UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q




(Mark
One)


x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
the Quarterly Period Ended June 30, 2010




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: 000 – 52077





MEDPRO
SAFETY PRODUCTS, INC.


(Exact
name of registrant as specified in its charter)




Nevada
              
              91-2015980(State
      or other jurisdiction of
              
              (I.R.S.
      Employerincorporation
      or organization)
              
              Identification
      No.)817
      Winchester Road, Suite 200,Lexington,
      KY
              
              40505(Address
      of principal executive offices)
              
              (Zip
      Code)





(859)
225-5375


(Registrant’s
telephone number, including area code)







Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.





Yes x     No   ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). 
      Yes  ̈       No
 ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer   ̈
              
              Accelerated
      filer   ̈Non-accelerated
      filer   ̈
              
              Smaller
      reporting company  x





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





Indicate
the number of shares outstanding of each of the issuer’s class of common stock,
as of the latest practicable date, 13,148,148
shares of Common Stock were outstanding at July 19, 2010.





INDEX





PagePART
      I –
                                
                                FINANCIAL
      INFORMATIONITEM
      1.
                                
                                FINANCIAL STATEMENTS
                                
                                2ITEM
      2.
                                
                                MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS
                                
                                27ITEM
      3.
                                
                                QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
      MARKET RISK
                                
                                34ITEM
      4.
                                
                                CONTROLS AND PROCEDURES
                                
                                34PART
      II –
                                
                                OTHER
      INFORMATIONITEM
      1.
                                
                                LEGAL PROCEEDINGS
                                
                                35ITEM
      1A.
                                
                                RISK FACTORS
                                
                                35ITEM
      2.
                                
                                UNREGISTERED SALES ON EQUITY SECURITIES AND USE OF
      PROCEEDS
                                
                                35ITEM
      3.
                                
                                DEFAULTS UPON SENIOR
    SECURITIES
                                
                                36ITEM
      4.
                                
                                SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS
                                
                                36ITEM
      5.
                                
                                OTHER INFORMATION
                                
                                36ITEM
      6.
                                
                                EXHIBITS
                                
                                36


1


PART
I


Item
1.  Financial Statements





The
following financial statements of MedPro Safety Products, Inc. are
submitted:





Balance
Sheets as of June 30, 2010 and December 31, 2009





Statements
of Operations for the three and six months ended June 30, 2010 and
2009





Statements
of Changes in Shareholders’ Equity for the six months ended June 30, 2010 and
the year ended December 31, 2009





Statements
of Cash Flows for the six months ended June 30, 2010 and 2009





Notes to
Unaudited Financial Statements


2




MedPro
Safety Products, Inc.


Balance
Sheets


June
30, 2010 and December 31, 2009





June
      30, 2010
                  (Unaudited)
                
                
                December 31, 2009ASSETSCurrent
      AssetsCash
                
                $
                2,335,668
                
                
                $
                4,072,443Accounts
      receivable, net of allowance of $21,225
                
                
                1,272
                
                
                
                -Inventory
                
                
                274,701
                
                
                
                247,981Accrued
      interest income
                
                
                5,245
                
                
                
                18,694Prepaid
      expenses and other current assets
                
                
                26,770
                
                
                
                22,048Total
      current assets
                
                
                2,643,656
                
                
                
                4,361,166Property
      and EquipmentEquipment
      and tooling
                
                
                1,102,572
                
                
                
                1,042,869Leasehold
      improvements
                
                
                192,377
                
                
                
                192,377Computers,
      network and phones
                
                
                199,984
                
                
                
                197,574Furniture
      and fixtures
                
                
                118,019
                
                
                
                118,019Trade
      show booth
                
                
                7,341
                
                
                
                7,3411,620,293
                
                
                
                1,558,180Less:
      accumulated depreciation
                
                
                326,570
                
                
                
                252,966Property
      and equipment, net
                
                
                1,293,723
                
                
                
                1,305,214Other
      AssetsIntangible
      assets, net of amortization of $295,383 and $42,840,
      respectively
                
                
                8,814,914
                
                
                
                9,067,457Deferred
      financing costs, net of amortization of $148,502 and $127,616,
      respectively
                
                
                34,831
                
                
                
                55,718Total
      other assets
                
                
                8,849,745
                
                
                
                9,123,175Total
      assets
                
                $
                12,787,124
                
                
                $
                14,789,555





See notes
to financial statements.


3


MedPro
Safety Products, Inc.


Balance
Sheets (Continued)


June
30, 2010 and December 31, 2009





June
      30, 2010
                                                                    (Unaudited)
                                                                  
                                                                  
                                                                  December 31, 2009LIABILITIES
      AND SHAREHOLDERS’ EQUITYCurrent
      LiabilitiesAccounts
      payable and accrued expenses
                                                                  
                                                                  $
                                                                  567,166
                                                                  
                                                                  
                                                                  $
                                                                  406,121Accrued
      interest payable
                                                                  
                                                                  
                                                                  13,084
                                                                  
                                                                  
                                                                  
                                                                  10,674Current
      portion of long term debt
                                                                  
                                                                  
                                                                  3,223,193
                                                                  
                                                                  
                                                                  
                                                                  3,413,533Current
      portion of technology transfer payments – Visual Connections,
      Inc.
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  250,000Notes
      payable to and advances from shareholders
                                                                  
                                                                  
                                                                  2,329,654
                                                                  
                                                                  
                                                                  
                                                                  -Derivative
      liabilities – fair value of warrants
                                                                  
                                                                  
                                                                  681,782
                                                                  
                                                                  
                                                                  
                                                                  -Total
      current liabilities
                                                                  
                                                                  
                                                                  6,814,879
                                                                  
                                                                  
                                                                  
                                                                  4,080,328Long-Term
      LiabilitiesNotes
      payable - long term portion
                                                                  
                                                                  
                                                                  0
                                                                  
                                                                  
                                                                  
                                                                  694,444Total
      long term liabilities
                                                                  
                                                                  
                                                                  0
                                                                  
                                                                  
                                                                  
                                                                  694,444Total
      liabilities
                                                                  
                                                                  
                                                                  6,814,879
                                                                  
                                                                  
                                                                  
                                                                  4,774,772Shareholders’
      EquityPreferred
      stock $.01 par value: 10,000,000 shares authorized:Series
      A Preferred6,668,229
      shares issued and outstanding.  Liquidation preference $1,364,793 and
      $1,215,544, respectively
                                                                  
                                                                  
                                                                  66,682
                                                                  
                                                                  
                                                                  
                                                                  66,682Series
      B Preferred1,493,779
      shares issued and outstanding
                                                                  
                                                                  
                                                                  14,937
                                                                  
                                                                  
                                                                  
                                                                  14,937Series
      C Preferred1,571,523
      shares issued and outstanding
                                                                  
                                                                  
                                                                  15,715
                                                                  
                                                                  
                                                                  
                                                                  15,715Common
      stock$.001
      par value; 90,000,000 shares authorized; 13,148,148 and 13,215,311 issued
      and outstanding, respectively
                                                                  
                                                                  
                                                                  13,148
                                                                  
                                                                  
                                                                  
                                                                  13,215Additional
      paid-in capital
                                                                  
                                                                  
                                                                  70,329,882
                                                                  
                                                                  
                                                                  
                                                                  67,410,070Unearned
      share-based compensation
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  (167,600
                                                                  )Treasury
      stock (172,243 and 105,080 common shares, respectively)
                                                                  
                                                                  
                                                                  (589,353
                                                                  )
                                                                  
                                                                  
                                                                  (386,370
                                                                  )Accumulated
      deficit
                                                                  
                                                                  
                                                                  (63,878,766
                                                                  )
                                                                  
                                                                  
                                                                  (56,951,866
                                                                  )Total
      shareholders’ equity
                                                                  
                                                                  
                                                                  5,972,245
                                                                  
                                                                  
                                                                  
                                                                  10,014,783Total
      liabilities and shareholders’ equity
                                                                  
                                                                  $
                                                                  12,787,124
                                                                  
                                                                  
                                                                  $
                                                                  14,789,555





See notes
to financial statements.


4


MedPro
Safety Products, Inc.


Statements
of Operations


For
the Three and Six Months Ended June 30, 2010 and 2009





For
      the Three
                                      
                                      
                                      For
      the Three
                                      
                                      
                                      For
      the Six
                                      
                                      
                                      For
      the SixMonths
      Ended
                                      
                                      
                                      Months
      Ended
                                      
                                      
                                      Months
      Ended
                                      
                                      
                                      Months
      EndedJune
      30, 2010
                                      
                                      
                                      June
      30, 2009
                                      
                                      
                                      June
      30, 2010
                                      
                                      
                                      June
      30, 2009(Unaudited)
                                      
                                      
                                      (Unaudited)
                                      
                                      
                                      (Unaudited)
                                      
                                      
                                      (Unaudited)SalesAutomation
      Services and Equipment
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      12,045Total
      sales
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      12,045Cost
      of goods sold and automation
                                      
                                      
                                      550
                                      
                                      
                                      
                                      4,610
                                      
                                      
                                      
                                      4,184
                                      
                                      
                                      
                                      12,045Gross
      profit
                                      
                                      
                                      (550
                                      )
                                      
                                      
                                      (4,610
                                      )
                                      
                                      
                                      (4,184
                                      )
                                      
                                      
                                      -Operating
      ExpensesSalaries,
      wages, and payroll taxes
                                      
                                      
                                      2,318,627
                                      
                                      
                                      
                                      2,268,187
                                      
                                      
                                      
                                      4,582,577
                                      
                                      
                                      
                                      4,509,676Qualified
      profit sharing plan
                                      
                                      
                                      16,842
                                      
                                      
                                      
                                      18,316
                                      
                                      
                                      
                                      31,277
                                      
                                      
                                      
                                      36,804Advertising
      and promotion
                                      
                                      
                                      12,535
                                      
                                      
                                      
                                      143,602
                                      
                                      
                                      
                                      202,971
                                      
                                      
                                      
                                      275,729Product
      development costs
                                      
                                      
                                      238,665
                                      
                                      
                                      
                                      240,395
                                      
                                      
                                      
                                      448,686
                                      
                                      
                                      
                                      413,657Professional
      and insurance
                                      
                                      
                                      495,695
                                      
                                      
                                      
                                      288,425
                                      
                                      
                                      
                                      978,947
                                      
                                      
                                      
                                      623,170General
      and administrative
                                      
                                      
                                      33,430
                                      
                                      
                                      
                                      92,155
                                      
                                      
                                      
                                      104,441
                                      
                                      
                                      
                                      171,601Travel
      and entertainment
                                      
                                      
                                      142,475
                                      
                                      
                                      
                                      66,581
                                      
                                      
                                      
                                      270,224
                                      
                                      
                                      
                                      168,922Depreciation
      and amortization
                                      
                                      
                                      174,335
                                      
                                      
                                      
                                      31,498
                                      
                                      
                                      
                                      347,032
                                      
                                      
                                      
                                      59,286Total
      operating expenses
                                      
                                      
                                      3,432,604
                                      
                                      
                                      
                                      3,149,159
                                      
                                      
                                      
                                      6,966,155
                                      
                                      
                                      
                                      6,258,845Loss
      from operations
                                      
                                      
                                      (3,433,154
                                      )
                                      
                                      
                                      (3,153,769
                                      )
                                      
                                      
                                      (6,970,339
                                      )
                                      
                                      
                                      (6,258,845
                                      )Other
      Income (Expenses)Interest
      expense
                                      
                                      
                                      (59,754
                                      )
                                      
                                      
                                      (65,886
                                      )
                                      
                                      
                                      (111,108
                                      )
                                      
                                      
                                      (141,083
                                      )Interest
      income
                                      
                                      
                                      5,570
                                      
                                      
                                      
                                      15,945
                                      
                                      
                                      
                                      12,472
                                      
                                      
                                      
                                      22,861Change
      in fair value of derivative liabilities
                                      
                                      
                                      99,147
                                      
                                      
                                      
                                      (1,929,325
                                      )
                                      
                                      
                                      142,075
                                      
                                      
                                      
                                      20,320,832Total
      other income (expenses)
                                      
                                      
                                      44,963
                                      
                                      
                                      
                                      (1,979,266
                                      )
                                      
                                      
                                      43,439
                                      
                                      
                                      
                                      20,202,610Provision
      for income taxes
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Net
      income/(loss)
                                      
                                      $
                                      (3,388,191
                                      )
                                      
                                      $
                                      (5,133,035
                                      )
                                      
                                      $
                                      (6,926,900
                                      )
                                      
                                      $
                                      13,943,765Net
      earnings/(loss) per common shareBasic
      net earnings (loss) per share
                                      
                                      $
                                      (0.26
                                      )
                                      
                                      $
                                      (0.39
                                      )
                                      
                                      $
                                      (0.53
                                      )
                                      
                                      $
                                      1.05Fully
      diluted net earnings/(loss) per share
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      0.33Shares
      used in computing earnings per shareWeighted
      average number of shares outstanding - basic
                                      
                                      
                                      13,166,609
                                      
                                      
                                      
                                      13,320,386
                                      
                                      
                                      
                                      13,190,825
                                      
                                      
                                      
                                      13,320,386Weighted
      average number of shares outstanding - diluted
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      42,316,278





See notes to financial
statements.


5


MedPro
Safety Products, Inc.


Statements
of Shareholders’ Equity


For
the Six Months Ended June 30, 2010


and
the Year Ended December 31, 2009





Common
      Stock
                        
                        
                        Preferred
      Stock
                        
                        
                        Unearned
                        
                        
                        Paid-In
                        
                        
                        AccumulatedShares
                        
                        
                        Amount
                        
                        
                        Shares
                        
                        
                        Amount
                        
                        
                        Compensation
                        
                        
                        Capital
                        
                        
                        DeficiencyBalance,
      January 1, 2009
                        
                        
                        13,320,366
                        
                        
                        $
                        13,320
                        
                        
                        
                        8,162,008
                        
                        
                        $
                        81,619
                        
                        
                        $
                        (21,885
                        )
                        
                        $
                        37,346,609
                        
                        
                        $
                        (65,328,139
                        )Series
      C convertible preferred shares issued for cash and exchange of warrants,
      net of issuance costs of $240,000 (fractional shares issued in common
      stock)
                        
                        
                        25
                        
                        
                        
                        -
                        
                        
                        
                        1,571,523
                        
                        
                        
                        15,715
                        
                        
                        
                        -
                        
                        
                        
                        20,645,414
                        
                        
                        
                        -Share
      based vendor compensation
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (145,715
                        )
                        
                        
                        145,715
                        
                        
                        
                        -Earned
      portion of employee and director options
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        7,374,450
                        
                        
                        
                        -Write
      off balance of derivative liability
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        1,897,882
                        
                        
                        
                        -Purchase
      of treasury stock
                        
                        
                        (105,080
                        )
                        
                        
                        (105
                        )
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Net
      income through December 31, 2009
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        8,376,273Balance
      December 31, 2009
                        
                        
                        13,215,311
                        
                        
                        $
                        13,215
                        
                        
                        
                        9,733,531
                        
                        
                        $
                        97,334
                        
                        
                        $
                        (167,600
                        )
                        
                        $
                        67,410,070
                        
                        
                        $
                        (56,951,866
                        )Earned
      portion of employee and director options
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        3,743,670
                        
                        
                        
                        -Earned
      portion of vendor share based compensation
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        167,600
                        
                        
                        
                        -
                        
                        
                        
                        -Derivative
      liabilities – warrants issued with debt
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (823,857
                        )
                        
                        
                        -Purchase
      of treasury stock
                        
                        
                        (67,163
                        )
                        
                        
                        (67
                        )
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Net
      (loss) through June 30, 2010
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (6,926,900
                        )Balance
      June 30, 2010
                        
                        
                        13,148,148
                        
                        
                        $
                        13,148
                        
                        
                        
                        9,733,531
                        
                        
                        $
                        97,334
                        
                        
                        $
                        -
                        
                        
                        $
                        70,329,883
                        
                        
                        $
                        (63,878,766
                        )





See notes
to financial statements.




6


MedPro
Safety Products, Inc.


Statements
of Cash Flows


For
the Six Months Ended June 30, 2010 and 2009





June
      30, 2010
                    (Unaudited)
                  
                  
                  June
      30, 2009
                    (Unaudited)Cash
      Flows From Operating ActivitiesNet
      income (loss)
                  
                  $
                  (6,926,900
                  )
                  
                  $
                  13,943,765Adjustments
      to reconcile net income (loss) to net cashflows
      from operating activities:Depreciation
                  
                  
                  73,604
                  
                  
                  
                  38,400Amortization
                  
                  
                  273,429
                  
                  
                  
                  20,886Share
      based compensation
                  
                  
                  3,911,270
                  
                  
                  
                  3,651,505Change
      in fair value of warrant (derivative liabilities)
                  
                  
                  (142,075
                  )
                  
                  
                  (20,320,832
                  )Changes
      in operating assets and liabilitiesAccounts
      receivable and accrued interest
                  
                  
                  13,450
                  
                  
                  
                  (11,228
                  )Inventory
                  
                  
                  (26,720
                  )
                  
                  
                  (370
                  )Other
      current assets
                  
                  
                  (4,722
                  )
                  
                  
                  151,896Accounts
      payable and accrued expenses
                  
                  
                  161,045
                  
                  
                  
                  (136,776
                  )Accrued
      interest payable
                  
                  
                  2,410
                  
                  
                  
                  (18,449
                  )Deferred
      revenue
                  
                  
                  -
                  
                  
                  
                  (12,045
                  )Net
      cash flows from operating activities
                  
                  
                  (2,665,209
                  )
                  
                  
                  (2,693,248
                  )Cash
      Flows From Investing ActivitiesPurchases
      of property and equipment
                  
                  
                  (62,113
                  )
                  
                  
                  (311,576
                  )Net
      cash flows from investing activities
                  
                  
                  (62,113
                  )
                  
                  
                  (311,576
                  )Cash
      Flows From Financing ActivitiesPayments
      on note - technology transfer payments
                  
                  
                  (250,000
                  )
                  
                  
                  (1,000,000
                  )Proceeds
      from bank borrowings
                  
                  
                  -
                  
                  
                  
                  1,500,000Repayments
      on bank borrowings
                  
                  
                  (884,784
                  )
                  
                  
                  (2,379,433
                  )Proceeds
      from notes payable to and advances from shareholders
                  
                  
                  2,328,382
                  
                  
                  
                  208Payments
      on notes payable to and advances from shareholders
                  
                  
                  -
                  
                  
                  
                  (383,333
                  )Net
      cash from issuance of preferred shares
                  
                  
                  -
                  
                  
                  
                  2,760,000Purchase
      of treasury shares
                  
                  
                  (203,051
                  )
                  
                  
                  -Net
      cash flows from financing activities
                  
                  
                  990,547
                  
                  
                  
                  497,442Net
      increase / (decrease) in cash
                  
                  
                  (1,736,775
                  )
                  
                  
                  (2,507,382
                  )Cash
      at the beginning of the period
                  
                  
                  4,072,443
                  
                  
                  
                  11,636,843Cash
      at the end of the period
                  
                  $
                  2,335,668
                  
                  
                  $
                  9,129,461Supplemental
      Disclosures of Cash Flow Information:Cash
      paid for interest
                  
                  $
                  79,044
                  
                  
                  $
                  191,186Non-Cash
      ActivityNon-cash
      proceeds from issuance of Series C preferred shares – derivative liability
      exchanged for Shares
                  
                  $
                  -
                  
                  
                  $
                  17,901,129Non-cash
      portion of derivative liabilities associated with warrants issued with
      debt
                  
                  $
                  823,858
                  
                  
                  $
                  -





See notes
to financial statements.




7




MedPro
Safety Products, Inc.


Notes
to Financial Statements


(Unaudited)





NOTE
1 – BASIS OF PRESENTATION AND NATURE OF BUSINESS





The
accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 8 of Regulation
S-X.  Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements.  In the opinion of management, all adjustments (consisting of
only normal recurring accruals) considered necessary for a fair presentation
have been included.  Operating results for the six months ended June 30,
2010 are not necessarily indicative of the results that may be expected for the
year ended December 31, 2010.  For further information, refer to the
Company’s financial statements and footnotes thereto included in the Company’s
annual report on Form 10-K for the year ended December 31, 2009.





NOTE
2 – INCOME TAXES





Income
tax expense is provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred
taxes.  Deferred taxes are recognized for differences between the basis of
assets and liabilities for financial statement and income tax purposes. 
The differences relate primarily to the effects of net operating loss carry
forwards and differing basis, depreciation methods, and lives of depreciable
assets. The deferred tax assets represent the future tax return consequences of
those differences, which will be deductible when the assets are
recovered.




No income
tax benefit (expense) was recognized for the three or six months ended June 30,
2010 as a result of tax losses in this period and because deferred tax benefits,
derived from the Company’s prior net operating losses, were previously fully
reserved and the Company has cumulative net operating losses for tax purposes in
excess of $25 million.




The
Company currently has tax return periods open beginning with December 31, 2006
through December 31, 2009.





NOTE
3 – EARNINGS PER SHARE





In
accordance with Statement of Financial Accounting Standards (SFAS) No. 128,
“Earnings Per Share”, which was primarily codified into Topic 260, basic
earnings per share were computed using weighted average shareholdings of
13,169,311 and 13,320,386 for the six months ended June 30, 2010 and 2009. 
There were no new common shares issued in the six months ended June 30,
2010.  There were 25 shares issued in the six months ended June 30,
2009.





The basic
earnings per share are calculated on the weighted average number of common
shares outstanding.  Diluted earnings per share are based on the weighted
average number of common shares outstanding and all dilutive potential common
shares outstanding.  Weighted average common shares outstanding assuming
full dilution were 42,316,278 for the six months ended June 30, 2009. 
Because the Company had a net loss for the three and six month periods ended
June 30, 2010, there is no dilutive effect and both the basic and diluted losses
per share were the same for this period.





Basic
earnings / (loss) per common share represents the amount of earnings / (loss)
for the period available to each share of common stock outstanding during the
reporting period.  Diluted earnings (loss) per common share is the amount
of earnings (loss) for the period available to each share of common stock
outstanding during the reporting period and to each share that would have been
outstanding assuming the issuance of common shares for all dilutive potential
common shares outstanding during the period.


8


NOTE
3 – EARNINGS PER SHARE – (Continued)





The
Company’s potentially dilutive securities consist of options and warrants, as
well as, convertible preferred stock.  Since the Company had a loss in
2010, the potentially dilutive options, warrants and preferred shares were not
considered and earnings per share were only presented on a non dilutive
basis.  In 2009, the Company had 1,627,376 warrants, 3,000,000 options and
9,733,531 preferred shares (in three different Series with different conversion
features) which had an impact on calculating fully diluted earnings per
share.  The common stock equivalent numbers of shares convertible from the
preferred shares were 28,358,575 shares.  After adjustment for potential
buy back of convertible preferred and warrants and options, the fully diluted
shares were 42,316,278.





NOTE
4 - RECENT ACCOUNTING PRONOUNCEMENTS


Recent
Accounting Pronouncements





Not Yet
Adopted





In
October 2009, the FASB issued new accounting guidance (Accounting Standards
Update (ASU), 2009-13) related to revenue arrangements with multiple
deliverables, Revenue
Recognition (“Topic 605-25-65-1”): Multiple Deliverable Revenue Arrangements — A
Consensus of the FASB Emerging Issues Task Force, that provides
principles for allocation of consideration among an arrangement's
multiple-elements, allowing more flexibility in identifying and accounting for
separate deliverables. The guidance introduces an estimated selling price method
for valuing the elements of a bundled arrangement if vendor-specific objective
evidence or third-party evidence of selling price is not available, and
significantly expands related disclosure requirements. This guidance is
effective on a prospective basis for revenue arrangements entered into or
materially modified in fiscal years beginning on or after June 15, 2010.
Alternatively, adoption may be on a retrospective basis, and early application
is permitted. We are currently evaluating the impact of adopting this guidance
on our financial statements.





Adopted





In June
2009, the FASB issued accounting guidance that eliminates the exemption from
consolidation for qualifying special-purpose entities, effective for financial
asset transfers occurring after the beginning of an entity's first fiscal year
that begins after November 15, 2009. We currently do not have any of these
entities.




In June
2009, the FASB issued accounting guidance that assists in determining whether an
enterprise has a controlling financial interest in a variable interest entity.
This guidance is effective as of the beginning of the first fiscal year that
begins after November 15, 2009. We currently do not have any such
arrangements.





The FASB
has issued Accounting Standard Update (ASU) No. 2010-01, Equity (Topic 505): Accounting for
Distributions to Shareholders with Components of Stock and Cash. The
amendments to the Codification in this ASU clarify that the stock portion of a
distribution to shareholders that allows them to elect to
receive cash or stock with a potential limitation on the total amount of cash
that all shareholders can elect to receive in the aggregate is considered a
share issuance that is reflected in earnings per share prospectively and is not
a stock dividend. This ASU codifies the consensus reached in EITF Issue No.
09-E, "Accounting for Stock Dividends, Including Distributions to Shareholders
with Components of Stock and Cash."   The Company recognizes that
the standard is applicable to its financial statements for this period but it
has no applicable dividend transactions and therefore implementation has had no
effect on its financial statements.  ASU 2010-01 is effective for interim
and annual periods ending on or after December 15, 2009, and should be applied
on a retrospective basis.


9


NOTE
4 - RECENT ACCOUNTING PRONOUNCEMENTS – (Continued)





In
January 2010, the FASB issued ASU, 2010-06, Fair Value Measurement and
Disclosures(Topic 820-10-65-7), which relates to the disclosure
requirements for fair value measurements and provides clarification for existing
disclosures requirements. This update will require an entity to disclose
separately the amounts of significant transfers in and out of Levels 1 and
2 fair value measurements and to describe the reasons for the transfers. 
It also will require entities to disclose information about purchases,
sales, issuances and settlements to be presented separately (i.e. present the
activity on a gross basis rather than net) in the reconciliation for fair value
measurements using significant unobservable inputs (Level 3 inputs). This
guidance clarifies existing disclosure requirements for the level of
disaggregation used for classes of assets and liabilities measured at fair value
and requires disclosures about the valuation techniques and inputs used to
measure fair value for both recurring and nonrecurring fair value measurements
using Level 2 and Level 3 inputs. The new disclosures and
clarifications of existing disclosure are effective for fiscal years beginning
after December 15, 2009, except for the disclosure requirements for or
related to the purchases, sales, issuances and settlements in the roll forward
activity of Level 3 fair value measurements.  Those disclosure requirements
are effective for fiscal years ending after December 31, 2010. We have
implemented this standard in our financial disclosures effective in the first
quarter of 2010.





In April
2010, the FASB issued ASU 2010-10, Accounting for Certain Tax Effects
of the 2010 Health Care Reform Acts (Topic 740-10-S99-4), which relates
to the impact of the differing signature dates for the two healthcare bills on
the tax provision and deferred taxes of a registrant.  The Company believes
that the standard has no impact on its financial statements or
disclosures.





In June
2008, effective for financial statements issued after December 15, 2009, ASC
260-10-65-2, Determining
Whether Instruments Granted in Share-Based Transactions Are Participating
Securities, the FASB issued guidance on the impact on earnings per share
of the inclusion of share-based transaction.  The adoption of Codification
Topic ASC 260-10-65-2 did not have a material impact on the Company’s financial
position, results of operations or earnings per share.





In
December 2007, the FASB ratified Codification Topic ASC 808-10-65-1, Collaborative Arrangements,
which applies to collaborative arrangements where no separate legal entity
exists and in which the parties are active participants and are exposed to
significant risks and rewards that depend on the success of the activity. 
This issue, among other things, requires certain statement of operations
presentation of transactions with third parties and of payments between parties
to the collaborative arrangement, along with disclosure about the nature and
purpose of the arrangement.  The provisions of Codification Topic ASC 808
are effective for fiscal years beginning on or after December 15,
2008.  The Company adopted Codification Topic 808 on January 1, 2009.
The adoption of Codification Topic 808 did not have a material impact on the
Company’s financial position or results of operations.


10


NOTE
4 - RECENT ACCOUNTING PRONOUNCEMENTS – (Continued)





In May
2009, the FASB issued Statement No. 165, Subsequent Events, which was
primarily codified into ASC Topic 855 (“Topic 855”). Topic 855 establishes
general standards of accounting for and disclosures of events that occur after
the balance sheet date but before financial statements are issued or are
available to be issued. In particular, this Statement requires the following:
(a) the period after the balance sheet date during which management of a
reporting entity should evaluate events or transactions that may occur for
potential recognition or disclosure in the financial statements, (b) the
circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements, and (c) the
disclosures an entity should make about events or transactions that occurred
after the balance sheet date. In accordance with this Statement, an entity
should apply the requirements to interim or annual financial periods ending
after June 15, 2009. Topic 855 was updated by FASB Accounting Standards Update
(“ASU”) 2010-09.





On
February 24, 2010, the FASB issued ASU 2010-09, effective immediately, which
amended ASC Topic 855, Subsequent Events. The
amendments were made to address concerns about conflicts with SEC guidance and
other practice issues. Among the provisions of the amendment, the FASB defined a
new type of entity, termed an “SEC filer,” which is an entity required to file
or furnish its financial statements with the SEC.  Entities other than
registrants whose financial statements are included in SEC filings (e.g.,
businesses or real estate operations acquired or to be acquired, equity method
investees, and entities whose securities collateralize registered securities)
are not SEC filers. While an SEC filer is still required by GAAP to evaluate
subsequent events through the date its financial statements are issued, it is no
longer required to disclose in the financial statements that it has done so or
the date through which subsequent events have been evaluated.  The Company
does not believe the changes had a material impact on our results or financial
position.





In
February 2008, ASC 820-10-15-1A was amended, which delayed the effective date of
ASC 820, Fair Value
Measurements and Disclosures, for all non-financial assets and
non-financial liabilities, except for items that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at least annually),
until the beginning of the first quarter of fiscal year 2009. The Company’s
adoption of 820-10-15-1A on January 1, 2009 did not have a material impact
on the Company’s financial position, results of operations or cash
flows.





In April
2008, ASC 350-30-65-1, Determination of the Useful Life of Intangible
Assets (“ASC 350-30-65-1”), amended the factors considered in developing
renewal or extension assumptions used to determine the useful life of a
recognized intangible asset under ASC 350, Intangibles-Goodwill and Other , ASC
350-30-65-1 requires a consistent approach between the useful life of a
recognized intangible asset under ASC 350 and the period of expected cash flows
used to measure the fair value of an asset under ASC 805. ASC 350-30-65-1 also
requires enhanced disclosures when an intangible asset’s expected future cash
flows are affected by an entity’s intent and/or ability to renew or extend the
arrangement. ASC 350-30-65-1 is effective for financial statements issued for
fiscal years beginning after December 15, 2008 and is applied
prospectively. Early adoption is prohibited. The Company’s adoption of ASC
350-30-65-1 on January 1, 2009 did not have a material impact on the
Company’s financial position, results of operations or cash flows.





In June
2008, ASC 815-10-65-3, Determining Whether an Instrument
(or Embedded Feature) is Indexed to an Entity’s Own Stock, provides
guidance for determining whether an equity-linked financial instrument (or
embedded feature) is indexed to an entity’s own stock, which would qualify as a
scope exception under ASC 815-10-15-74(a),  Accounting for Derivative
Instruments and Hedging Activities. ASC 815
is effective for fiscal years beginning after December 15, 2008 and early
adoption for an existing instrument is not permitted. The Company’s adoption of
ASC 815 on January 1, 2009 had a material impact on the Company’s financial
position, results of operations and cash flows.  Its impact is more fully
disclosed in the Notes to our financial statements and reflected on our
Statement of Shareholders’ Equity.


11


NOTE
4 - RECENT ACCOUNTING PRONOUNCEMENTS – (Continued)





In
December 2007, the FASB issued FASB ASC 805-10 (Prior authoritative literature:
SFAS No. 141 (revised 2007), “Business Combinations”, which
replaces FASB Statement No. 141). FASB ASC 805-10 establishes principles
and requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, any non
controlling interest in the acquiree and the goodwill acquired. The Statement
also establishes disclosure requirements which will enable users to evaluate the
nature and financial effects of the business combination.  FASB ASC 805-10
will change how business combinations are accounted for and will impact
financial statements both on the acquisition date and in subsequent periods. The
adoption of FASB ASC 805-10 did not have an impact on the Company’s financial
position and results of operations although it may have a material impact on
accounting for business combinations in the future which cannot currently be
determined.





In April
2009, ASC 820-10-65-4, Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly, provided
additional guidance for estimating fair value in accordance with ASC 820, Fair
Value Measurements and Disclosures, when the volume and level of activity for
the asset or liability have significantly decreased. This ASC also includes
guidance on identifying circumstances that indicate a transaction is not
orderly. This ASC emphasizes that even if there has been a significant decrease
in the volume and level of activity for the asset or liability and regardless of
the valuation technique(s) used, the objective of a fair value measurement
remains the same. Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction (that is, not a
forced liquidation or distressed sale) between market participants at the
measurement date under current market conditions. ASC 820-10-65-4 is effective
for interim and annual reporting periods ending after June 15, 2009, and is
applied prospectively. Accordingly, the Company adopted the provisions of ASC
820-10-65-4 on April 1, 2009.  The adoption of this guidance did not
have a material impact on the Company’s financial position, results of
operations or cash flows.





In April
2009, ASC 825-10-65-1, Interim Disclosures about Fair Value of
Financial Instruments, was revised to require disclosures about fair
value of financial instruments in interim as well as annual financial
statements. This standard is effective for periods ending after June 15,
2009. Accordingly, the Company adopted the provisions of ASC 825-10-65-1 on
April 1, 2009. The adoption of this guidance did not have a material impact
on the Company’s financial position, results of operations or cash flows.
However, the provisions of ASC 825-10-65-1 may, in the future, result in
additional disclosures with respect to the fair value of the Company’s financial
instruments.





In
January 2010, guidance was issued to alleviate diversity in the accounting for
distributions to shareholders that allow the shareholder to elect to receive
their entire distribution in cash or shares but with a limit on the aggregate
amount of cash to be paid. The amendment states that the stock portion of a
distribution to shareholders that allows them to elect to receive cash or shares
with a potential limitation on the total amount of cash that all shareholders
can elect to receive in the aggregate is considered a share issuance. The
amendment is effective for interim and annual periods ending on or after
December 15, 2009 and had no impact on the Company’s financial
statements.  The Company does not currently, nor does it expect to issue
dividends to shareholders in the foreseeable future.





In April
2009, guidance was issued by the FASB, ASC 320-10-65-1, Recognition and Presentation of
Other Than Temporary Impairments, effective for financial statements
issued after June 15, 2009, on the reporting for other than temporary
impairments.  The adoption of this guidance did not have a material impact
on the Company’s financial position, results of operations or cash
flows.


12


NOTE
4 - RECENT ACCOUNTING PRONOUNCEMENTS – (Continued)





Reclassifications





Certain
amounts in the 2009 financial statements have been reclassified to conform to
the classifications used to prepare the 2010 financial statements.  These
reclassifications had no material impact on the Company’s financial position,
results of operations, or cash flow as previously reported.





NOTE
5 – INVENTORY





The
Company’s inventory consists primarily of the Needlyzer product less an amount
that is necessary to adjust inventory to its estimated net realizable value less
all applicable disposition costs.





NOTE
6 – INTANGIBLE ASSETS





The
Company’s intangible assets consist primarily of intellectual properties
(medical device patents) that give the Company the right to produce and exploit,
commercially, certain medical devices.  The various patents include the
skin and tube- activated blood collection devices with a cost of $2,525,425, the
Key-LokTM patent at $489,122, the syringe guard prefilled family of products at
$4,845,000 and the winged infusion set at $1,250,000.





To date,
two of the existing patents have been utilized to manufacture parts for testing
and evaluation.  The Company expects to begin delivering product in the
fourth quarter of 2010.  Amortization expense was $273,429 which included
amortization of $252,543 for the intellectual property and amortization of
prepaid loan fees of $20,886.  Estimated future amortization for the
balance of this fiscal year is expected to be $322,341 and amortization of the
following amounts for the fiscal years ended on December 31 are expected to be
as follows:





Fiscal
      Year EndingDecember 31,
                  
                  Amount2011
                  
                  $
                  1,109,1042012
                  
                  
                  1,821,9092013
                  
                  
                  1,821,9092014
                  
                  
                  1,695,638After
      12/31/14
                  
                  
                  2,078,843


13


NOTE
7 – LONG-TERM DEBT





Long-term
debt at June 30, 2010 and December 31, 2009 consisted of the
following:





June 30, 2010
                
                
                December 31, 2009Payable
      to Fifth Third Bank, Term Loan, interest payable at prime plus 2%, monthly
      principal payments of $138,889 beginning June 2008,
      maturing  May 1, 2011, collateralized by an assignment of
      intellectual properties
                
                $
                1,527,780
                
                
                $
                2,361,111Payable
      to Traditional Bank, Inc., Term loan, interest at 2.45% payable monthly,
      maturing July 1, 2010, secured by $1,500,000 interest bearing deposit
      account.  (Account paid in full July 1, 2010.)
                
                
                1,500,000
                
                
                
                1,500,000Payable
      to Whitaker Bank, Draw Loan, interest payable  at 7.5% monthly
      payments of principal and interest of $10,000 due through July 23, 2010,
      secured by certain inventory of the Company and personally guaranteed by
      the Company’s Chairman and CFO.  Note was extended 60 days on July
      23, 2010.  Principal and interest due in full on September 23,
      2010.
                
                
                195,416
                
                
                
                246,8663,223,196
                
                
                
                4,107,977Less:
      current portion
                
                
                3,223,196
                
                
                
                3,413,533Long-term
      portion
                
                $
                0
                
                
                $
                694,444





The term
note at Traditional Bank was taken out to pay off the original Fifth Third Bank
line of credit and was fully collateralized with a certificate of
deposit.





The
maturities of long-term for the remainder of this fiscal year will be $2,528,749
and the following table summarizes the maturities of long-term debt for the
fiscal years ended December 31:





Fiscal Year Ended
                    December 312011
                  
                  $
                  694,444





The
financial covenant on the term note with Fifth Third Bank was amended on April
1, 2010 to provide a compensating balance requirement of the lesser of 50% of
the outstanding loan balance or $750,000.  As of the first business day of
each month the covenant amount, plus the current note payment then due, must be
available in a Fifth Third account in the name of the Company.  In
addition, the Company agreed to an assignment of its patents as
collateral.  The Company also assigned the revenue stream from its minimum
volume contracts, in the event of default.  We have also agreed to
extinguish our loan with Fifth Third if we raise additional equity
capital.  The former covenant required 100% of the loan balance to be
covered by cash on deposit in a Company account held in Fifth Third Bank. 
The former covenant will be reinstated after September 30,
2010.


14


NOTE
8 – NOTES PAYABLE TO AND ADVANCES FROM SHAREHOLDERS





Notes
payable to and advances from shareholders represent loans and advances received
from officers, directors, shareholders and entities over which they exert
significant control.  They are comprised of the following:





June 30,
                    2010
                  
                  
                  December 31,
                    2009Short
      term advances with no stated terms settled in the ordinary course of
      business
                  
                  $
                  14,908
                  
                  
                  $
                  49,742Demand
      and promissory notes with varying interest rates and conversion
      features
                  
                  
                  2,329,654
                  
                  
                  
                  -Less
      amounts reflected in accounts payable and accrued interest
                  
                  
                  (14,908
                  )
                  
                  
                  (49,742
                  )$
                  2,329,654
                  
                  
                  $
                  0





Short
term advances consisted of $14,908 and $49,742 for June 30, 2010 and December
31, 2009, respectively, which were due to various related parties including a
company controlled by our Chairman for charter air services and unpaid expense
reports submitted after year end totaling $35,550.  An additional $3,634 of
expense reports due to our Chief Operating Officer and an employee were part of
the year-end short term advances.  Finally, the Company owed SC Capital
$10,557 for travel expenses incurred in 2009 but billed in 2010.  At June
30, 2010, the unpaid advances and invoices for services consisted of $10,053 due
to SC Capital and $4,855 due to employees, officers and directors for expense
reports.  Directors and officers were $14,072 (including SC Capital) of the
total $14,908.





2010
VOMF Bridge Loans





On
February 8, 2010, MedPro borrowed $500,000 from VOMF.  The loan provided
MedPro with additional liquidity.  The outstanding principal balance bears
interest at an annual rate of 6%, and all principal and interest was originally
due and payable on March 31, 2010.





Under the
terms of the note purchase agreement, we agreed to add a representative of VOMF
to our board of directors upon VOMF’s request.  Other covenants of the note
purchase agreement provide that without the written consent of VOMF, we will not
guarantee or incur additional indebtedness in excess of $100,000, other than
trade accounts payable incurred in the ordinary course of business, refinancing
of current indebtedness, and financing secured by purchase money liens, liens on
equipment and other permitted liens.  We also agreed not to sell any of our
properties, assets and rights including, without limitation, intellectual
property, to any person except for sales to customers in the ordinary course of
business; or with the prior written consent of VOMF.


15


NOTE
8 – NOTES PAYABLE TO AND ADVANCES FROM SHAREHOLDERS – (Continued)





On
February 26, 2010, we increased the outstanding principal balance of the bridge
loan to $850,000 and extended the date on which all principal and interest was
due and payable to June 30, 2010.  In consideration, we issued to VOMF a
five-year warrant to purchase 212,500 shares of our common stock at $4.00 per
share.





On March
31, 2010, the Company borrowed an additional $450,000 from VOMF and issued a new
6% promissory note and a five-year warrant to purchase 112,500 shares of our
common stock at $4.00 per share.  At March 31, 2010, the outstanding
principal amount of short-term notes from VOMF totaled $1,300,000.  All
principal and interest was due and payable to June 30, 2010.  The notes and
warrants issued on February 26, 2010 and March 31, 2010 have substantially
similar terms.





On April
30, 2010, the Company executed a line of credit agreement with VOMF for
$1,000,000, which the Company may draw in installments of up to $300,000 per
month.  The outstanding principal balance bears interest at 7% and is due
on the earlier of January 1, 2011, or the date on which the Company raises
$20,000,000 or more of new equity or debt.  The Company also agreed to
issue warrants to purchase 166,666 shares of common stock upon the execution of
the credit agreement and warrants to purchase 16,667 shares of common stock for
each $100,000 drawn on the credit agreement.  The exercise price of the
warrants is $3.00 per share.  The initial $250,000 draw on this line was
funded on May 4, 2010, at which time the Company issued 208,334 warrants for its
common stock exercisable at $3.00 per share.





On May
28, 2010, the Company borrowed an additional $300,000 from VOMF and issued a new
7% promissory note and a five-year warrant to purchase 50,001 shares of our
common stock at $3.00 per share.





On June
4, 2010, the Company and VOMF executed an extension for the notes issued to
date.  These notes are now due September 30, 2010.





On June
30, 2010, the Company borrowed an additional $450,000 from VOMF and issued a new
7% promissory note and a five-year warrant to purchase 75,002 shares of our
common stock at $3.00 per share.  This note is due September 30,
2010.





The total
outstanding loans from VOMF at June 30, 2010 were $2,300,000.  Accrued
interest on these loans was $29,654 at June 30, 2010.





NOTE
9 – RELATED PARTY TRANSACTIONS





As part
of the September 2006 debt restructuring, our Chairman agreed to personally
guarantee the term loan and revolving line of credit under the Company’s credit
agreement with a commercial lender, for which the Company agreed to pay him
$250,000 annually.  The final fee was accrued in 2008 and paid in
2009.  The personal guarantee was released in 2009.





On March
6, 2008, the Company entered into a consulting agreement with SC Capital
Partners, LLC to assist it with future capital requirements, strategic financial
planning and support of the Company’s efforts to build shareholder
liquidity.  The contract was replaced with a new contract on January 11,
2010.  The agreement calls for a retainer of $15,000 per month, plus
out-of-pocket expenses, beginning on the date of execution.  The agreement
may be terminated by the Company with appropriate notice or upon satisfaction of
the goals of the agreement.  The agreement also contains certain fees for
future capital milestones achieved.  Warren Rustand, a director of the
Company, is a principal of SC Capital Partners, LLC.


16


NOTE
9 – RELATED PARTY TRANSACTIONS – (Continued)





The
Company also issued Series AA warrants to purchase 533,458 common shares to SC
Capital Partners, LLC for $1.81 per share as compensation for financial advisory
services in connection with the December 28, 2007 private placement.  The
terms of these warrants are comparable to the terms of the “A”
warrants and they expire on December 28, 2012.  None of the AA warrants
have been exercised as of the date of the financial statements.





NOTE
10 – SHAREHOLDERS’ EQUITY





The
Company is authorized to issue 90,000,000 shares of common stock with a par
value of $0.001 per share, and 10,000,000 shares of preferred stock with a par
value of $.01 per share, which is issuable in series.  Of the 10,000,000
shares of preferred stock authorized, 6,668,229 shares are designated as Series
A Convertible Preferred Stock (“Series A Stock”), 1,493,779 shares are
designated as Series B Convertible Preferred Stock (“Series B Stock”) and
1,571,523 shares are designated as Series C Convertible Preferred Stock (“Series
C Stock”).





At June
30, 2010, the Company’s issued and outstanding shares consisted of 13,148,148
shares of common stock, 6,668,229 shares of Series A Stock, 1,493,779 shares of
Series B Stock, and 1,571,523 shares of Series C Stock.  In addition,
warrants to purchase 2,392,677 shares of common and options for 3,332,971 shares
of common were outstanding at June 30, 2010.  On July 30, 2010, after the
quarter ended, the Company issued 83,335 warrants to purchase common stock in
connection with a new $500,000 loan from VOMF issued at 7%.  The warrants
are exercisable at $3 per share for a five year period.





See Note
12 of the notes to our audited financial statements included in our Annual
Report on Form 10-K for 2009 for a detailed description of the terms of our
three series of preferred stock and stock purchase warrants issued and
outstanding, including the accounting treatment.





The
Company had previously authorized the issuance of warrants to purchase up to
68,036 common shares for $1.99 per share as compensation for the publication of
a research report about the Company in a medical device industry
publication.  These warrants became exercisable when the report was
delivered to the Company and will expire on December 28, 2012.  During
2009, the Company and the warrant holder negotiated a settlement of a
disagreement resulting in the issuance of an additional 31,964 warrants under
the original terms and 75,000 warrants exercisable under the original timing but
at the market price of $3.75 per share at the date of issuance.  Since the
report was completed in the first quarter of 2010, we have expensed the unearned
portion of these warrants in the first quarter of 2010.





On June
25, 2009, the Company announced that its Board of Directors had authorized the
repurchase of up to one million shares of the Company’s common stock. 
Through March 31, 2010 the Company had repurchased 105,080 of its shares in the
open market transactions at an average price per share of $3.68.  None of
these purchases occurred in the first quarter of 2010.  During the quarter
ended June 30, 2010, the Company acquired an additional 67,163 shares of its own
common stock at an average price of $3.03.  The total number of shares
repurchased has been 172,243 shares at $3.42 per share average cost.  The
Company has spent $589,550 on share repurchases since the inception of the buy-
back program.





NOTE
11 –STOCK PURCHASE WARRANTS





Effective
for financial statements issued for fiscal periods beginning after December 15,
2008, or interim periods therein, ASC 815 (formerly, EITF 07-05) requires that
warrants and convertible instruments with certain conversion or exercise price
protection features be recorded as derivative liabilities on the balance sheet
based on the fair value of the instruments.


17


NOTE
11 –STOCK PURCHASE WARRANTS – (Continued)





The
warrants the Company issued in connection with its sale of Series A Stock on
December 28, 2007, possess features covered by ASC 815.  The warrants
provide for cashless exercise after one year.  They also provided that if
before January 1, 2009, we issued any additional shares of common stock at a
price per share less than $1.81 (or the adjusted warrant exercise price then in
effect) or without consideration, then the exercise price would adjust to the
price per share paid for the additional shares of common stock upon each such
issuance.





To
reflect the cumulative effect of adopting ASC 815, the Company reduced
Additional Paid in Capital by $6,321,081, increased its Accumulated Deficiency
by $35,081,114 and recorded a liability of $41,402,196 as of January 1,
2009.  The amount of the liability was determined by reference to the fair
value of the warrants at January 1, 2009. Approximately 1% of the Company’s
outstanding common was freely tradable at January 1, 2009. The thinly traded
market for the Company’s shares at January 1, 2009, and the volatility of its
trading price made the use of level one inputs (quoted market prices in active
markets for the warrants or the Company’s shares) under FASB ASC 820 (formerly
SFAS 157) as inappropriate. The Company used average share prices in a
Black-Scholes calculation using volatility inputs from similar companies and
taking into account the time it would take for the market to absorb the influx
of over 19,000,000 common shares underlying the warrants based on then current
trading volumes. As a result, some level two inputs, such as sales of warrants
for cash, and some level three inputs, unobservable inputs developed using
estimates and assumptions expected to be utilized by market participants, were
used to determine fair value of the warrants for the derivative liability
analysis.





After
consideration of all the factors necessary to determine the value of the
warrants as of January 1, 2009 for purposes of ASC 815 and ASC 820 and the
Company-specific issues regarding trading prices and trading volume, including
the restricted status of nearly 99% of the Company’s common shares under Rule
144 through January 4, 2009, the following inputs were used to value the
warrants.  Share prices ranged from $7.88 at January 1, 2009 to $5.00 at
March 24, 2009.  The January price was based on a trailing 20-day average
from the first trade in 2009 due to an extremely thin market and price
volatility. The Company used a 50% discount from these quoted values in the
Black-Scholes calculation in order to more closely approximate the only
observable input for the warrant values based on the exercise of the Series C
warrants for $2.18 per common share equivalent in March 2009.  We also
considered the expected inefficient market absorption of the common shares
underlying the Series C preferred stock in the warrant exercise, reflecting the
average daily trading volume of fewer than 700 shares during the first quarter
of 2009.  In addition, the Series C preferred issued in exchange for
warrants in March 2009 as well as the 14,339,090 underlying shares of common
stock cannot be transferred for one year, and are subject to additional
“leak-out” transfer restrictions during the subsequent twelve months.  The
Company used comparable company volatility rates of 50% in January 2009 and 55%
in March 2009.  The discount rate was based on comparable term U.S.
Treasury rates of 0.76% and 0.81%, respectively for January and March
2009.





In March
2009, two Series A preferred stockholders exchanged all of their Series A, B and
C warrants, exercisable for a total of 18,285,692 common shares, for $3,000,000
of cash and a total of 1,571,523 shares of new Series C preferred stock. Each
Series C preferred share converts into 10 common shares, a ratio equivalent to
$2.18 per common share.  The Company issued 137,614 shares of Series C
preferred stock upon the exercise of a portion of the Series C warrants for the
cash, plus an additional 1,433,909 shares of Series C preferred stock in
exchange for all of the remaining Series A, B and C warrants held by the two
stockholders.  A small number of common shares were issued in lieu of
fractional shares of Series C preferred. The liability for the warrants
exchanged in March 2009 was recomputed using the Black- Scholes
method with updated inputs and the difference was recorded as income from the
decline in debt due to the reduction in fair value of the outstanding warrants
at March 24, 2009 immediately before the exchange.
The valuation difference on these warrants was $21,237,919 which accounts for
the substantial portion of the total gain for the year ended December 31, 2009,
of $21,603,185.


18


NOTE
11 –STOCK PURCHASE WARRANTS – (Continued)





A total
of 1,025,882 Series A and B warrants remained outstanding at December 31, 2009.
As of August 12, 2009, the Company’s registration statement became effective and
no derivative liabilities remain outstanding at December 31, 2009.  ASC 820
defines fair value as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at
the measurement date.  ASC 820 establishes a fair value hierarchy that
prioritizes the use of inputs used in valuation methodologies into the following
three levels:





·
            Level
      1: Quoted prices (unadjusted) for identical assets or liabilities in
      active markets. A quoted price in an active market provides the most
      reliable evidence of fair value and must be used to measure fair value
      whenever available.





·
            Level
      2: Significant other observable inputs other than Level 1 prices such as
      quoted prices for similar assets or liabilities; quoted prices in markets
      that are not active; or other inputs that are observable or can be
      corroborated by observable market
data.





·
            Level
      3: Significant unobservable inputs that reflect a reporting entity’s own
      assumptions about the assumptions that market participants would use in
      pricing an asset or liability. For example, level 3 inputs would relate to
      forecasts of future earnings and cash flows used in a discounted future
      cash flows method.





We
concluded there was insufficient trading frequency and volume in MedPro’s shares
to use the Level 1 inputs to value our warrants in a Black-Scholes calculation
under ASC 820 as of January 1, 2009. In particular, we noted that nearly 99% of
our outstanding common shares were restricted securities under Rule 144 that
could not be traded in public markets through January 4, 2009, and our stock
continued to trade sporadically thereafter. According, we used the following
level 2 inputs and level 3 inputs for purposes of our ASC 815 and ASC 820
analysis:





·
            MedPro
      share prices ranging from $7.88 at January 1, 2009 to $5.00 at March 24,
      2009. The January price was based on a trailing 20-day average from the
      first trade in 2009 due to an extremely thin market and price volatility.
      These values were then discounted by 50% to more closely approximate the
      only observable input for the warrant values — the exercise of the Series
      C warrants for $2.18 per common share equivalent in March
      2009.





·
            The
      time it would take for the market to absorb the influx of over 19,000,000
      common shares underlying the warrants, based on the average daily trading
      volume of fewer than 700 shares during the first quarter of
      2009.


19


NOTE
11 –STOCK PURCHASE WARRANTS – (Continued)





·
            Transfer
      restrictions on the Series C preferred stock issued in exchange for
      warrants in March 2009, as well as the 14,339,090 underlying shares of
      common stock, which cannot be transferred for one year, and are subject to
      additional “leak-out” restrictions during the subsequent twelve
      months.


·
            Share
      price volatility rates of 50% in January 2009 and 55% in March 2009 for
      comparable companies.


·
            A
      discount rate based on comparable term U.S. Treasury rates of 0.76% and
      0.81%, respectively for January and March
2009.


·
            Average
      share prices using volatility inputs from similar companies, and taking
      into account common shares underlying the warrants based on then current
      trading volumes.





The
factors used to value the remaining derivative liability associated with the
remaining A and B warrants as of June 30, 2009 included the Company’s own
volatility calculated based on month end observations for the first six months
of 2009 of approximately 55%.  The Company’s share price at June 30, 2009
was $5.00. The risk free return rate for the remaining life of the derivatives
was based on U S Treasury rates of 1.11% for the 1.75 years of estimated
remaining life of the warrants.  The A warrant was valued at $3.19 and the
B warrant was valued at $3.01. Many of the conversion features expired in August
2009 when the registration statement for the common stock underlying convertible
preferred stock and warrants became effective. Other terms expired at the end of
2009.  By year end, all of the derivative liability had been written off or
recognized as gain.





All of
the warrants we issued in 2010 provide for cashless exercise after one
year.  In addition, if we issue any additional shares of common stock at a
price per share less than the adjusted warrant exercise price then in effect or
without consideration, then the exercise price will adjust to the price per
share paid for the additional shares of common stock upon each such
issuance.





The
warrants we issued in the first quarter of 2010 have an exercise price of $4.00
per share.  As a result of the cashless exercise and anti-dilution
features, the Company had recorded a liability for the fair market value of
these warrants at their respective issue dates of $412,954.  The derivative
liability was adjusted to $370,026 due to a decline in the market value of the
warrants of $42,928 as of March 31, 2010.





The
inputs used to value the derivative liability as of the issue date of the
respective warrants and at March 31, 2010 were:





•
            The
      market price of the Company’s stock on February 26, 2010 of $3.40 and
      March 31, 2010 of $3.10;


•
            Specific
      Company Volatility for the quarter of  –
  48%


•
            Risk
      free return rate – 2.3%


•
            Estimated
      life of the warrants - 5 years





These
inputs, coupled with the individual warrant exercise prices resulted in a
Black-Scholes value of $1.34 for the February 26, 2010 warrants and $1.14 for
the March 31, 2010 warrants.  The $0.20201 decline in the 212,500 warrants
from February 26, 2010 to March 31, 2010 resulted in a gain of $42,928 on the
derivative liability as of March 31, 2010.  As of June 30, 2010, these
warrants were revalued to $294,253.  The Company recorded an additional
gain of $75,773 for these warrants in the second quarter of
2010.


20


NOTE
11 –STOCK PURCHASE WARRANTS – (Continued)





The
warrants we issued in the second quarter of 2010 have an exercise price of $3.00
per share.  As a result of the cashless exercise and anti-dilution
features, the Company had recorded a liability associated with these warrants at
their respective issue dates of $410,902.  The derivative liability for
these warrants was adjusted to $387,529 due to a decline in the market value of
the warrants of $23,374 as of June 30, 2010.  The combined gain on
derivative valuation for the quarter was $99,147.  Gain on derivative
valuation for the six months ended June 30, 2010 was $142,075.





The
inputs used to value the derivative liability as of the issue date of the
respective warrants and at June 30, 2010 were:





•
            The
      market price of the Company’s stock on April 30, 2010, June 3, 2010 and
      June 30, 2010 were all $3.00 per
share;


•
            Specific
      Company Volatility for the valuation dates were  – 44.51, 43.32
      and 42.26, respectively;


•
            Risk
      free return rates were – 2.43%, 2.17% and 1.79%, respectively;
      and


•
            Estimated
      life of the warrants - 5 years.





These
inputs, coupled with the individual warrant exercise prices resulted in a
Black-Scholes value of approximately $1.25, $1.22 and $1.18 for the respective
warrant grant dates.  The quarter end valuations of these warrants were
determined based on a $3.00 market price, 42.26% volatility, 1.79% risk free
return and estimated remaining lives of the warrant based on their respective
maturity dates.  The adjustments to the derivative liabilities were
previously stated above.





NOTE
12 – STOCK OPTIONS





On August
18, 2008, the Company adopted the MedPro Safety Products, Inc. 2008 Stock and
Incentive Compensation Plan (“2008 Plan”) and issued stock options to its
directors and employees in the amounts and on the terms agreed upon in the
September 2007 stock purchase agreement with the Series A Stockholders. 
The Company’s employees, including its three executive officers, were granted a
total of 2,800,000 options.  The two non-employee directors each were
granted 100,000 options.  The options may be exercised at an exercise price
of $1.81 per share only on the earliest of the 30 days following January 1,
2013, the date of the holder’s death or 100% disability, termination of
employment or service as a director, and the date of a change in control of the
Company.  Because the exercise price was less than market price of MedPro
stock on the date of grant, the Company set a date certain for the exercise of
the options in order to qualify for exemptions from excise taxes under IRS
deferred compensation rules.





The
Company recorded unearned compensation expense of $14,580,000, or $4.86 per
underlying share, for the grant of these 3,000,000 options. The unearned
compensation is being charged to earnings over 24 months beginning on August 18,
2008.  The 24 month period coincides with the term of a
non-competition covenant included in the option agreement. The Company recorded
$3,645,000 of compensation expense for the first two quarters of 2010 and
2009.  The balance of the unearned compensation was $951,750 at June
30, 2010.




21


NOTE
12 – STOCK OPTIONS – Continued,





On May
27, 2009, the Company awarded incentive stock options to purchase 185,715 common
shares to all of its employees.  The exercise price of the options was
$3.85 per share, the market price at the close of trading on the grant date,
except that the exercise price for the options to purchase 25,974 shares awarded
to the Company’s Chairman was $4.24, 110% of the market price, because he is a
10% shareholder.  The options are exercisable immediately and have a
ten year term, except for the Chairman’s options, which are limited to a
five-year term. The Company recorded $355,106 of unearned compensation expense
for the May 27, 2009 awards.  The Company is recording compensation
expense over three different periods for the Chairman, other officers and other
employees, respectively, at $5,819 per month. Unearned compensation for these
options was $278,771 at June 30, 2010.





The CEO’s
options were valued based on a 2.5 year life with 1.23% risk-free
return.  The other officer options were based on a 5 year life and a
2.43% risk-free return.  Finally, the employee options were based on a
6 year life and a 2.83% risk-free return.  The resulting values were
$1.21, $1.90 and $2.09 per option, respectively, utilizing these
inputs.





On August
24, 2009, the Company awarded an option to purchase 50,000 shares to both of the
directors elected in October 2008.  The options have the same terms as
the options previously granted to the employees and the other directors in
August 2008.  The option exercise price is $1.81 per share and the
options may only be exercised between January 1, 2013 and January 31,
2013.  The unearned compensation booked at August 24, 2009 for these
two options was $224,372. The Company recorded compensation expense of $56,093
for the six months ended June 30, 2010.  The factors utilized to value
these options were a volatility factor of 53%, a life of 2 years, $3.70 fair
value at grant based on market prices and a1.05% risk-free rate of
return.  The resulting option value based on the $1.81 exercise price
was $2.24.  Unearned compensation for these options was $128,860 at
June 30, 2010.





On
October 6, 2009, the Company awarded incentive stock options to purchase 47,256
common shares to its employees, excluding officers.  The exercise
price of the options was $3.65 per share, the market price at the close of
trading on the grant date.  The options are exercisable immediately
and have a ten year term. The Company recorded $91,944 of unearned compensation
expense for the October 6, 2009 awards. The
unearned compensation is being recorded as expense over a six year life of the
options at $1,277 per month. The Company recorded compensation expense of $7,662
for the six months ended June 30, 2010.   The factors used to
value these options were a life of 6 years, market prices for the stock value
($3.65 exercise price at date of grant), a 55% volatility factor and a 2.25%
risk-free return.  The resulting option value was
$1.95.  Unearned compensation on these options was $80,671 at June 30,
2010.





We valued
the options granted under the 2008 Plan utilizing the Black-Scholes
model.  The values of the options granted under the 2008 Plan on
August 18, 2008, May 27, 2009, August 24, 2009 and October 6, 2009 and the
inputs the Company used to determine those values under the Black-Scholes method
are described in Note12 of the Notes to the Audited Financial Statements
included in the Company’s Annual Report on Form 10-K for the year ended December
31, 2009.


22





NOTE
12 – STOCK OPTIONS – Continued,





The
following table summarizes stock option activity for the periods
indicated:





Six Months Ended
                          June 30, 2010
                        
                        
                        Twelve Months Ended
                          December 31, 2009Shares
                        
                        
                        Average
                          weighted
                          exercise price
                        
                        
                        Shares
                        
                        
                        Average
                          weighted
                          exercise priceOutstanding beginning
      of period
                        
                        
                        3,332,971
                        
                        
                        $
                        1.95
                        
                        
                        
                        3,000,000
                        
                        
                        
                        n/aGranted
                        
                        
                        0
                        
                        
                        
                        n/a
                        
                        
                        
                        332,971
                        
                        
                        $
                        3.24Exercised
                        
                        
                        0
                        
                        
                        
                        n/a
                        
                        
                        
                        0
                        
                        
                        
                        n/aExpired/cancelled
                        
                        
                        0
                        
                        
                        
                        n/a
                        
                        
                        
                        0
                        
                        
                        
                        n/aOutstanding,
      end of period
                        
                        
                        3,332,971
                        
                        
                        $
                        1.95
                        
                        
                        
                        3,332,971
                        
                        
                        $
                        1.95





The
following table summarizes information about stock options outstanding and
exercisable at June 30, 2010:





Weighted average
                              exercise price
                            
                            Options
                              outstanding
                            
                            
                            Average weighted
                              remaining
                              contractual life
                              (years)
                            
                            
                            Options
                              Exercisable$
                            1.95
                            
                            
                            3,332,971
                            
                            
                            
                            3.114
                            
                            
                            
                            232,971





NOTE
13 – LEASE COMMITMENT WITH RELATED PARTY





The
Company leases its office and storage facility in Lexington, Kentucky, under a
non-cancelable operating lease with a related party.  On January 10,
2007, the Company signed a lease addendum that extended the term of the original
1998 lease through August 2012 with two five-year extension
options.  The amended lease provides for lease payments of $3,500 per
month from January 1, 2007, through July 31, 2007, and $6,500 per month from
August 1, 2007, through January 31, 2008.  Beginning on February 1,
2008, the lease payment increased to $6,975 per month ($83,700 per year) for the
remainder of the term when the Company increased its leased space by an
additional 1,063 square feet.





Total
lease expense was $41,850 for the six months ended June 30, 2010 and 2009,
respectively.  Future minimum lease payments for the balance of this
fiscal year are expected to be $41,850 and for future annual fiscal periods
ended December 31 are as follows:





Fiscal Year Ended
                      December 31,2011
                    
                    $
                    83,7002012
                    
                    
                    55,800Total
                    
                    $
                    139,500




23


NOTE
14 – DEVELOPMENT AND DISTRIBUTION AGREEMENTS





Joint
Development Agreement





On March
8, 2010, the Company entered into a Joint Development Agreement with Helvoet
Pharmaceutical N.V. relating to the overall development and distribution of our
pre-filled passive safety syringe system.  The joint development
agreement formalizes the relationship between MedPro and Helvoet and establishes
their respective responsibilities and contributions to the project.





The
agreement provides that we will develop the safety syringe portion of the
pre-filled passive safety syringe system, and Helvoet will develop rubber
components for the product including determining the appropriate chemical rubber
formulation and component design for use with the medicament cartridge. The
agreement also establishes a general framework for formalizing the role of
additional participants in the project.





Headquartered
in Alken, Belgium, Helvoet is a worldwide manufacturer of rubber closures and
aluminum and plastic caps for pharmaceutical packaging, drug delivery and
diagnostics.  With more than 1,250 employees and five plants for
rubber components and four plants for aluminum and plastic caps in Europe and
the United States, Helvoet produces over 12 billion parts per
year.  Helvoet is the pharmaceutical packaging division of the
Daetwyler Holding, Altdorf, Switzerland.





Distribution
Agreements





On July
15, 2008, the Company entered into two Medical Supply Manufacturing Agreements
with an international manufacturer and supplier of medical products with a
worldwide distribution network. The two agreements grant the distributor the
right to manufacture, market and distribute MedPro’s tube-activated and
skin-activated blood collection systems and its winged blood collection set.
Each agreement extends for six years from the commencement of initial commercial
manufacturing of the applicable product.





The July
2008 agreements required the Company to perform multiple revenue generating
activities, which are independent and distinct phases of the
project.




·
            First,
      the Company provided services, preparing and delivering the production
      line design for the blood collection devices and the initial design and
      preproduction plan for the Wing product. The design plans include the
      design and specifications of the medical devices the lines would actually
      produce, thereby allowing a different contractor to use the plans to
      construct the production line. The arrangements contemplated the design
      plans would be delivered by October 1, 2008, and the Company would earn a
      $1 million fee for design services when the distributor accepted each of
      the plans.


·
            Second,
      the Company was to construct the production lines. Payment was based on
      the estimated cost to manufacture the components and assemble the
      production line, plus a potential margin. Installments were to become
      payable upon achievement of agreed-upon
  milestones.


·
            Third,
      the Company granted an exclusive license to the distributor to manufacture
      and sell the product, for which the Company would receive a royalty per
      unit sold.


24





NOTE
14 – DEVELOPMENT AND DISTRIBUTION AGREEMENTS – Continued,





The
agreement for our tube-activated blood collection system and our skin activated
blood collection device provided that the Company would design, construct,
complete and successfully test an initial automated production line (“IPL”) for
delivery at a mutually acceptable date not earlier than March 31,
2009.  Payment was to be made in three installments, beginning October
1, 2008 with the final payment due March 31, 2009.  The agreement
provides for production of a designated minimum number of units each year during
the first five years of the agreement. The distributor is obligated to pay the
Company a production royalty per unit, totaling $33 million over this period.
The distributor has the right to continue to manufacture the products and pay
the production royalty in year six.





The
agreement for our winged blood collection set provided that the Company would
produce an initial design plan for the product for review and the distributor’s
approval by October 1, 2008. Payment of the fee for design services was due upon
delivery and acceptance of the initial design plan, at which time the Company
was to initiate the construction of the production line. Payment for the
construction phase was to be made in three equal installments upon the
achievement of certain milestones leading to validation of the final production
line.  The July 2008 agreement for the winged blood collection set
also provides for production of a designated minimum number of units each year
during the first five years of the agreement. The distributor is obligated to
pay the Company a production royalty per unit, totaling $10.8 million
over this period. The distributor has the right to continue to manufacture the
products and pay the production royalty in year six.





We
recorded program fees of $1,000,000 on each of the safety needle and the winged
blood collection set projects in September 2008 when we delivered the automation
plan for producing the safety needle and the design plan for the winged blood
collection set.





In
October 2008 we received an advance of $700,000 for costs associated with
automation and other product development activities requested by our
distributor.  In November 2008, the distributor informed us that it
had decided to change the production lines to incorporate greater
computerization and would modify the design plans and construct the production
lines itself.  At December 31, 2008 we had spent $687,955 of the
advance.  In 2008 we recorded $235,100 of the advance as income from
the reimbursement of automation expenses. We had also used the advance to
purchase packaging equipment for $452,855, which cost was deferred, along with
the associated revenue from our customer for its purchase, during 2008. After we
reached an oral understanding with the customer during 2009 that we would retain
the packaging equipment, we applied $452,855 of deferred revenue from the 2008
advance against the purchase price.  We retained the equipment at a
zero dollar carrying value.  We recognized the remaining $12,045 of
deferred revenue from the 2008 advance during the first quarter of
2009.





On July
16, 2010, we entered into a new agreement (the “July 2010 Agreement”) with our
distributor that terminated and superseded the July 2009 Manufacturing
Agreements.  The July 2010 Agreement covers the two holder products
and the winged blood collection set. The July 2010 Agreement has a term ending
six years from October 1, 2010, which may be extended for up to three years in
certain circumstances.





During
the term of the July 2010 Agreement, the distributor will pay a total minimum
royalty of not less than $43,750,000 (the “Royalty Amount”).  Royalty
payments will be made no later than the fifteenth day following the end of each
calendar quarter, based on a minimum number of units for each calendar
quarter.  Until the Royalty Amount has been paid in full, if the
aggregate royalties paid for all preceding quarters in the aggregate exceeds the
minimum aggregate royalties owed on minimum quarterly production for all
preceding quarters, then the minimum royalty obligation for the next quarter
will be reduced accordingly.


25


NOTE
14 – DEVELOPMENT AND DISTRIBUTION AGREEMENTS – Continued,





The
Company agreed to make a quarterly financial contribution to the distributor to
help cover the anticipated expenses of marketing the products during the term of
the July 2010 Agreement.  The total marketing contribution would total
approximately $6.65 million over the six-year term of the July 2010
Agreement.





The July
2010 Agreement also resolved the issue of prior advances to the Company by
adjusting the prior fees paid to the Company to $2,350,000 from
$2,700,000.  The Company agreed to credit the customer with $350,000
against future obligations to the Company.  The Company recorded these
transactions as a $275,000 purchase of a packaging machine, which had previously
been recorded at a zero basis even though the Company had paid $452,855 for the
machine, and $75,000 of expense in the third quarter of 2010.


26





Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations





The
following discussion and analysis of the financial condition and results of
operations of MedPro Safety Products, Inc. as of and for the six months ended
June 30, 2010 should be read in conjunction with our audited financial
statements and the notes to those financial statements that are included
elsewhere in this report or our annual filings of Form 10K for
2009.  References in this Management’s Discussion and Analysis or Plan
of Operations to “us,” “we,” “our,” and similar terms refers to MedPro Safety
Products, Inc. This discussion includes forward-looking statements based upon
current expectations that involve risks and uncertainties, such as plans,
objectives, expectations and intentions. Actual results and the timing of events
could differ materially from those anticipated in these forward-looking
statements as a result of a number of factors. Words such as “anticipate,”
“estimate,” “plan,” “continuing,” “ongoing,” “expect,” “believe,” “intend,”
“may,” “will,” “should,” “could,” and similar expressions are used to identify
forward-looking statements.





Overview





MedPro
Safety Products, Inc. has developed and acquired a portfolio of medical device
safety products incorporating proprietary needlestick prevention technologies
that deploy with minimal or no user activation. Our present strategy focuses on
developing and commercializing multiple products in four related product
segments: clinical, phlebotomy, pharmaceutical, and intravenous.





Our
long-term strategy is to enter into partnership agreements with major medical
products distribution partners, which whenever possible would be fixed minimum
volume contracts. We have entered into one such agreement for three of our
products.  In addition, we are discussing the terms of a similar
distribution arrangement with potential partners for a proprietary safety
syringe product with an “anti-blunting” feature and a prefilled pharmaceutical
safety syringe.  Our product development plans also include a needleless
intravenous line based on patents and designs we control.  We have
entered into a development agreement with a global manufacturer involved in
stopper design to jointly commercialize our prefilled and fillable safety
syringes.  We have also acquired intellectual property rights to a
safety needle for “pen” delivery systems for various medicaments such as
insulin.





Our
strategy for the next 18 months focuses on completing the steps necessary to
attain pre-market product development milestones and to commence the
distribution of three products in these sectors — two models of blood collectors
and a winged blood collection set.  In July 2010 we entered into a new
agreement for the manufacture and distribution of our three blood collection
products, terminating and superseding the prior agreements relating to these
products.  Our new agreement provides for royalty payments based on
minimum volume commitments to commence October 1, 2010.  The agreement
contemplates that the production and sale of our three blood collection
products, and therefore the amount of revenue realized, will increase over the
next several fiscal quarters. The total value of royalty payments based on
minimum production volumes over the six-year term of the new agreement totals
$43,750,000. We also agreed to make a marketing contribution totaling
approximately $6.65 million over the six-year term of the
agreement.





Our
financial results and operations in future periods will depend upon our ability
to enter into sales and distribution agreements for our products currently under
development so we can generate sustained revenues from our portfolio of products
and technologies. Our operations are currently funded from the proceeds from
sales of securities, revenue from operations and borrowing from commercial
lenders and related parties.  We are currently seeking financing based
on the monetization of our contract rights to receive royalties of not less than
$43,750,000 from production of our blood collection products over a six-year
term.  We intend to use the financing proceeds to pay off current debt
and for working capital to fund the commercialization of our technology and
expand our ability to manufacture and deliver products to commercial
markets.


27





Critical
Accounting Estimates and Judgments





Our
financial statements are prepared in accordance with accounting principles
generally accepted in the United States (“GAAP”). The preparation of our
financial statements requires management to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues, expenses and
related disclosures. We base our estimates on historical experience and various
other assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates. The significant
accounting policies that are believed to be the most critical to fully
understanding and evaluating the reported financial results include revenue
recognition, inventory valuations for slow moving items, recoverability of
intangible assets and the recovery of deferred income tax assets.





We
recognize sales and associated cost of sales when delivery has occurred and
collectability is probable. There have been minimal returns for credit, so no
reserve for product returns has been established. We provide for probable
uncollected amounts through a charge to earnings and a credit to the allowance
for doubtful accounts based on our assessment of the current status of
individual accounts. We have fully reserved our only receivable from the sale of
the Needlyzer devices to a customer in Africa.  We continue to have
ongoing discussions with this customer about selling our remaining inventory in
a single transaction if they can get funding to pay old invoices (approximately
$21,225) and cover the cost of shipping these devices to Ghana on
consignment.





We
determine our inventory value at the lower of cost (first-in, first-out method)
or market value. In the case of slow moving items, we may write down or
calculate a reserve to reflect a reduced marketability for the item. The actual
percentage reserved depends on the total quantity on hand, its sales history,
and expected near term sales prospects. When we discontinue sales of a product,
we will write down the value of inventory to an amount equal to its estimated
net realizable value less all applicable disposition costs.





Our
intangible assets consist principally of intellectual properties such as
regulatory product approvals and patents. We currently are amortizing certain of
our intangible assets using the straight line method based on an estimated
economic life, after the products are introduced into the market, of five
years.  We began amortization of the patents for our two blood
collectors in December 2009 when these products were first introduced for human
use in December.  Because our winged blood collection product, our
Key-Lok technology and our Syringe Guard family of products are currently not in
production for distribution, we have not begun to amortize the patents for those
technologies. We expect to use the straight line method to amortize these
intellectual properties over their estimated period of benefit, ranging from one
to ten years, when our products are placed in full production and we can better
evaluate market demand for our technology.





We
evaluate the recoverability of intangible assets periodically and take into
account events or circumstances that warrant revised estimates of useful lives
or indicate that impairment exists.  Once our intellectual property has
been placed into productive service, we expect to utilize a net present value of
future cash flows analysis to calculate carrying value after an impairment
determination.  Our forecasted revenue on our current portfolio of
intellectual property over the next five years, discounted to the balance sheet
date based on our current borrowing rate, is in excess of our cost of our
patents and estimated development costs ($58 million) by approximately
592%.


28





As part
of the process of preparing our financial statements, we must estimate our
actual current tax liabilities together with assessing temporary differences
resulting from differing treatment of items for tax and accounting
purposes.  These differences result in deferred tax assets and
liabilities, which are included within the balance sheet.  We must
assess the likelihood that the deferred tax assets will be recovered from future
taxable income and, to the extent we believe that recovery is not likely, a
valuation allowance must be established.  To the extent we establish a
valuation allowance or increase or decrease this allowance in a period, the
impact will be included in the tax provision in the statement of
operations.





Results
of Operations for the Three and Six Months Ended June 30, 2010 and
2009





MedPro
recorded net (loss) of ($3,388,191) for the three months ended June 30,
2010, as compared to a net (loss) of ($5,133,035) for three months ended June
30, 2009.  Losses from operations for the three month periods ended
June 30 were $(3,433,154) for 2010 and $(3,153,769) for 2009.  For the
six month periods ended June 30, 2010 and 2009, net income or (loss) was
($6,926,900) for 2010 and $13,943,765for 2009.





Three
Months Ended June 30, 2010 and 2009





Total compensation, including
share-based compensation was $50,440 higher in the three months ended June 30,
2010 versus 2009.  We added some additional option costs in
2010.  Advertising and promotion was down ($131,067) in the 2010
period versus 2009.  This reflects the more conservative use of
investor relations assistance in 2010.  Professional and insurance
costs were up $207,270 reflecting additional legal work in 2010 second quarter
over 2009.  A number of factors contributed to the increased
professional and insurance costs.  They included some new contract
work by our lawyers and new consultants hired to assist us with product
positioning.





Travel
costs were up $75,894 reflecting increased travel attempting to raise equity
capital and more work in Europe with customers, contractors and new development
partners.  General and administrative costs were down ($58,725)
reflecting tighter control of home office expenses.  Depreciation and
amortization were up $142,837 reflecting amortization charges on out holder
intellectual property cost this year versus 2009.





Six
Months Ended June 30, 2010 versus 2009





For the
six months ended June 30, 2010, we recorded net other income of $43,439 compared
to net other income of $20,202,610 for the same period in
2009.  Other income in 2009 included $20,320,832 of gain associated
with derivative liabilities originally recorded on January 1,
2009.  The gain was primarily due to the decline in the carrying value
of the derivative liability as a result of the exercise and exchange of warrants
for cash and preferred stock and the decrease in the market price of our shares
during the first two quarters of 2009.  See Note 8 of the notes to the
financial statements for a description of the derivative liabilities recorded
with respect to outstanding warrants to purchase our common
stock.  The net other income of $43,439 in 2010 included $142,075 of
gain from change in the carrying value of derivative liabilities recorded for
the grant of warrants with debt issued in 2010, also resulting from a decrease
in the market price of our shares.





Net other
expense included interest expense of $111,108 for 2010 and $141,083 for
2009.  Interest income was $12,472 for 2010 and $22,861 for
2009.  Income from the change in fair value of derivative liabilities
was $142,075 in 2010 and $20,320,832 in 2009, as previously
described.





We had no
sales in either year during the first two quarters.  We recorded
revenue of $12,045 in 2009, which was the balance of an advance of $700,000 we
received in October 2008 for costs associated with automation and other product
development activities requested by our distributor in connection with the
distribution agreement for our blood collection products.


29





The most
substantial difference between the losses from operations in 2010 and 2009 was
the $355,777 increase in professional and insurance
costs.  Depreciation and amortization was up $287,746 from 2009 to
2010 primarily due to the initiation of amortization of two of our intellectual
properties.  Advertising and promotion, which consists predominantly
of investor relations costs, was down ($72,758) in 2010 over 2009 as a result of
changing IR firms and cutting the Company’s monthly cost by 77%.





The
compensation charge for stock option awards went from $3,651,505 in 2009 to
$3,746,670 in 2010, an increase of $95,165, reflecting the incentive stock
options granted to employees in May and October 2009 and the options granted to
our two newest directors in August 2009.  The balance of the change in
compensation and other payroll related costs reflects a decline of $22,264
due to a reduction of one employee and the suspension of officer bonuses in
2010.  The number of our full-time employees decreased from thirteen
in 2009 to twelve in 2010.





The costs
associated with the profit sharing plan in 2010 were $31,277 and $36,804 in
2009.  The decline of $5,527 was due to lower compensation in 2010
versus 2009.





On August
18, 2008, we adopted our stock incentive compensation plan and granted options
to purchase 3,000,000 shares of common stock to seven employees and two
directors.  The options may be exercised only during a thirty-day
period ending on January 1, 2013.  If before that date either the
recipient terminates service with us or a change of control occurs, then the
recipient must exercise the options 30 days after the event.  Because
the exercise price was less than market price of our common stock on the date of
grant, we set a date certain for the exercise of the options in order to qualify
for exemptions from excise taxes under IRS deferred compensation
rules.





The
non-cash compensation charge for the August 2008 grants will total $14,580,000,
or $4.86 per share underlying the options.  The Black-Scholes model
was used to value the options.  The valuation methodology and
underlying assumptions are described in Note 12 of the notes to the financial
statements.  The compensation expense is being charged to earnings
over 24 months, which period coincides with the term of a non-competition
covenant included in the option agreement. We recorded $3,645,000 of
compensation expense for the first two quarters of 2010 and 2009.  The
balance of the unearned compensation was $951,750 at June 30, 2010.





During
the first two quarters of 2010, total share-based compensation expense on
employee option awards granted in May and October 2009 totaled
$42,577.  The incentive stock options for 185,715 shares awarded in
May were valued at $355,106, and the options for 47,256 shares awarded in
October were valued at $91,944 utilizing the Black-Scholes valuation
methodology.  No expense was recognized in the first quarter of
2009.  During the first six months of 2009, the Company recorded
expense on these options of $6,505.





We also
granted options for 50,000 shares to our two directors elected in October 2008
on the same terms and conditions as the options granted in August 2008 to our
four other directors.  The options are exercisable at $1.81 per share
only during January 2013.  The total expense associated with these
options was $224,373.  We recorded $56,093 of share-based compensation
expense in 2010 and $128,860 of unearned compensation remained on these options
at June 30, 2010.  No expense was recorded in the first half of 2009
on these options.


30





Professional
and insurance costs increased $355,776 over the same period in
2009.  Consulting fees, accounting fees and other related expenses
increased $253,108 during 2010.  Legal fees increased
$103,247.  Insurance costs were down ($579) in 2010 versus
2009.  Consulting fees were up $269,623 in 2010 primarily due to our
engagement of consultants for product road mapping and product design and
development services.  We also incurred $90,000 in financial advisory
fees.  We paid $18,750 for a research report and $7,875 for third
party consulting on a technical issue with a product under
development.  During 2010 we also paid $90,000 of consulting fees to
the principal inventor of our technology for technology development
services.  Total consulting costs were $422,336 in 2010 versus
$152,713 in 2009.





Travel
expenses were $101,302 higher in 2010 versus 2009, reflecting increased travel
costs in connection with our recently announced joint development agreement with
a European manufacturing partner and meetings with prospective investor groups
in the U.S.  Total travel expenses were $270,224 and $168,922 in 2010
and 2009, respectively.





Amortization
expenses increased in 2010 to $273,429 from $20,886 in 2009, reflecting
amortization of intellectual property costs on two products.  There
was no product-related amortization in the first half of 2009.





Product
development costs increased $27,745 from 2009 levels.  The increase in
costs reflects the increased production of samples for verification and
validation testing of three products.





Depreciation
and amortization expenses (associated with intellectual property and prepaid
financing costs) increased by $287,746, reflecting the depreciation of
additional testing equipment and manufacturing equipment acquired in 2009 and
2010.  Intangible asset amortization of $252,543 was recorded in 2010,
along with amortization of finance costs of $20,886.  This is $252,543
higher than 2009.  Depreciation in 2010 was $73,603 versus $38,400 in
2009.  Fixed asset additions were $62,113 in the first half of
2010.  They consisted primarily of manufacturing molds, jigs and
fixtures ($59,703 of $62,113).





Liquidity
and Capital Resources





Total
assets were $14,789,555 as of December 31, 2009 and $12,787,124 as of June 30,
2010. The $2,002,431 net decline in total assets reflects the impact of the
negative cash flow from operations, investing and financing activities of
($1,736,775).  During 2010, our cash decreased by $1,736,775 to
$2,335,668 at June 30, 2010 from $4,072,443 at December 31, 2009.  We
paid off $884,784 of bank debt in the first half of
2010.





Our
financial results and operations in future periods will depend upon our ability
to enter into sales and distribution agreements for our products currently under
development so we can generate sustained revenues from our portfolio of products
and technologies. Our operations are currently funded from the proceeds from
sales of securities and borrowing from commercial lenders and related
parties.





Our July
2010 agreement for the distribution of three blood collection products provides
for royalty payments based on minimum volume commitments commencing October 1,
2010.  The agreement contemplates that the production and sale of our three
blood collection products, and therefore the amount of revenue we realize, will
increase over the next several fiscal quarters. The total value of royalty
payments based on minimum production volumes over the six-year term of the new
agreement totals $43,750,000. We also agreed to make a marketing contribution
totaling approximately $6.65 million over the six-year term of the
agreement.


31





Despite
our expectation of receiving revenue from product sales in 2010, our current
cash position requires that we obtain additional funding during 2010 to maintain
our current level of operations, as well as to fund the development and launch
of all of the safety products for which we currently own intellectual property
rights and new devices currently under contract.  We are currently
seeking financing based on the monetization of our contract rights to receive
royalties of not less than $43,750,000 from production of our blood collection
products over a six-year term.  We intend to use the financing
proceeds to pay off current debt and for working capital to fund the
commercialization of our technology and expand our ability to manufacture and
deliver products to commercial markets.





Pending
the completion of a financing, we will monitor our cash flow carefully and will
maintain only the employment levels necessary to sustain
operations.  If we cannot find sources of additional funds on
reasonable terms, we may be forced to limit or even suspend our operations and
product development plans, which would adversely affect our efforts to achieve
profitability and to continue our business.





During
the first half of 2010, we have borrowed $2,300,000 from our principal investor,
VOMF, which matures on the earlier of January 1, 2011 or the date the Company
secures $20,000,000 of new debt or equity.  In connection with this
financing, we granted VOMF warrants for the purchase 325,000 shares of common
stock at $4 per share and 333,337 warrants to purchase common shares at $3.00
per share.  The warrant features caused them to be treated as
derivative liabilities and we recorded an additional $823,856 of liabilities as
the loans were recorded.  At March 31, 2010, as the price of our stock
declined, we adjusted the market value of the warrants by $42,928 to reflect the
reduction of the derivative liability and a gain from the adjustment of the
market value of the derivative.  We made an additional adjustment to
the value of the derivative liabilities at June 30, 2010 of
$99,147.  The derivative liability balance at June 30, 2010 was
reflected as $681,781.  The Company has recorded gains from the change
in fair value of the derivative liabilities totaling $142,075 for the six months
ended June 30, 2010.





In
the second quarter of 2010, VOMF committed to provide a $1,000,000 line of
credit, in monthly installments of up to $300,000.  Since the first of
the year, we have been actively exploring other arrangements for short-term and
long term financing with several institutional investors and other
prospects.  We have borrowed the entire $1,000,000
commitment.  We borrowed an additional $500,000 on August 5,
2010.





Our
credit agreement with a commercial bank originally included a $5,000,000 term
loan and a $1,500,000 revolving line of credit.  During 2009, we paid
off the $1,498,475 balance of the line of credit.  At December 31,
2009, the outstanding balance of the term loan was $ 2,361,111.  The
term loan matures on August 1, 2011.  Our monthly payment under the
term loan is approximately $138,889 of principal plus interest at the prime rate
plus 2%.





Our term
loan agreement was modified in June 2009 to release our Chairman and Chief
Executive Officer from his personal guarantee.  In return, we agreed
to maintain a compensating cash balance with the lender equal to the declining
balance of the term note.  We met the loan covenant at the end of 2009
and have met it at the end of each subsequent month through July 1,
2010.  On April 1, 2010, we entered into a new loan agreement with the
lender which adjusted the compensating balance requirement from 100% of the loan
balance to the lesser of 50% of the outstanding loan balance at the first
business day of the month or $750,000 after the bank sweeps the payment due on
the first of the month.  The original covenant is restored after
September 30, 2010.  We have pledged our patents and our guaranteed
revenue contracts as collateral for the loan.  In the event of a
default, the lender will collect the revenue on these contracts directly from
our distribution partner.





On March
31, 2010, we renewed a second $1,500,000 loan at different commercial bank for
ninety days.  That loan was paid on July 1, 2010 by applying the
$1,500,000 compensating cash balance held in an account with the
lender.


32





A third
term note in the amount of $195,416, originally due on July 23, 2010, has been
extended to September 23, 2010.  The extended note was personally
guaranteed by our Chief Executive Officer and the Chief Financial
Officer.





We
believe there is a well defined market for our products, encouraged by Federal
Needlestick Safety and Prevention Act, which requires the use of safety products
similar to those we are developing.  In addition to the July 2010
agreement for the distribution of our three blood collection products, in March
2010 we entered into a joint development agreement with an international
manufacturer of pharmaceutical syringe components for the development and
distribution of our pre-filled passive safety syringe system.  The
agreement provides that we will develop the safety syringe portion of the
pre-filled passive safety syringe system, and our joint development partner will
develop rubber components for use with the medicament cartridge. The agreement
also establishes a general framework for formalizing the role of additional
participants in the project.





We
estimate that funding our continued development and launches of our planned
products, meeting current capital support requirements, and pursuing other areas
of corporate interest as may be determined by the Board of Directors for the
next twelve months will require substantial additional
funding.  Whether we commit resources to optional projects will depend
upon our cash position from time to time. Our primary cash requirements will be
to fund (a) launching our blood collection products for distribution, (b)
continuing development of our safety syringe products and other medical device
safety products based on the technology for which we hold rights, and (c)
increasing our administrative capability as needed to support expanded
day-to-day operations.


33


Item
3.  Quantitative and Qualitative Disclosures About Market
Risk.





We are
not party to any forwards and futures, options, swaps, or other instruments that
would expose us to market risk associated with activities in derivative
financial instruments, other financial instruments, and derivative commodity
instruments.  Our bank indebtedness is priced at interest rates geared
to the lender’s prime rate.  Therefore, our interest expense may
increase or decrease due to changes in the interest rate
environment.





Item
4T. Controls and Procedures.





MedPro’s
management, under the supervision and with the participation of the Chief
Executive Officer (the “CEO”) and Chief Financial Officer (the “CFO”), evaluated
the effectiveness of the design and operation of our disclosure controls and
procedures as of June 30, 2010.  Based on that evaluation, the CEO and
CFO concluded that MedPro’s disclosure controls and procedures are effective in
timely making known to them material information required to be disclosed in the
reports filed or submitted under the Securities Exchange Act.  There
were no changes in MedPro’s internal control over financial reporting during the
second quarter of 2010 that have materially affected, or are reasonably likely
to materially affect, the internal control over financial
reporting.





Limitations
on the Effectiveness of Controls





A control
system, no matter how well designed and operated, can provide only reasonable,
not absolute, assurance that the control system’s objectives will be
met.  Further, the design of a control system must reflect the fact
that there are resource constraints, and the benefits of controls must be
considered relative to their costs.  Because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any, with
our company have been detected.  These inherent limitations include
the realities that judgments in decision-making can be faulty, that breakdowns
can occur because of simple errors or mistakes, and that controls can be
circumvented by the acts of individuals or groups.  Because of the
inherent limitations in a cost-effective control system, misstatements due to
error or fraud may occur and not be detected.




34




PART
II


Item
1. Legal Proceedings.





We
are not a party to any pending legal proceedings as of this
date.





Item
1A. Risk Factors





Information
regarding risk factors appears our Annual Report on Form 10-K for the year ended
December 31, 2009 under Item 1A – Risk Factors.  There have been no
material changes from the risk factors previously discussed in our Form
10-K.





Item
2. Unregistered Sales of Equity Securities and Use of Proceeds





During
the quarter ended June 30, 2010, the Company issued warrants to purchase shares
of its common stock in consideration of a $1,000,000 commitment to provide
bridge loans extended to us by Vision Opportunity Master Fund, Ltd.
(“VOMF”).  The Company agreed to issue 166,666 warrants for the
purchase of one share each of the Company’s common stock as consideration for
the $1,000,000 commitment and 16,667 shares per each $100,000 of loan
issued.  The warrant purchase price is $3.00 per share and the
warrants have a five-year term.  We also agreed to appoint a
representative of VOMF to its board of directors at such time as requested by
VOMF.  These transactions between us and VOMF, a principal holder of
our common and preferred stock, were exempt transactions not involving any
public offering within the meaning of section 4(2) of the Securities Act of
1933, as amended.  The following table presents additional information
regarding the transactions.





Date
                        
                        Principal amount
                          of bridge loan
                        
                        
                        Number of Shares
                          Underlying
                          Warrant
                        
                        Warrant
                          Expiration Date5/4/2010
                        
                        $
                        250,000
                        
                        
                        
                        208,334
                        
                        5/4/20156/3/2010
                        
                        
                        300,000
                        
                        
                        
                        50,001
                        
                        6/3/20156/30/2010
                        
                        
                        450,000
                        
                        
                        
                        75,002
                        
                        3/31/2015Total
                        
                        $
                        1,000,000
                        
                        
                        
                        333,337





The
following table provides certain information with respect to our purchases of
common stock during the quarter ended June 30, 2010.





Period
                          
                          Total Number of
                            Shares Purchased
                          
                          
                          Average Price Paid
                            per Share
                          
                          
                          Total Number of
                            Shares Purchased
                            as part of Publicly
                            Announced Plans
                            or Programs
                          
                          
                          Maximum Number
                            of Shares that May
                            Yet Be Purchased
                            Under the Plans or
                            Programs4/1/2010
      through 4/30/2010
                          
                          
                          46,498
                          
                          
                          $
                          3.03
                          
                          
                          
                          151,578
                          
                          
                          
                          848,4225/1/2010
      through 5/31/2010
                          
                          
                          20,665
                          
                          
                          $
                          3.02
                          
                          
                          
                          172,243
                          
                          
                          
                          827,7576/1/2010
      through 6/30/2010
                          
                          
                          0
                          
                          
                          
                          0
                          
                          
                          
                          0
                          
                          
                          
                          827,757Total
                          
                          
                          67,163
                          
                          
                          $
                          3.02
                          
                          
                          
                          172,243
                          
                          
                          
                          827,757




35


Item
3. Default Upon Senior Securities





Not
applicable.





Item
4. Submission of Matters to a Vote of Securities Holders





Not
applicable.





Item
5. Other Information





None.





Item
6.  Exhibits and Financial Statement Schedules.





*
              10.1
              Medical
      Supply Manufacturing Agreement, dated as of July 14, 2010, between MedPro
      Safety Products, Inc. and Greiner Bio-One GmbH (portions of the exhibit
      have been omitted pursuant to a request for confidential
      treatment).10.2
              7%
      Promissory Note dated August 5, 2010 is incorporated by reference to
      Exhibit 10.1 to Form 8-K filed August10, 2010.*
              31.1
              Certification
      of Chief Executive Officer pursuant to SEC Rule
  13(a)-14(a)*
              31.2
              Certification
      of Chief Financial Officer pursuant to SEC Rule
  13(a)-14(a)*
              32.1
              Certification
      of Chief Executive Officer pursuant to Section 1350 of Chapter 63 of Title
      18 of the U.S. Code*
              32.2
              Certifications
      of Chief Financial Officer, pursuant to Section 1350 of Chapter 63 of
      Title 18 of the U.S. Code





*      Filed
herewith


36


SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act if 1934, the Registrant had
duly caused this amendment to be signed on its behalf by the undersigned
thereunto duly authorized.





MEDPRO
      SAFETY PRODUCTS, INC.(Registrant)August
      16, 2010
                  
                  By:
                  /s/W.
      Craig TurnerW.
      Craig TurnerChief
      Executive Officer, Chairmanof
      the Board of Directors(Principal
      Executive Officer)August
      16, 2010
                  
                  By:
                  /s/Marc T.
      RayMarc
      T. RayVice
      President Finance, Chief
                    Financial
      Officer(Principal
      Financial and
                    Accounting
      Officer)


37


INDEX
TO EXHIBITS





Exhibit No.
                      
                      Description of Exhibit10.1
                      
                      Medical
      Supply Manufacturing Agreement, dated as of July 14, 2010, between MedPro
      Safety Products, Inc. and Greiner Bio-One GmbH (portions of the exhibit
      have been omitted pursuant to a request for confidential
      treatment).31.1
                      
                      Certification
      of Principal Executive Officer, pursuant to Rule
  13a–14(a).31.2
                      
                      Certification
      of Principal Financial Officer, pursuant to Rule
  13a–14(a).32.1
                      
                      Certification
      of Principal Executive Officer, pursuant to 18 U.S.C. Section
      1350.32.2
                      
                      Certification
      of Principal Financial Officer, pursuant to 18 U.S.C. Section
      1350.


38