<PAGE>

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


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

For the fiscal year ended December 31, 2004

                                       OR

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

For the transition period from         to

Commission file number 0-24053


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


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


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

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

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

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

         None                                                N/A


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

                         Common Stock, $.0005 par value

                                (TITLE OF CLASS)


<PAGE>


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

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K contained in this form, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]

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

The aggregate market value of the voting and non-voting stock held by
non-affiliates of the registrant as of March 30, 2005 was approximately
$177,062,710.

The number of shares of the common stock outstanding as of March 30, 2005 was
7,190,675.

                   DOCUMENTS INCORPORATED BY REFERENCE: NONE.


<PAGE>


PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

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

General
-------

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

         In November 1999, we acquired a 73.3% interest in Med Enclosure, LLC, a
limited liability company organized under the laws of the State of Nevada.
Pursuant to the terms of an Operating Agreement dated November 5, 1999, we
received a 73.3% interest in Med Enclosure in exchange for our promissory note
in the original principal amount of $250,000. On April 25, 2000, we retired the
note in full by paying $255,208 to Med Enclosure. In September 2002, we
increased our percentage interest in Med Enclosure to 80.3% pursuant to a
purchase agreement with the minority owner of Med Enclosure by which we acquired
from the minority owner an additional 7% membership interest in Med Enclosure in
exchange for our issuance of 10,000 shares of our common stock. In November
2004, we acquired from the minority owner an additional 12% membership interest
in exchange for $100,000. In February 2005, we acquired the remaining 7.7%
membership interest in exchange for our issuance of 4,000 shares of our common
stock. Med Enclosure, LLC is now the 100%-owned subsidiary of CPC of America.

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

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

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

GENERAL

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

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


                                      -1-
<PAGE>

CORONARY ARTERY DISEASE AND TREATMENT

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

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

INTERNAL PUNCTURE CLOSURE DEVICE: "MEDCLOSE"

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

         The glue alone is not sufficient to close the artery, however.
Debridement is the key to the effectiveness of this technique, creating a
surface area that allows the glue to adhere and form a solid seal. MedClose
includes a patented instrument and technique to temporarily close the wound,
debride the surrounding adventitia and deliver a form of human glue to the
puncture site that can be activated by laser light. We hold 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. Since March 2003, we have continued to refine the product design
and conduct additional 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 approximately one year from the date of this
report.


                                      -2-
<PAGE>

         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.

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.

         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.

MARKETING AND DISTRIBUTION

         INTERNAL PUNCTURE CLOSURE DEVICE " MEDCLOSE"

         We initially intend to market MedClose to both hospitals and to
physicians through both national and international distribution agreements. 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.


                                      -3-
<PAGE>

         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.

         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.

GOVERNMENT REGULATION AND SUPERVISION

         FDA APPROVAL PROCESS

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

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


                                      -4-
<PAGE>

         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.

         ANTI-KICKBACK STATUTES

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

COMPETITION

         INTERNAL PUNCTURE CLOSURE DEVICE  " MEDCLOSE"

         We have several competitors that manufacture and market in the puncture
closure devices, including Perclose, Inc., Kensey Nash, Datascope Corp. and
Vascular Solutions, Inc. We believe our device has 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.


                                      -5-
<PAGE>

         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.

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
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, 2004, our research and development
expenses have amounted to approximately $15,493,983, including $6,719,116 and
$2,233,294 spent on research and development in 2004 and 2003, respectively. At
present, none of these research and development expenses have been borne by
customers, as we have not begun to market or sell our products and services.

EMPLOYEES

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


                                      -6-
<PAGE>

ITEM 1A. CAUTIONARY STATEMENT REGARDING FUTURE RESULTS, FORWARD-LOOKING
         INFORMATION AND CERTAIN IMPORTANT FACTORS

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

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

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

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

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

         WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY RIGHTS AND WE MAY INCUR
SIGNIFICANT COSTS IN ATTEMPTING TO DO SO. Our success and ability to compete are
dependent to a significant degree on our proprietary technology. We rely on a
combination of patent, trade secret and trademark laws, as well as
confidentiality and licensing agreements to protect our proprietary rights.
However, it may be possible for a third party to copy or otherwise obtain and


                                      -7-
<PAGE>

use our proprietary information without authorization or to develop similar
technology independently. In addition, litigation may be necessary in the future
to enforce our intellectual property rights, to protect our trade secrets, to
determine the validity and scope of the proprietary rights of others, or to
defend against claims of infringement or invalidity. Such litigation, whether
successful or unsuccessful, could result in substantial costs and diversions of
resources, either of which could have a material adverse affect on our business,
financial condition and operating results.

ITEM 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 is subject to any pending legal
proceedings, other than routine litigation incidental to our business

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

         There were no matters submitted to the security holders of the company
during the fourth quarter of the fiscal year ended December 31, 2004.


                                      -8-
<PAGE>

PART II

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

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

         Our common stock is listed on the OTC Bulletin Board under the symbol
"CPCF." Set forth below are high and low closing prices for our common stock for
each quarter during the two fiscal years ended December 31, 2004. We consider
our common stock to be thinly traded and that any reported bid or sale prices
may not be a true market-based valuation of the common stock.


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

         March 31, 2003                                   $ 8.00   $  5.80
         June 30, 2003                                    $12.50   $  7.90
         September 30, 2003                               $23.95   $ 13.25
         December 31, 2003                                $37.89   $ 21.10

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


Holders
-------

         As of March 30, 2005, there were 65 record holders of our common stock.

Dividends
---------

         We have not paid any cash dividends on our common stock since our
inception and do not contemplate paying dividends in the foreseeable future. It
is anticipated that earnings, if any, will be retained for the operation of our
business. Pursuant to our certificates of designations, holders of shares of our
Series C preferred stock and Series D preferred stock are entitled to dividends
at a rate of 5% per annum, payable at the option of the holders, in either cash
or shares of common stock. During 2004, we paid no cash dividends on the shares
of our preferred stock.

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

         Item 11 of this report includes information about the securities
underlying outstanding options and securities remaining available for issuance
under our equity compensation plans as of December 31, 2004.

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

         During the fiscal year ended December 31, 2004, we sold unregistered
shares of our securities in the following transactions:

         During 2004, we issued a total of 70,918 shares of our common stock
upon the conversion of 11,236 outstanding shares of Series C preferred stock,
27,873 outstanding shares of Series D preferred stock and related accrued
dividends of $28,464. The common shares were issued pursuant to Rule 506 under
the Act. There was no underwriter involved in this issuance.


                                      -9-
<PAGE>

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 MedClose device and counterpulsation units and the raising of
development and working capital. We have developed and prepared for market our
counterpulsation units, including a stand-alone unit known as the CPCA 2000. In
March 2003, we received FDA clearance to market the CPCA 2000 counterpulsation
unit as a Class III medical device. We are also engaged in the business of
developing a patented internal puncture closure device and technique known as
"MedClose".

         We have not commenced revenue producing operations. 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 2005, nor do we expect a significant change in the number of
our employees during the year.

         As of December 31, 2004, we had working capital of $3,146,343,
excluding $950,763 of accrued dividends payable on our outstanding preferred
shares as of such date. Those dividends are convertible into our common shares
at the rate of $3.57 per share in the case of the Series C preferred stock and
$6.86 per share in the case of the Series D preferred stock. 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.

Off-Balance Sheet Arrangements
------------------------------

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


                                                 -10-
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

<TABLE>
                                     INDEX TO FINANCIAL STATEMENTS

<S>                                                                                                <C>
Report of Independent Registered Public Accounting Firm............................................F-1
Consolidated Balance Sheet at December 31, 2004....................................................F-2
Consolidated Statements of Operations for the years ended December 31, 2004 and 2003
  and cumulative from inception (April 11, 1996) to December 31, 2004..............................F-3
Consolidated Statements of Shareholders' Equity (Deficit)
  from inception (April 11, 1996) to December 31, 2004.............................................F-4
Consolidated Statements of Cash Flows for the years ended December 31, 2004 and 2003
  and cumulative from inception (April 11, 1996) to December 31, 2004..............................F-7
Notes to Consolidated Financial Statements.........................................................F-8


                                                 -11-
</TABLE>
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying consolidated balance sheet of CPC of America,
Inc. and subsidiaries (a development stage company) (the "Company") as of
December 31, 2004, 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, 2004 and for the period from inception (April 11,
1996) to December 31, 2004. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes, 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 the
Company as of December 31, 2004, and the results of its consolidated operations
and cash flows for each of the years in the two year period ended December 31,
2004 and for the period from inception (April 11, 1996) to December 31, 2004, in
conformity with accounting principles generally accepted in the United States of
America.


                                          /s/CACCIAMATTA ACCOUNTANCY CORPORATION
                                          --------------------------------------

Irvine, California
March 25, 2005

                                      F-1
<PAGE>
<TABLE>
                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                           Consolidated Balance Sheet


                                                                      DECEMBER 31,
                                                                         2004
                                                                     -------------
                                     ASSETS
CURRENT ASSETS
<S>                                                                  <C>
  Cash and equivalents                                               $  1,279,628
  Short term investments                                                1,896,390
  Prepaid expenses                                                         14,904
                                                                     -------------

      TOTAL CURRENT ASSETS                                              3,190,922

EQUIPMENT, NET OF ACCUMULATED DEPRECIATION OF $18,210                         807

PATENTS, NET OF ACCUMULATED AMORTIZATION OF $103,561                      299,939

TRADEMARK, NET OF ACCUMULATED AMORTIZATION OF $3,322                        2,910
                                                                     -------------
                                                                     $  3,494,578
                                                                     =============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable                                                   $      9,454
  Accrued expenses                                                         35,125
  Accrued dividends payable                                               950,763
                                                                     -------------
     TOTAL CURRENT LIABILITIES                                            995,342
                                                                     -------------

COMMITMENTS AND CONTINGENCIES                                                  --

SHAREHOLDERS' EQUITY
  Preferred stock, 5,000,000 shares authorized, $.001 par value,
   Series C -  303,182 shares issued and outstanding                          303
   Series D -  791,463 shares issued and outstanding                          792
  Common stock, 20,000,000 shares authorized, $.0005 par value,
   7,007,873 shares issued and outstanding                                  3,503
  Additional paid-in capital - preferred                               14,070,811
  Additional paid-in capital - common                                  14,574,414
  Deficit accumulated during the development stage                    (26,150,587)
                                                                     -------------
      TOTAL SHAREHOLDERS' EQUITY                                        2,499,236
                                                                     -------------
                                                                     $  3,494,578
                                                                     =============

       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


                                                                                             CUMULATIVE
                                                                                           FROM INCEPTION
                                                       Year ended December 31,            (APRIL 11, 1996)
                                              ---------------------------------------      TO DECEMBER 31,
                                                    2004                   2003                  2004
                                              -----------------     -----------------     -----------------
Costs and expenses:

<S>                                           <C>                   <C>                   <C>
  Research and development                    $      6,719,116      $      2,233,294      $     15,493,983

  General and administrative                         1,669,967               593,064             5,437,387
                                              -----------------     -----------------     -----------------

OPERATING LOSS                                       8,389,083             2,826,358            20,931,370
                                              -----------------     -----------------     -----------------

OTHER INCOME (EXPENSE):

  Interest expense                                          --                    --                (8,954)

  Interest income                                       74,828                66,892               200,178
                                              -----------------     -----------------     -----------------

                                                        74,828                66,892               191,224
                                              -----------------     -----------------     -----------------

LOSS BEFORE MINORITY INTEREST                        8,314,255             2,759,466            20,740,146

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

NET LOSS                                      $      8,314,255      $      2,759,466      $     20,739,026
                                              =================     =================     =================

BASIC AND DILUTED NET LOSS PER SHARE          $          (1.31)     $          (0.90)
                                              =================     =================

BASIC AND DILUTED WEIGHTED AVERAGE NUMBER
  OF COMMON SHARES OUTSTANDING                       6,723,101             5,904,416
                                              =================     =================

          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)
                                      Consolidated Statements of Shareholders' Equity (Deficit)
                                        From inception (April 11, 1996) to December 31, 2004


                                                      PREFERRED STOCK                                    COMMON STOCK
                               ----------------------------------------------------------------    --------------------------
                                   SERIES A                SERIES B              SERIES C              SERIES D
                               ----------------    --------------------    --------------------    --------------------------
                               NUMBER
                                 OF                   NUMBER                 NUMBER                 NUMBER
                               SHARES     TOTAL     OF SHARES     TOTAL    OF SHARES     TOTAL     OF SHARES       TOTAL
                              --------    -----    ----------    ------    ----------    ------    ----------    ------------
<S>                           <C>         <C>      <C>           <C>         <C>         <C>         <C>         <C>
BALANCE, DECEMBER 31, 2002         --     $ --            --     $  --       341,204     $ 341       110,627     $       111
  Exercise of options              --       --            --        --            --        --            --              --
  Conversion of  preferred
    stock and
    accrued dividends into
    common shares                  --       --            --        --       (26,786)      (27)           --              --
  Valuation of beneficial
    conversion feature
    on Series D Preferred          --       --            --        --            --        --            --              --
  Issuance of preferred
   stock for cash                  --       --            --        --            --        --       708,709             709
  Preferred stock dividend         --       --            --        --            --        --            --              --
  Net loss for 2003                --       --            --        --            --        --            --              --
                              --------    -----    ----------    ------    ----------    ------    ----------    ------------
BALANCE DECEMBER 31, 2003          --       --            --        --       314,418       314       819,336             820
  Exercise of options              --       --            --        --            --        --            --              --
  Conversion of  preferred
    stock and accrued
    dividends into common
    shares                         --       --            --        --       (11,236)      (11)      (27,873)            (28)
  Preferred stock dividend         --       --            --        --            --        --            --              --
  Stock option costs               --       --            --        --            --        --            --              --
  Net loss for 2004                --       --            --        --            --        --            --              --
                              --------    -----    ----------    ------    ----------    ------    ----------    ------------
BALANCE DECEMBER 31, 2004          --     $ --            --     $  --       303,182     $ 303       791,463     $       792
                              ========    =====    ==========    ======    ==========    ======    ==========    ============

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


                                                                F-4a
</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, 2004


                                COMMON STOCK
                               ---------------------
                                                                                                        DEFICIT
                                                                         ADDITIONAL      ADDITIONAL     ACCUMULATED         TOTAL
                                                           STOCK         PAID-IN         PAID-IN        DURING THE     SHAREHOLDERS'
                                 NUMBER                   OPTION         CAPITAL-        CAPITAL-       DEVELOPMENT       EQUITY
                                OF SHARES     TOTAL        COSTS          COMMON         PREFERRED         STAGE         (DEFICIT)
                               -----------   --------   ------------   -------------   -------------   -------------   ------------
<S>                            <C>          <C>        <C>            <C>             <C>             <C>             <C>
BALANCE, DECEMBER 31, 2002      5,626,582    $ 2,812    $        --    $  6,966,327    $  6,024,678    $(12,046,289)   $   947,980
  Exercise of options             775,909        388             --       1,351,807              --              --      1,352,195
  Conversion of  preferred
    stock and
    accrued dividends into
    common shares                  73,689         37             --         263,034        (244,973)             --         18,071
  Valuation of beneficial
    conversion feature
    on Series D Preferred              --         --             --              --       2,161,694      (2,161,694)            --
  Issuance of preferred
   stock for cash                      --         --             --              --       6,484,373              --      6,485,082
  Preferred stock dividend             --         --             --              --              --        (390,289)      (390,289)
  Net loss for 2003                    --         --             --              --              --      (2,759,466)    (2,759,466)
                               -----------   --------   ------------   -------------   -------------   -------------   ------------
BALANCE DECEMBER 31, 2003       6,476,180      3,237             --       8,581,168      14,425,772     (17,357,738)     5,653,573
  Exercise of options             460,775        230             --       1,082,034              --              --      1,082,264
  Conversion of  preferred
    stock and accrued
    dividends into common
    shares                         70,918         36             --         383,428        (354,961)             --         28,464
  Preferred stock dividend             --         --             --              --              --        (478,594)      (478,594)
  Stock option costs                   --         --             --       4,527,784              --              --      4,527,784
  Net loss for 2004                    --         --             --              --              --      (8,314,255)    (8,314,255)
                               -----------   --------   ------------   -------------   -------------   -------------   ------------
BALANCE DECEMBER 31, 2004       7,007,873    $ 3,503    $        --    $ 14,574,414    $ 14,070,811    $(26,150,587)   $ 2,499,236
                               ===========   ========   ============   =============   =============   =============   ============

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


                                                                F-4b
</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, 2004


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

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

BALANCE, DECEMBER 31, 2001         --       --        71,429        71        95,123        95            --              --
  Exercise of options              --       --            --        --            --        --            --              --
  Conversion of  preferred
    stock and accrued
    dividends
    into common shares             --       --       (71,429)      (71)      (18,576)      (19)           --              --
  Valuation of beneficial
    conversion feature on
    Series C Preferred             --       --            --        --            --        --            --              --
  Cancellations of shares          --       --            --        --            --        --            --              --
  Issuance of preferred
    stock for cash                 --       --            --        --       264,657       265       110,627             111
  Amortization of stock
    option cost                    --       --            --        --            --        --            --              --
  Preferred stock dividend         --       --            --        --            --        --            --              --
  Purchase of Med
    Enclosure Stocks               --       --            --        --            --        --            --              --
  Net loss for 2002                --       --            --        --            --        --            --              --
                              --------    -----    ----------    ------    ----------    ------    ----------    ------------
BALANCE DECEMBER 31, 2002          --     $ --            --     $  --       341,204     $ 341       110,627     $       111

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

                                                                F-5a
</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, 2004


                                COMMON STOCK
                               ---------------------
                                                                                                        DEFICIT
                                                                         ADDITIONAL      ADDITIONAL     ACCUMULATED         TOTAL
                                                           STOCK         PAID-IN         PAID-IN        DURING THE     SHAREHOLDERS'
                                 NUMBER                   OPTION         CAPITAL-        CAPITAL-       DEVELOPMENT       EQUITY
                                OF SHARES     TOTAL        COSTS          COMMON         PREFERRED         STAGE         (DEFICIT)
                               -----------   --------   ------------   -------------   -------------   -------------   ------------
<S>                            <C>          <C>        <C>            <C>             <C>             <C>             <C>
BALANCE, DECEMBER 31, 1999      4,129,533    $ 2,065             --    $  1,822,900    $    898,407   $  (2,737,027)    $   (13,576)
  Exercise of warrants            365,500        183             --         639,442              --              --         639,625
  Exercise of options             223,832        113             --         258,528              --              --         258,641
  Issuance of preferred
    stock for cash                     --         --             --              --         624,929              --         625,000
  Valuation of beneficial
    conversion feature on
    Series B Preferred                 --         --             --              --         208,125        (208,125)             --
  Conversion of Series A
    Preferred into
    common shares                 127,447         64             --         598,936        (598,930)             --              --
  Beneficial conversion
    feature on Series
    A Preferred shares                 --         --             --         199,486        (199,486)             --              --
  Settlement of lawsuit            33,333         17             --         199,983              --              --         200,000
  Purchase of patent               47,042         24             --         235,184              --              --         235,208
  Stock option costs                   --         --       (280,000)        280,000              --              --              --
  Amortization of stock
    option cost                        --         --        105,000              --              --              --         105,000
  Cancellation of common
    shares                        (89,000)       (45)            --              --              --              --             (45)
  Net loss for 2000                    --         --             --              --              --      (1,749,444)     (1,749,444)
                              ------------   --------   ------------   -------------   -------------   -------------    ------------

BALANCE, DECEMBER 31, 2000      4,837,687      2,421       (175,000)      4,234,459         933,045      (4,694,596)        300,409
  Exercise of options             360,394        179             --         413,484              --              --         413,663
  Issuance of common stock
    for services                  100,000         50             --         255,450              --              --         255,500
  Issuance of preferred
    stock for cash                     --         --             --              --       1,841,392              --       1,841,601
  Valuation of beneficial
    conversion feature on
    Series B Preferred                 --         --             --              --         331,636        (331,636)             --
  Valuation of beneficial
    conversion feature on
     Series C Preferred                --         --             --              --         282,233        (282,233)             --
  Conversion of  preferred
    stock and accrued
    dividends
    into common shares            330,327        165             --       1,081,316      (1,069,887)             --          11,471
  Preferred stock dividend             --         --             --              --              --         (63,397)        (63,397)
  Issuance of common stock             --         --             --              --              --              --              --
     options for services              --         --             --          20,000              --              --          20,000
   Amortization of stock
    option cost                        --         --        140,000              --              --              --         140,000
   Net loss for 2001                   --         --             --              --              --      (1,968,471)     (1,968,471)
                              ------------   --------   ------------   -------------   -------------   -------------    ------------

BALANCE, DECEMBER 31, 2001      5,628,408      2,815        (35,000)      6,004,709       2,318,419      (7,340,333)        950,776
  Exercise of options             282,480        140             --         317,650              --              --         317,790
  Conversion of  preferred
    stock and accrued
    dividends
    into common shares            241,627        120             --         790,205        (783,495)             --           6,740
  Valuation of beneficial
    conversion feature on
    Series C Preferred                 --         --             --              --       1,122,521      (1,122,521)             --
  Cancellations of shares        (535,933)      (268)            --        (199,732)             --              --        (200,000)
  Issuance of preferred
    stock for cash                     --         --             --              --       3,367,233              --       3,367,609
  Amortization of stock
    option cost                        --         --         35,000              --              --              --          35,000
  Preferred stock dividend             --         --             --              --              --        (122,861)       (122,861)
  Purchase of Med
    Enclosure Stocks               10,000          5             --          53,495              --              --          53,500
  Net loss for 2002                    --         --             --              --              --      (3,460,574)     (3,460,574)
                              ------------   --------   ------------   -------------   -------------   -------------    ------------
BALANCE DECEMBER 31, 2002       5,626,582    $ 2,812    $        --    $  6,966,327    $  6,024,678    $(12,046,289)    $   947,980

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

                                                                F-5b
</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, 2004


                                                               PREFERRED STOCK                                 COMMON STOCK
                                        ------------------------------------------------------------    ----------------------------
                                                  SERIES A                        SERIES B
                                        ----------------------------    ----------------------------
                                           NUMBER
                                             OF                           NUMBER                          NUMBER
                                           SHARES          TOTAL         OF SHARES         TOTAL         OF SHARES          TOTAL
                                        ------------    ------------    ------------    ------------    ------------    ------------
<S>                                     <C>             <C>             <C>             <C>               <C>           <C>
Initial capitalization                           --     $        --              --     $        --       2,400,000     $     1,200
Issuance of common stock
  for a note                                     --              --              --              --         300,000             150
Issuance of common stock
  for cash                                       --              --              --              --         100,000              50
Issuance of common stock
  for services                                   --              --              --              --         764,000             382
Net loss for 1996                                --              --              --              --              --              --
                                        ------------    ------------    ------------    ------------    ------------    ------------
 BALANCE, DECEMBER 31, 1996                      --              --              --              --       3,564,000           1,782
Exercise of options                              --              --              --              --          26,666              13
Issuance of common stock for
  cash and conversion of
   note payable ($77,000)                        --              --              --              --         640,000             320
Net loss for 1997                                --              --              --              --              --              --
                                        ------------    ------------    ------------    ------------    ------------    ------------
 BALANCE, DECEMBER 31, 1997                      --              --              --              --       4,230,666           2,115
Exercise of options                              --              --              --              --          57,000              29
Issuance of common stock
  for cash                                       --              --              --              --          40,000              20
Issuance of preferred stock
  for cash                                    8,824               9              --              --              --              --
Valuation of beneficial
  conversion feature on
  Series A Preferred                             --              --              --              --              --              --
Contribution of officer's
  salary                                         --              --              --              --              --              --
Net loss for 1998                                --              --              --              --              --              --
                                        ------------    ------------    ------------    ------------    ------------    ------------
 BALANCE, DECEMBER 31, 1998                   8,824               9              --              --       4,327,666           2,164
Exercise of warrants                             --              --              --              --         209,490             105
Exercise of options                              --              --              --              --         146,903              73
Issuance of preferred stock
  for cash                                   70,469              70              --              --              --              --
Preferred stock dividend                         --              --              --              --           5,474               3
Valuation of beneficial
  conversion feature on
  Series A Preferred                             --              --              --              --              --              --
Repurchase of common shares                      --              --              --              --        (560,000)           (280)
Net loss for 1999                                --              --              --              --              --              --
                                        ------------    ------------    ------------    ------------    ------------    ------------
 BALANCE, DECEMBER 31, 1999                  79,293     $        79              --     $        --       4,129,533     $     2,065

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

                                                                F-6a
</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, 2004


                                                                                                           DEFICIT
                                                          ADDITIONAL      ADDITIONAL      ACCUMULATED        TOTAL
                                           STOCK           PAID-IN         PAID-IN        DURING THE      SHAREHOLDERS'
                                           OPTION          CAPITAL-        CAPITAL-       DEVELOPMENT       EQUITY
                                           COSTS            COMMON         PREFERRED        STAGE           (DEFICIT)
                                        ------------     ------------    ------------    ------------     ------------
<S>                                     <C>              <C>             <C>             <C>              <C>
Initial capitalization                  $        --      $        --     $        --     $        --      $     1,200
Issuance of common stock
  for a note                                     --               --              --              --              150
Issuance of common stock
  for cash                                       --            4,950              --              --            5,000
Issuance of common stock
  for services                                   --           37,818              --              --           38,200
Net loss for 1996                                --               --              --         (59,079)         (59,079)
                                        ------------     ------------    ------------    ------------     ------------
 BALANCE, DECEMBER 31, 1996                      --           42,768              --         (59,079)         (14,529)
Exercise of options                              --           29,987              --              --           30,000
Issuance of common stock for
  cash and conversion of
  note payable ($77,000)                         --          927,680              --              --          928,000
Net loss for 1997                                --               --              --        (457,829)        (457,829)
                                        ------------     ------------    ------------    ------------     ------------
 BALANCE, DECEMBER 31, 1997                      --        1,000,435              --        (516,908)         485,642
Exercise of options                              --          114,971              --              --          115,000
Issuance of common stock
  for cash                                       --           57,980              --              --           58,000
Issuance of preferred stock
  for cash                                       --               --          74,991              --           75,000
Valuation of beneficial
  conversion feature on
  Series A Preferred                             --               --          25,000         (25,000)              --
Contribution of officer's
  salary                                         --           80,000              --              --           80,000
Net loss for 1998                                --               --              --        (640,580)        (640,580)
                                        ------------     ------------    ------------    ------------     ------------
 BALANCE, DECEMBER 31, 1998                      --        1,253,386          99,991      (1,182,488)         173,062
Exercise of warrants                             --          366,503              --              --          366,608
Exercise of options                              --          177,289              --              --          177,362
Issuance of preferred stock
  for cash                                       --               --         598,930              --          599,000
Preferred stock dividend                         --           25,722              --         (25,725)              --
Valuation of beneficial
  conversion feature on
  Series A Preferred                             --               --         199,486        (199,486)              --
Repurchase of common shares                      --               --              --              --             (280)
Net loss for 1999                                --               --              --      (1,329,328)      (1,329,328)
                                        ------------     ------------    ------------    ------------     ------------
 BALANCE, DECEMBER 31, 1999             $        --      $ 1,822,900     $   898,407     $(2,737,027)     $   (13,576)

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

                                                                F-6b
</TABLE>
<PAGE>
<TABLE>
                                       CPC OF AMERICA, INC. AND SUBSIDIARIES
                                           (A DEVELOPMENT STAGE COMPANY)
                                       Consolidated Statements of Cash Flows



                                                                                                      CUMULATIVE
                                                                                                    FROM INCEPTION
                                                                      YEAR ENDED DECEMBER 31,      (APRIL 11, 1996)
                                                                -------------------------------     TO DECEMBER 31,
                                                                     2004              2003             2004
                                                                -------------     -------------     -------------
<S>                                                             <C>               <C>               <C>
Cash flows from operating activities:
  Net loss                                                      $ (8,314,255)     $ (2,759,466)     $(20,739,026)
  Adjustments to reconcile net loss to net cash
    used by operating activities:
    Depreciation and amortization                                     21,247            21,274           138,728
    Contribution of officer's salary                                      --                --            80,000
    Issuance of common stock and options for services              4,962,866            33,770         5,629,213
  Changes in operating asets and liabilities
    Decrease (increase) in other assets                              162,912           (70,329)           38,867
    Increase (decrease) in accounts and other payable               (198,268)          (13,546)           10,631
    (Decrease) increase in accrued expenses                           24,591            (5,474)          222,852
                                                                -------------     -------------     -------------
    Net cash used by operating activities                         (3,340,907)       (2,793,771)      (14,618,735)
                                                                -------------     -------------     -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  (Purchase) redemption of short-term investments                    554,079        (2,450,469)       (1,896,390)
  Purchase of patent                                                (100,000)               --          (114,795)
  Capital expenditures                                                    --            (1,500)         (148,016)
                                                                -------------     -------------     -------------
    Net cash provided (used) by investing activities                 454,079        (2,451,969)       (2,159,201)
                                                                -------------     -------------     -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from shareholder notes                                         --                --            73,150
  Payments on note payable to shareholder                                 --                --            (3,000)
  Exercise of options and warrants                                   647,182         1,318,425         4,284,296
  Issuance of preferred stock                                             --         6,485,082        12,993,292
  Issuance of common stock                                                --                --           915,200
  Dividends                                                               --                --            (5,051)
  Cancellation of common stock                                            --                --          (200,325)
                                                                -------------     -------------     -------------
    Net cash provided by financing activities                        647,182         7,803,507        18,057,562
                                                                -------------     -------------     -------------

Net increase (decrease) in cash                                   (2,239,646)        2,557,767         1,279,626
CASH, BEGINNING OF PERIOD                                          3,519,274           961,507                --
                                                                -------------     -------------     -------------
CASH, END OF PERIOD                                             $  1,279,628      $  3,519,274      $  1,279,626
                                                                =============     =============     =============

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

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


                                                        F-7
</TABLE>
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

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

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

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

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

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

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

         On November 22, 1999, CPC formed Med Enclosures, LLC, a Nevada limited
         liability company (MED), with Gene Myers Enterprises, Inc. (GME), a
         minority shareholder of CPC. CPC received a 73.3% interest in MED for a
         $250,000 promissory note, which was retired in April 2000. GME
         contributed two patents it developed that are recorded at GME's
         carrying value of zero. MED acquired its third patent from GME with the
         proceeds from the $250,000 promissory note. During 2002, the Company
         purchased an additional 7% of MED through the issuance of 10,000 shares
         of common stock valued at $53,500. During 2004, the Company purchased
         an additional 12% of MED for $100,000, and in January 2005 purchased
         the remaining 7.7% of MED through the issuance of 4,000 shares of
         common stock valued at $154,000.


                                      F-8
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

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

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

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

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

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

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

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

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

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

         Patents and trademarks are stated at cost and amortized using the
         straight-line method over their economic useful life, which is
         estimated at ten and fifteen years, respectively. During 2004, the
         Company acquired a 7% additional interest in MED for $100,000, which
         was added to patent costs in the accompanying financial statements.
         Amortization expense was $20,649 in 2004 and in 2003.

         Equipment
         ---------

         Depreciation expense is provided over the estimated useful life of 5
         years using accelerated methods. Depreciation expense was $598 in 2004
         and $625 in 2003.

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

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

         Reclassifications
         -----------------

         Certain items in the 2003 financial statements have been reclassified
         to conform to the 2004 presentation.


                                      F-9
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

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

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

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

                                                     2004         2003
                                                  ---------    ---------
         Patents
                Gross carrying amount             $403,500     $303,500
                                                  =========    =========
                Accumulated amortization          $103,561     $ 83,327
                                                  =========    =========
                Amortization expense              $ 20,234     $ 20,234
                                                  =========    =========

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

         Amortization of intangibles is expected to be approximately $28,000 in
         each of the next five years.

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

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

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

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

         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 2004
         and 2003 all common stock equivalents were anti-dilutive.


                                      F-10
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

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

         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:

                                                       2004             2003
                                                   -------------   -------------
         Net loss
                As reported                        $ (8,314,255)   $ (2,759,466)
                Stock compensation                 $  1,885,540    $    267,487
                Pro forma                          $(10,199,795)   $ (3,026,953)
         Basic and fully diluted loss per share
                As reported                        $      (1.31)   $      (0.90)
                Pro forma                          $      (1.59)   $      (1.05)

         The fair value of these options was estimated at the date of grant
         using the Black-Scholes option-pricing model with the following
         weighted average assumptions for 2004, 1998 and 1996, respectively:
         risk-free interest rate of 3.375%, 6% and 9%; volatility of 20%, 50%
         and 200%; and a weighted fair value of $11.33, $1.26 and $.001.

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

         In December 2004, the FASB issued SFAS No. 123 (Revised 2004),
         SHARE-BASED PAYMENTS ("SFAS 123R"). SFAS 123R requires all share-based
         payments to employees, including grants of employee stock options, to
         be recognized in the income statement based on their fair values. The
         Company is required to adopt the new standard in the first interim
         period beginning after December 15, 2005. The Company has not yet
         determined the impact, if any, of the adoption of SFAS 123R on its
         financial statements.

         In December 2004, the FASB issued SFAS No. 153, EXCHANGES OF
         NONMONETARY ASSETS, AN AMENDMENT OF APB OPINION 29 ("SFAS 153"). SFAS
         153 requires that exchanges of nonmonetary assets be measured based on
         the fair values of the assets exchanged, and eliminates the exception
         to this principle under APB OPINION 29 for exchanges of similar
         productive assets. The Company is required to adopt the new standard in
         the first interim period beginning after June 15, 2005. The Company
         does not expect the adoption of SFAS 153 to have a material effect on
         its financial statements.


                                      F-11
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

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

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

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

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

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

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

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


                                      F-12
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

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

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

         At June 30, 2002, the conversion price was adjusted to $3.57 per share.
         During the fourth quarter of 2002, 18,576 Series C shares and related
         accrued dividends of $6,625 were converted into 46,314 common shares.
         During 2003, 26,786 Series C shares and related accrued dividends of
         $18,071 were converted into 73,689 common shares. During 2004, 11,236
         Series C shares and related accrued dividends of $11,758 were converted
         into 31,304 common shares. Accrued dividends of $337,032 on the 303,182
         outstanding shares remain unpaid at December 31, 2004.

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

         In November 2002, the Company commenced the private placement sale of
         Series D preferred stock at $9.15 per share. The Company sold 819,336
         shares for proceeds of $7,496,924. The Company recorded a beneficial
         conversion feature totaling $2,499,111 at the date of issuance. The
         Series D Preferred stock has no voting rights and has a 5% annual
         dividend payable in cash or common stock. Each Series D share was
         convertible into one common share until June 30, 2003, when the
         conversion price was adjusted to the lower of $6.86 or 75% of the
         average last sale price of the common stock for the 30 trading days
         immediately preceding such date as reported on any stock exchange,
         according to the terms of the original agreement. Based on the last
         prices over the applicable period, no adjustment was made to the
         conversion price and it remains fixed at $6.86 per share. During 2004,
         27,873 Series D shares and related accrued dividends of $16,706 were
         converted into 39,614 common shares. Accrued dividends of $613,731 on
         the 791,463 outstanding shares remain unpaid at December 31, 2004.

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

         During 2004, 11,236 Series C shares and 27,873 Series D shares and
         related accrued dividends of $28,464 were converted into 70,918 common
         shares. During 2003, 26,786 Series C shares and related accrued
         dividends of $18,071 were converted into 73,689 common shares. During
         2002, 18,576 Series C shares and related accrued dividends of $6,625
         were converted into 46,314 common shares.

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

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

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


                                      F-13
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

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

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

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

         In March 1997, the Company commenced the private placement sale of 35
         units at $29,000 per unit. Each unit consisted of 20,000 shares of
         common stock and warrants to purchase 40,000 shares of common stock
         exercisable at $1.75 per share from February 10, 1999 until December
         31, 2000. The Company sold 34 units, including 3 units in conversion of
         a note payable. An investor converted a note with a balance of $70,000
         and related accrued interest of $7,000 into three units, and the
         Company received $10,000 cash for the balance. No value was allocated
         to the warrants because the exercise price was above market price at
         the time of issuance. During 1999, warrants to purchase 209,490 common
         shares were exercised. 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, 2004:

<TABLE>
                                                          Weighted                          Weighted
                                          Average         average                            average
     Exercise            Options         remaining        exercise          Number          exercise
      Price            Outstanding     life (years)        price         exercisable          price
-------------------  ---------------- ---------------- --------------- ----------------- --------------
<S>  <C>                  <C>                <C>           <C>               <C>              <C>
     $ 1.125              757,600            1             $ 1.125           757,600          $ 1.125
     $  2.50            3,722,907            3             $  2.50         2,522,907          $  2.50
     $ 29.12              550,000            5             $ 29.12           550,000          $ 29.12


                                                F-14
</TABLE>
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

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

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

         A summary of stock option activity follows:

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

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

         Granted                               4,152,000      $1.25 -  9.00             2008
         Exercised                               (57,000)     $1.125 - 2.50
         Canceled                             (1,173,334)     $       1.125
                                               ----------     ---------------    ------------
         Outstanding at December 31, 1998      7,115,000      $1.125 - 9.00      2003 - 2014

         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

         Exercised                              (775,909)     $1.125 - 9.00
         Canceled                                (10,000)                        $      8.00
                                               ----------     ---------------    ------------
         Outstanding at December 31, 2003      4,941,282      $1.125 -  5.75     2004 - 2008
         Granted                                 550,000      $        29.12            2009
         Exercised                              (460,775)     $1.125 -  5.75
                                               ----------     ---------------    ------------
         Outstanding at December 31, 2004      5,030,507      $1.125 - 29.12     2006 - 2009
                                               ==========     ===============    ============


                                              F-15
</TABLE>
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

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

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

         The following information applies to employee options outstanding at
         December 31, 2003:

<TABLE>
                                                           Weighted                           Weighted
                                          Average          average                             average
    Exercise            Options          remaining         exercise          Number           exercise
     Price            Outstanding      life (years)         price          exercisable          price
-----------------   ----------------  ----------------  ---------------  ----------------  --------------
<S> <C>                       <C>            <C>           <C>                      <C>        <C>
    $ 1.125                   19             1             $ 1.125                  19         $ 1.125
    $ 2.50             1,731,605             3             $  2.50           1,131,605         $  2.50
    $ 29.12              275,000             5             $ 29.12             275,000         $ 29.12
</TABLE>

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

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

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

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


                                      F-16
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

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

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

<TABLE>
                                                                  2004             2003
                                                              ------------     ------------
<S>                                                           <C>              <C>
BASIC AND DILUTED LOSS PER SHARE:

  Numerator
      Net loss                                                $(8,314,255)     $(2,759,466)
      Preferred dividend                                         (478,594)        (390,289)
      Beneficial conversion feature preferred stock                    --       (2,161,694)
                                                              ------------     ------------

                                                              $(8,792,849)     $(5,311,449)
                                                              ============     ============
  Denominator
      Basic and diluted weighted average number of
      common shares outstanding during the period               6,723,101        5,904,416
                                                              ============     ============

  Basic and diluted loss per share                            $     (1.31)     $     (0.90)
                                                              ============     ============

   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                                    5,030,507        4,941,282
         Preferred stock                                        1,811,500        1,876,751
                                                              ------------     ------------

                                                                6,842,007        6,818,033
                                                              ============     ============
</TABLE>

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

         The Company recognizes deferred tax assets and liabilities for
         temporary differences between the financial reporting and tax bases of
         its assets and liabilities. At December 31, 2004 the Company has an
         estimated net operating loss carryforward for federal tax purposes of
         $15,965,000, which, if unused to offset future taxable income, will
         begin to expire in 2012 and continue through 2025. The Company had
         deferred tax assets of approximately $5,600,000 and $3,384,000 at
         December 31, 2004 and 2003, respectively, relating to its net operating
         loss. A 100% valuation allowance, which increased by $2,216,000 in
         2004, has been recognized to offset the entire related deferred tax
         asset due to the uncertainty of realizing the benefit.


                                      F-17
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

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

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

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

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

         The Company has entered into various agreements with its strategic
         consultant for the research and development of additional applications
         of the Company's proprietary intellectual properties. The Company made
         payments to the strategic consultant amounting the $1,528,725 in 2004
         and $672,264 in 2003.

         Employment agreement
         --------------------

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

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


                                      F-18
<PAGE>

                      CPC OF AMERICA, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

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

         Royalty agreements
         ------------------

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

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

         Litigation
         ----------

         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. The
         $200,000 was paid in 2004 as required by the settlement agreement.

         Office lease
         ------------

         The Company leases its office space under a one-year lease at $1,000
         per month from a related party. The lease expires November 30, 2005.
         Actual rent expense was $12,000 in 2004 and $12,500 in 2003.


                                      F-19
<PAGE>

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

         None.

ITEM 8A. CONTROLS AND PROCEDURES

         Our disclosure controls and procedures are designed to ensure that
information required to be disclosed in reports that we file or submit under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the Securities and
Exchange Commission and that such information is accumulated and communicated to
our management, as appropriate, to allow timely decisions regarding required
disclosure. Our chief executive officer and chief financial officer has reviewed
the effectiveness of our disclosure controls and procedures and has concluded
that the disclosure controls and procedures are effective as of the end of the
period covered by this report. There were no significant changes in our internal
controls or in other factors that could significantly affect these controls
subsequent to the last day they were evaluated.

         It should be noted that any system of controls, however well designed
and operated, can provide only reasonable, and not absolute, assurance that the
objectives of the system are met. In addition, the design of any control system
is based in part upon certain assumptions about the likelihood of future events.
Because of these and other inherent limitations of control systems, there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions. As a small organization with one full time
employee, the effectiveness of our controls heavily depends on the direct
involvement of our chief executive officer and chief financial officer.


ITEM 8B. OTHER INFORMATION

         Not applicable.

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            54        President, Secretary, Treasurer and Director
Rafe Cohen                57        Director
William C. Lievense       57        Director


         Mr. Shipman has been our president and chief executive officer since
January 1997, became secretary in July 1997 and treasurer in September 2000 and
has been a director of our company since its inception in May 1996. Mr. Shipman
has over 20 years of experience in the medical industry. From August 1994 to
September 1999, Mr. Shipman was president and chief executive officer of R.A.
Shipman & Associates, L.L.C., a health care consulting firm. From January 1993
to July 1994 he served as senior vice president and chief operating officer of
MRI Medical Diagnostics, a Colorado corporation that provided imaging and
nuclear medical services and operated a senior retirement facility. Mr. Shipman
also served as a director of that company from May 1993 to June 1994. From
January 1991 to September 1992, Mr. Shipman served as the president and chief
operating officer of Southern California Imaging Services, a private mobile
diagnostic imaging and service company. From 1978 to 1990 he served in various
positions including business manager, controller, account executive and district
general manager with Philips Medical Systems, CGR Medical Systems, ADAC
Laboratories and Picker, all medical imaging companies. Mr. Shipman received a
Bachelor of Science degree in Business Administration from Pepperdine University
in Malibu, California and a Masters degree in Public and Health Care
Administration from the University of San Francisco in San Francisco,
California. He currently serves as a director on several small privately held
companies in real estate and environmental companies


                                      -12-
<PAGE>

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

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

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

KEY CONSULTANTS TO THE COMPANY

         The CTM Group, Inc., has a consulting contract to provide strategic
planning services to our company. Mr. Paul Shabty is the key consultant from the
CTM Group, Inc. who provides these consulting services. Mr. Shabty is a founder
of our company and served as our president, treasurer and chairman of the board
from April 1996 to January 1997. Mr. Shabty was a member of the Board of
Trustees of Columbia/Doctors Hospital of Sarasota, Florida. He is a former
director of TD Technologies, Inc., a private engineering and software company,
and Advanced Technologies Management Corporation, a medical software and
management company. Mr. Shabty has been involved in the medical and
manufacturing industries since 1970. He was the founder, chairman of the board
and chief executive officer of Medical Clinic Unlimited, Inc., which specialized
in both the provision of outpatient dialysis services and the manufacturing of
medical devices, equipment and supplies. From October 1993 to September 1994,
Mr. Shabty served as executive vice president of U.S. Diagnostic Labs, Inc., a
physician practice management provider specializing in diagnostic imaging
centers. Mr. Shabty received a Bachelor of Arts degree in Accounting from the
University of Tel Aviv. We made payments to CTM Group amounting to $1,528,725 in
2004 and $672,264 in 2003.

AUDIT COMMITTEE FINANCIAL EXPERT

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

CODE OF ETHICS

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

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

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


                                      -13-
<PAGE>

         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, 2004, all Section 16(a) filing
requirements applicable to our officers, directors and greater than 10%
beneficial owners were complied with.

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, 2004, 2003 and
2002.



<TABLE>
                                      ANNUAL COMPENSATION                 LONG-TERM COMPENSATION
                            ----------------------------------------  ------------------------------
                                                                                   COMMON SHARES
                                                                      RESTRICTED    UNDERLYING
                                                       OTHER ANNUAL     STOCK      OPTIONS GRANTED     ALL OTHER
NAME AND POSITION            YEAR    SALARY   BONUS    COMPENSATION   AWARDS ($)     (# SHARES)      COMPENSATION
-----------------------------------------------------------------------------------------------------------------
<S>                          <C>    <C>       <C>          <C>             <C>        <C>                 <C>
Rod A. Shipman, President    2004   $363,876  $ 58,344      -0-             -0-         275,000            -0-
and Chief Executive          2002   $381,557   175,000     9,000            -0-           -0-              -0-
Officer                      2002   $409,095      -0-       -0-             -0-           -0-              -0-


                                     OPTION/SAR GRANTS IN 2004 FISCAL YEAR
                                                INDIVIDUAL GRANTS
-----------------------------------------------------------------------------------------------------------------
                                 NUMBER OF
                                 SECURITIES
                                 UNDERLYING         % OF TOTAL OPTIONS/SARS      EXERCISE OR
                                OPTIONS/SARS        GRANTED TO EMPLOYEES IN       BASE PRICE
    NAME                        GRANTED (#)               FISCAL YEAR               ($/SH)        EXPIRATION DATE
-----------------------------------------------------------------------------------------------------------------
Rod A. Shipman,                   275,000                     100%                  $29.12            10/11/09
President and Chief
Executive Officer
-----------------------------------------------------------------------------------------------------------------

                                    AGGREGATED OPTION/SAR EXERCISES IN 2004 FISCAL YEAR
                                               AND FY-END OPTION/SAR VALUES

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

Rod A. Shipman, President and        247,452            $8,078,562         1,095,246/600,000         $37,785,987/
Chief Executive Officer                                                                              $20,700,000(1)

</TABLE>

(1)  Based on a closing price of $37.00 per share for our common stock as quoted
     on the OTC Bulletin Board on December 30, 2004.

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


                                      -14-
<PAGE>

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

         In July 2000, our board of directors approved, and caused our
subsidiary, Med Enclosure LLC, to award, a bonus to Mr. Shipman in the form of a
royalty on the net sale of products of Med Enclosure derived from two of its
three patents. Mr. Shipman was to initially will receive a royalty in the amount
of three-quarters of one percent (.75%) on all net sales of products subject to
the royalty agreement. In July 2001, our board of directors approved an
amendment to the royalty agreement increasing the royalty payable to Mr. Shipman
to one and one-half percent (1.5%) on all net sales. In October 2004, our board
of directors approved a further amendment to the royalty agreement between Med
Enclosure and Mr. Shipman. Pursuant to that amendment, in the event of a change
in control of either Med Enclosure or CPC of America, Med Enclosure shall be
obligated to pay Mr. Shipman minimum royalty payments of $4,000,000 per year. In
October 2002, our board of directors approved, and caused our wholly-owned
subsidiary, Med Close Corp., to award a bonus to Mr. Shipman in the form of a
royalty in the amount of two and one-half percent (2.5%) on all net sales of
products of Med Close Corp.

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

         The following table sets forth certain information regarding the
beneficial ownership of the shares of our common stock as of March 28, 2005 by
(i) each person who is known by us to be the beneficial owner of more than five
percent (5%) of the issued and outstanding shares of our common stock, (ii) each
of our directors and executive officers and (iii) all directors and executive
officers as a group.

<TABLE>
                 NAME AND ADDRESS                  NUMBER OF SHARES     PERCENTAGE OWNED
                                                   ----------------     ----------------
<S>                                                   <C>                   <C>
Rod A. Shipman(1) (2)                                  1,725,595             20.1%
Rafe Cohen(1)                                             60,000              (*)
William C. Lievense(1)                                    65,000              (*)
CTM Group, Inc.(3)(4)                                  3,130,616             33.8%
Leslie J. Kessler(5)(6)                                  599,468              7.9%
All officers and directors as a group (three           1,850,595             21.6%
persons)

---------------
</TABLE>

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

(2)      Includes options granted to Mr. Shipman to purchase 1,370,246 shares of
         common stock. Does not include options to purchase 600,000 shares of
         common stock, which are subject to vesting.

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

(4)      Includes options granted to the CTM Group to purchase 2,069,253 shares
         of common stock. Does not include options to purchase 600,000 shares of
         common stock, which are subject to vesting.

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

(6)      Includes an option granted to Ms. Kessler to purchase 357,000 shares of
         common stock.

(*)      Less than one percent.


                                      -15-
<PAGE>

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

         The following table sets forth certain information as of December 31,
2004 concerning our equity compensation plans:

<TABLE>
                                   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                810,348                       $1.42                   3,175,534
approved by shareholders

Equity compensation plan              4,233,548                       $2.50                      N/A
not approved by
shareholders (1)
</TABLE>
----------
         (1) Represents shares of common stock issuable to Rod Shipman and CTM
Group, Inc. pursuant to option agreements entered into with us.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         In July 2000, our board of directors approved, and caused our
subsidiary, Med Enclosure LLC, to award, bonuses to our chief executive officer,
Rod A. Shipman and CTM Group, Inc in the form of a royalty on the net sale of
products of Med Enclosure derived from two of its three patents. Under the
original royalty agreements, Mr. Shipman and CTM Group were to each receive a
royalty in the amount of three-quarters of one percent (.75%) on all net sales
of products subject to the royalty agreement. In July 2001, our board of
directors approved amendments to the royalty agreements increasing the royalties
payable to Mr. Shipman and CTM Group to one and one-half percent (1.5%) on all
net sales. In October 2004, our board of directors approved further amendments
to the royalty agreements with Mr. Shipman and CTM Group. Pursuant to those
amendments, in the event of a change in control of either Med Enclosure or CPC
of America, Med Enclosure shall be obligated to pay Mr. Shipman and CTM Group
each minimum royalty payments of $4,000,000 per year. CTM Group beneficially
owns approximately 32.1% of our outstanding common shares.

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

         During 2002 and 2003, we entered into various agreements with CTM Group
for research and development of additional various applications of our
proprietary intellectual property. We made payments to CTM Group amounting to
$1,528,725 in 2004 and $672,164 in 2003.

ITEM 13. EXHIBITS.

         INDEX TO EXHIBITS

         3.1      Articles of Incorporation of the Company (1)

         3.2      Certificate of Amendment of Articles of Incorporation (2)

         3.3      Bylaws of the Company (1)


                                      -16-
<PAGE>

         4.1      Specimen of Common Stock Certificate (1)

         4.2      Certificate of Designations of the Company's Series A
                  Preferred Stock (5)

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

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

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

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

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

         10.3     Employment Agreement dated April 23, 1998 between the Company
                  and Rod A. Shipman (3)

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

         10.5     Consulting Agreement dated April 23, 1998 between the Company
                  and CTM Consulting Group, Inc. (3)

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

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

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

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

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

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

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

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

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

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

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

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

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


                                      -17-
<PAGE>

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

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

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

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

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

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

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

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

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

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

         21.1     List of Subsidiaries

         23.1     Consent of Independent Certified Public Accountants

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

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

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

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

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

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

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

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

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

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


                                      -18-
<PAGE>

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

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

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

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

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

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

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


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

         Our board of directors has selected Cacciamatta Accountancy Corporation
as our independent accountants to audit our consolidated financial statements
for the fiscal year 2004. Cacciamatta Accountancy Corporation previously audited
our consolidated financial statements for the two fiscal years ended December
31, 2003 and 2002.


AUDIT AND NON-AUDIT FEES

         Aggregate fees for professional services rendered to us by Cacciamatta
Accountancy Corporation for the years ended December 31, 2004 and 2003 were as
follows:

              Services Provided                          2004         2003
              -------------------------------------   ----------   ---------
              Audit Fees...........................   $ 63,000     $ 57,000
              Audit Related Fees...................      -0-          -0-
              Tax Fees.............................      -0-          -0-
              All Other Fees.......................      -0-          -0-
                                                     ----------    ---------
                      Total........................   $ 63,000     $ 57,000

         AUDIT FEES. The aggregate fees billed for the years ended December 31,
2004 and 2003 were for the audits of our financial statements and reviews of our
interim financial statements included in our annual and quarterly reports.

         AUDIT RELATED FEES. There were no fees billed for the years ended
December 31, 2004 and 2003 for the audit or review of our financial statement
that are not reported under Audit Fees.

         TAX FEES. There were no fees billed for the years ended December 31,
2004 and 2003 for professional services for tax compliance, tax advice and tax
planning.

         ALL OTHER FEES. There were no billed for the years ended December 31,
2004 and 2003 for services other than the services described above.


                                      -19-
<PAGE>

PRE-APPROVAL POLICIES AND PROCEDURES

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


                                      -20-
<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, 2005                 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, 2005
---------------------  Secretary, Treasurer and Principal
ROD A. SHIPMAN         Accounting Officer and Director


/s/ Rafe Cohen         Director                                   March 31, 2005
---------------------
RAFE COHEN

/s/ William Lievense   Director                                   March 31, 2005
---------------------
WILLIAM LIEVENSE


                                      -21-