common shares. Accrued dividends of
      $124,821 on the 341,204 outstanding shares remain unpaid at December 31,
      2002.

      Series D Preferred stock
      ------------------------

      In November 2002, the Company offered in a private placement memorandum
      Series D preferred stock at $9.15 per share. As of December 31, 2002, the
      Company sold 110,627 shares for proceeds of $1,012,250. The Company
      recorded the beneficial conversion feature totaling $337,417 at the date
      of issuance. The Series D Preferred stock has no voting rights and has a
      5% annual dividend which may be payable in cash or common stock. Each
      Series D share is convertible into one common share until June 30, 2003,
      when the conversion price will be 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. Accrued dividends of
      $2,902 on the 110,627 outstanding shares remain unpaid at December 31,
      2002.

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

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

      During the October and December of 2002, 18,576 Series C shares and
      related accrued dividends of $6,625 were converted into 46,314 common
      shares.

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

      In March 2002, 33,333 common shares were canceled as part of a lawsuit
      settlement. In August and November 2002, 502,600 common shares were
      canceled 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 offered in a private placement memorandum 35
      units at $29,000 per unit. Each unit consists of 20,000 shares of common
      stock and warrants to purchase 40,000 shares of common stock exercisable
      at $1.75 per share from February 10, 1999 until December 31, 2000. As of
      December 31, 1998, the Company had sold 34 units, including 3 units in
      conversion of a note payable. An investor converted a note with a balance
      of $70,000 and related accrued interest of $7,000 into 3 units, and the
      Company received $10,000 cash for the balance. No value was allocated to
      the warrants because the exercise price was above market price at the time

                                      F-13
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

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

      Common stock (continued)
      ------------------------

      of issuance. During 1999, warrants to purchase 209,490 common shares were
      exercised. During 2000, warrants to purchase 365,500 common shares were
      exercised and the remaining balance of 785,010 at December 31, 2000 were
      not converted and therefore expired.

      In December 1996, the Company issued 4,000 shares of common stock to its
      attorney for payment of $200 in legal fees.

      In October 1996, the Company issued 760,000 shares of common stock to
      related parties in payment of $38,000 in consulting fees rendered in 1996.

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

      Stock options

      The Company has granted options to purchase its common stock. The option
      prices at the time of grant were at or above the fair value of the
      Company's common stock. The following information applies to all options
      outstanding at December 31, 2002:

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

           $ 1.125    1,514,391        3        $ 1.125    1,514,391   $ 1.125
           $  2.50    4,097,800        5        $  2.50    2,097,800   $  2.50
    $  4.63 - 5.75      105,000        1        $  5.33      105,000   $  5.33
           $  9.00       10,000        1        $  9.00       10,000   $  9.00

                                      F-14
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

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

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

      A summary of stock option activity follows:

<TABLE>
<CAPTION>
                                                               Exercise
                                               Number of        Price
                                                Options        Per Share      Expiration
                                              -----------   --------------   ------------
    <S>                                        <C>          <C>              <C>
    Inception (April 11, 1996)                         -                -            -
    Granted                                    4,420,000    $1.125 - 1.25    1997 - 2006
                                              -----------   --------------
    Outstanding at December 31, 1996           4,420,000    $1.125 - 1.25    1997 - 2006

    Exercised                                    (26,666)          $1.125
    Expired                                     (200,000)           $1.18
                                              -----------   --------------
    Outstanding at December 31, 1997           4,193,334    $1.125 - 1.25        2006

    Granted                                    4,152,000     $1.25 - 9.00        2008
    Exercised                                    (57,000)   $1.125 - 2.50
    Canceled                                  (1,173,334)          $1.125
                                              -----------   --------------
    Outstanding at December 31, 1998           7,115,000    $1.125 - 9.00    2003 - 2008

    Granted                                       25,000            $5.50        2004
    Exercised                                   (146,903)   $1.125 - 2.50
    Canceled                                    (490,000)          $1.125
                                              -----------   --------------
    Outstanding at December 31, 1999           6,503,097    $1.125 - 9.00    2003 - 2008

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

    Granted                                       15,800            $2.50        2004
    Exercised                                   (360,394)   $1.125 - 2.50
                                              -----------   --------------
    Outstanding at December 31, 2001           6,109,671    $1.125 - 9.00    2003 - 2008

    Exercised                                   (282,480)          $1.125
    Canceled                                    (100,000)           $5.50
                                              -----------   --------------
    Outstanding at December 31, 2002           5,727,191    $1.125 - 9.00    2003 - 2008
                                              ===========   ==============
</TABLE>

      The following information applies to employee options outstanding at
December 31, 2002:


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

    $ 1.125    1,514,391        3        $ 1.125    1,514,391   $ 1.125
    $  2.50    4,078,000        5        $  2.50    2,062,000   $  2.50

                                      F-15
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

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 are to be performed
      over two years. The cost of $280,000 is being amortized over two years.
      During 2002 and 2001, $35,000 and $140,000 were charged to expense and
      recorded in the statement of operations, respectively. In 2002, 100,000 of
      these options were cancelled due to non-performance. The fair value of the
      options issued to non-employees during 1999 and 1998 was determined to be
      minimal.

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

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

                                                         2002           2001
                                                     ------------   ------------
BASIC AND DILUTED LOSS PER SHARE:

  Numerator
      Net loss                                       $(3,460,574)   $(1,968,471)
      Preferred dividend                                (116,121)       (63,379)
      Beneficial conversion feature preferred stock   (1,122,521)      (613,869)
                                                     ------------   ------------

                                                     $(4,699,216)   $(2,645,719)
                                                     ============   ============
  Denominator
      Basic and diluted weighted average number of
      common shares outstanding during the period      5,768,032      5,114,133
                                                     ============   ============

  Basic and diluted loss per share                   $     (0.81)   $     (0.52)
                                                     ============   ============

   Incremental common shares (not included in
   denominator of diluted earnings per share
   calculation due to their antidilutive nature)
   attributable to exercise/conversion of:
         Outstanding options                           5,727,191      6,109,671
         Outstanding warrants                                 --             --
         Preferred stock                                 961,248        483,672
                                                     ------------   ------------

                                                       6,688,439      6,593,343
                                                     ============   ============

                                      F-16
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

4.    INCOME TAXES
------------------

      The Company recognizes deferred tax assets and liabilities for temporary
      differences between the financial reporting and tax bases of its assets
      and liabilities. Deferred tax assets are reduced by a valuation allowance
      when deemed appropriate. For 2002 and 2001 there is no difference between
      income tax expense and the amount computed by applying the federal
      statutory income tax rate.

      At December 31, 2002, the Company has a net operating loss carryforward
      for federal tax purposes of $7,445,538, which, if unused to offset future
      taxable income, will begin to expire in 2012 and continue through 2021.

      The Company had deferred tax assets of $2,605,938 and $2,109,000 at
      December 31, 2002 and 2001, respectively, relating to its net operating
      loss. A valuation allowance has been recognized to offset the entire
      related deferred tax asset due to the uncertainty of realizing the
      benefit.

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

      Lease
      -----

      The Company leases office space under a one-year lease at $1,100 per
      month. The lease expires November 30, 2003. Future rental payments are
      $13,200 in 2002. Actual rent expense was $12,100 in 2002 and $2,756 in
      2001.

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

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

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

                                      F-17
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

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 .0075%
      on net sales of certain MED products as defined. In July 2001, these
      agreements were amended to increase the royalties to 1.5% of net sales of
      certain MED products as defined. To date, MED has not had any sales.

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

      Litigation
      ----------

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

      The Company was named in a lawsuit brought by Nancy Lee, a former
      consultant to the Company. Ms. Lee alleged that the Company prohibited her
      from selling the balance of her shares of stock she acquired as one of the
      Company's founders. She sought a judicial declaration from the court that
      she is the rightful owner of the shares. The Company filed an answer and a
      counterclaim seeking return of the shares on the grounds that Ms. Lee
      failed to provide adequate consideration for the securities. In July 2002,
      this matter was settled, with the Company paying Ms. Lee $170,000 in
      settlement of her claims and Ms. Lee returning 78,000 shares of common
      stock to the Company.

      The Company was named in a lawsuit brought by Richard E. Rubin, M.D., a
      former officer and director of the Company. Rubin alleged that the Company
      breached an employment contract with him and prohibited him from selling
      his shares of stock or exercising his stock options. He sought damages in
      excess of $5,000,000. The Company filed an answer denying any and all
      liability to Rubin. The Company interposed counterclaims against Rubin
      seeking recovery of the shares and options, or in the alternative,
      monetary damages. In December 2002, this matter was settled, with the
      Company paying Rubin $400,000 with a final payment of $200,000 due in 24
      months in settlement of his claims and Rubin returning 424,600 shares of
      common stock to the Company.

                                      F-18
<PAGE>

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

         None.

PART III

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

Set forth below are our directors and officers.


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

Rod A. Shipman          52     President, Secretary, Treasurer and Director
Rafe Cohen              55     Director
William C. Lievense     55     Director


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

         Mr. Cohen has served as a director of the Company since July 1998. Mr.
Cohen previously served as a director of the Company in 1996. Mr. Cohen served
as Treasurer from July 1998 to September 2000. Mr. Cohen is a certified public
accountant and has owned and managed his own accounting practice since 1974. Mr.
Cohen also currently serves as President of Galaxy Theaters. Mr. Cohen received
a Masters Degree in Business Taxation from the University of Southern California
in 1976 and a Masters Degree in Finance from the University of California, Los
Angeles in 1972.

         Mr. Lievense has served as a director of the Company since October
1996. He has approximately 26 years of experience in the medical industry. Mr.
Lievense was the President and Chief Executive Officer of Columbia/Doctors
Hospital of Sarasota, Florida, and its predecessor, Galen Health Care
Corporation from 1993 to his recent retirement in January 2000. Mr. Lievense has
worked for Humana, Inc., a nationwide owner and operator of hospitals and
healthcare facilities, for 20 years, serving as its Vice President and Assistant
Regional Manager from 1988 to 1993. He also worked for American Inhalation
Representatives, Inc., a respiratory services company in Birmingham, Alabama.
Mr. Lievense received a Bachelor of Arts degree in Sociology from Alma College
in Alma, Michigan and received a Masters degree in Business Administration from
the University of Louisville, Kentucky.

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

                                      -13-
<PAGE>

KEY CONSULTANTS TO THE COMPANY

         The CTM Group, Inc., has a consulting contract to provide strategic
planning services to the Company. Mr. Paul Shabty is the key consultant from the
CTM Group, Inc. who provides these consulting services. Mr. Shabty is a former
founder of the Company and served as its President, Treasurer and Chairman of
the Board from April 1996 to January 1997. Mr. Shabty was a member of the Board
of Trustees of Columbia/Doctors Hospital of Sarasota, Florida. He is a former
director of TD Technologies, Inc., a private engineering and software company,
and Advanced Technologies Management Corporation, a medical software and
management company. Mr. Shabty has been involved in the medical and
manufacturing industries since 1970. He was the Founder, Chairman of the Board
and Chief Executive Officer of Medical Clinic Unlimited, Inc., which specialized
in both the provision of outpatient dialysis services and the manufacturing of
medical devices, equipment and supplies. From October 1993 to September 1994,
Mr. Shabty served as Executive Vice President of U.S. Diagnostic Labs, Inc., a
physician practice management provider specializing in diagnostic imaging
centers. Mr. Shabty received a Bachelor of Arts degree in Accounting from the
University of Tel Aviv.

         Gene Myers, M.D. has been the Medical and Clinical Affairs Director of
the Company's wholly-owned subsidiary, CPCA 2000, Inc., since July 1998 and
majority-owned subsidiary, Med Enclosure, LLC, since November 1999. Dr. Myers,
through Gene Myers Enterprises, Inc., is the beneficial owner of a 19.7%
membership interest in Med Enclosure, LLC. Dr. Myers has performed medical
internships at the University of Michigan's Department of Internal Medicine and
at the University Health Center of Pittsburgh. Dr. Myers was also an Assistant
Resident, Research Cardiology Fellow and Chief Medical Resident at Duke
University Hospital, and has published or presented more than two dozen
scientific studies. He received a Bachelor's degree in Chemistry and Physics
from Pennsylvania State University and his M.D. from the Pennsylvania School of
Medicine at the University of Pennsylvania. Dr. Myers is licensed in three
states, and has a cardiology practice in Sarasota, Florida. He is a member of
numerous professional organizations including the American College of
Cardiology, the American Heart Association, the American College of Nuclear
Cardiology and the American Board of Quality Assurance and Utilization Review.


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

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

         Based solely upon a review of the copies of such forms furnished to us,
or written representations that no Form 5 filings were required, we believe that
during the fiscal year ended December 31, 2002, all Section 16(a) filing
requirements applicable to our officers, directors and greater than 10%
beneficial owners were complied with.

                                      -14-
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION.

         CASH COMPENSATION OF EXECUTIVE OFFICERS. The following table sets forth
the cash compensation paid by the Company to its Chief Executive Officer for
services rendered during the fiscal years ended December 31, 2002, 2001 and
2000.

<TABLE>
<CAPTION>
                                      ANNUAL COMPENSATION                LONG-TERM COMPENSATION
                            ---------------------------------------- -------------------------------
    NAME AND POSITION        YEAR     SALARY   BONUS  OTHER ANNUAL   RESTRICTED     COMMON SHARES     ALL OTHER
                                                      COMPENSATION      STOCK        UNDERLYING      COMPENSATION
                                                                     AWARDS ($)    OPTIONS GRANTED
                                                                                     (# SHARES)
--------------------------- ------ ---------- ------- -------------- ------------ ------------------ ---------------

<S>                          <C>    <C>         <C>       <C>             <C>            <C>          <C>
Rod A. Shipman, President    2002   $248,134
and Chief Executive          2001   $278,685    -0-        -0-            -0-            -0-          $54,500(1)
Officer                      2000   $220,000    -0-       9,000           -0-            -0-             -0-
</TABLE>


<TABLE>
<CAPTION>
                                  OPTION/SAR GRANTS IN 2002 FISCAL YEAR
                                       INDIVIDUAL GRANTS
-------------------------------------------------------------------------------------------------
        NAME             NUMBER OF      % OF TOTAL OPTIONS/SARS    EXERCISE OR    EXPIRATION DATE
                         SECURITIES     GRANTED TO EMPLOYEES IN     BASE PRICE
                         UNDERLYING           FISCAL YEAR             ($/SH)
                        OPTIONS/SARS
                        GRANTED (#)
--------------------  ---------------   ------------------------   ------------   ---------------
<S>                                         <C>
                                            None
</TABLE>


<TABLE>
               AGGREGATED OPTION/SAR EXERCISES IN 2002 FISCAL YEAR
                          AND FY-END OPTION/SAR VALUES


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


                                                                      EXERCISABLE/         EXERCISABLE/
                                                                     UNEXERCISABLE         UNEXERCISABLE
-----------------------------   ----------------   --------------   -----------------    -----------------

<S>                                  <C>              <C>           <C>                    <C>
Rod A. Shipman, President and        180,090          $807,705      1,437,728/800,000      $10,926,732/
Chief Executive Officer                                                                    $6,080,000(2)
</TABLE>


(1)  Represents bonus of 25,000 shares of Common Stock valued at $2.18 per
     share, the closing price of the Common Stock on the date of grant.
(2)  Based on a price of $7.60 per share for the Common Stock as quoted on the
     OTC Bulletin Board on December 31, 2002.


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

                                      -15-
<PAGE>

         EMPLOYMENT AGREEMENTS. On April 23, 1998, the Company entered into an
Employment Agreement with Rod A. Shipman to serve as President and Chief
Executive Officer of the Company. Pursuant to the terms of that employment
agreement, Mr. Shipman received an annual salary of $120,000. Effective April 1,
1999, the Company and Mr. Shipman amended the terms of his employment agreement
to increase annual compensation to $220,000 and to permit Mr. Shipman to use his
accrued salary to pay the exercise price on his outstanding options. Effective
January 1, 2003, the Company and Mr. Shipman further amended the agreement to
increase annual compensation to $354,312. Pursuant to his employment agreement
with the Company, Mr. Shipman received options to purchase 2,000,000 shares of
Common Stock at an exercise price of $2.50 per share, of which options to
purchase 200,000 were immediately exercisable and options to purchase 200,000
shares vest and first become exercisable on April 23 on each of the next nine
anniversaries of the date of grant. The options expire on April 22, 2008. The
Employment Agreement is for a term of ten years, subject to automatic renewals
for additional five year periods unless either party elects not to renew the
agreement .

         In July 2000, the Board of Directors of the Company approved, and
caused its 80.3% subsidiary, Med Enclosure LLC, to award, a bonus to Mr. Shipman
in the form of a royalty on the net sale of products of Med Enclosure LLC
derived from two of its three patents. Mr. Shipman will receive a royalty in the
amount of three-quarters of one percent (.75%) on all net sales of products
subject to the royalty agreement. In July 2001, the Board of Directors of the
Company approved an amendment to the royalty agreement increasing the royalty
payable to Mr. Shipman to one and one-half percent (1.5%) on all net sales. In
October 2002, the Board of Directors of the Company approved, and caused its
wholly-owned subsidiary, Med Close Corp., to award a bonus to Mr. Shipman in the
form of a royalty in the amount of two and one-half percent (2.5%) on all net
sales of products of Med Close Corp.

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

         The following table sets forth certain information regarding the
beneficial ownership of the shares of Common Stock as of March 25, 2003 by (i)
each person who is known by the Company to be the beneficial owner of more than
five percent (5%) of the issued and outstanding shares of Common Stock, (ii)
each of the Company's directors and executive officers and (iii) all directors
and executive officers as a group.

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

Rod A. Shipman(1) (2)                      1,629,073           23.06%
Rafe Cohen(1)                                 62,000            1.10%
William C. Lievense(1)                       100,000            1.78%
CTM Group, Inc.(4)(5)                      2,880,990           37.80%
Leslie J. Kessler(6)(7)                      950,000           15.53%
All officers and directors as a
   group (three persons)                   1,791,073           25.35%

_______________

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

(2)  Includes options granted to Mr. Shipman to purchase 1,437,728 shares of
     Common Stock. Does not include options to purchase 800,000 shares of Common
     Stock, which are subject to vesting.

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

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

(5)  Includes options granted to the CTM Group to purchase 1,995,769 shares of
     Common Stock. Does not include options to purchase 800,000 shares of Common
     Stock, which are subject to vesting.

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

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

                                      -16-
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         In July 2000, the Board of Directors of the Company approved, and
caused its 80.3% subsidiary, Med Enclosure LLC, to award, bonuses to the
Company's Chief Executive Officer, Rod A. Shipman, and its strategic consultant,
CTM Group, Inc., in the form of royalties on the net sale of products of Med
Enclosure LLC derived from two of its three patents. Mr. Shipman and CTM Group
each will receive a royalty in the amount of three-quarters of one percent
(.75%) on all net sales of products subject to the royalty agreement. In July
2001, the Board of Directors of the Company approved amendments to both royalty
agreements increasing the royalty payable to Mr. Shipman and CTM Group each to
one and one-half percent (1.5%) on all net sales.

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

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


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

(a)      INDEX TO EXHIBITS                                                  PAGE
                                                                            ----

      3.1       Articles of Incorporation of the Company (1)

      3.2       Bylaws of the Company (1)

      4.1       Specimen of Common Stock Certificate (1)

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

      4.3       Certificate of Designations of the Company's Series B Preferred
                Stock (6)

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

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

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

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

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

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

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

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

      10.7      Agreement dated November 17, 1998 (3)

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

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

                                      -17-
<PAGE>

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

      10.11     Operating Agreement for Med Enclosures LLC (6)

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

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

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

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

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

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

      10.18     Amendment No. 2 to Royalty Agreement dated October 29, 2002
                between Med Enclosure, LLC and CTM Group, Inc. (8)

      10.19     Amendment No. 2 to Royalty Agreement dated October 29, 2002
                between Med Enclosure, LLC and Rod A. Shipman (8)

      10.20     Royalty Agreement dated October 29, 2002 between MED Close Corp.
                and CTM Group, Inc. (8)

      10.21     Royalty Agreement dated October 29, 2002 between MED Close Corp.
                and Rod A. Shipman (8)

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

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

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

      21.1      List of Subsidiaries

      23.1      Consent of Independent Certified Public Accountants

      99        Section 906 Certification

_______________

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

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

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

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

                                      -18-
<PAGE>

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

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

(7)  Previously filed as part of the Company's quarterly report on Form 10-QSB
     for the quarter ended September 30, 2001 filed with the Securities and
     Exchange Commission on November 11, 2001.

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

(b)  REPORTS ON FORM 8-K.

         None.

                                      -19-
<PAGE>

                                   SIGNATURES

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

                                    CPC OF AMERICA, INC.

Date:  March 31, 2003               By: /s/ ROD A. SHIPMAN
                                        -----------------------------------
                                        Rod A. Shipman, President and Chief
                                        Executive Officer

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


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

/s/ ROD A. SHIPMAN        President, Chief Financial Officer,     March 31, 2003
------------------        Secretary, Treasurer and Principal
ROD A. SHIPMAN            Accounting Officer and Director

/s/ RAFE COHEN            Director                                March 31, 2003
--------------
RAFE COHEN

/s/ WILLIAM LIEVENSE      Director                                March 31, 2003
--------------------
WILLIAM LIEVENSE

<PAGE>

                                 CERTIFICATIONS

I, Rod A. Shipman, certify that:

1. I have reviewed this annual report on Form 10-KSB of CPC of America, Inc.
("registrant"):

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this annual report (the "Evaluation Date"); and

         c) presented in this annual report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 31, 2003

  /s/ Rod A. Shipman
-----------------------
Rod A. Shipman
Chief Financial Officer

<PAGE>

I, Rod A. Shipman, certify that:

1. I have reviewed this annual report on Form 10-KSB of CPC of America, Inc.
("registrant"):

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this annual report (the "Evaluation Date"); and

         c) presented in this annual report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 31, 2003

  /s/ Rod A. Shipman
-----------------------
Rod A. Shipman
Chief Executive Officer