U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2010

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

For the transition period from to

Commission file number 0-24053

CPC of America, Inc.

(Name of registrant as specified in its charter)

Nevada		11-3320709
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5348 Vegas Drive, #89 Las Vegas, Nevada		89108
(Address of principal executive offices)		(Zip Code)

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

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

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

None		N/A

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.0005 par value

(Title of class)

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

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

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

Yes x No o

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

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

	Large accelerated filer o		Accelerated filer o
	Non-accelerated filer o		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 o No x

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, computed by reference to the price at which the common equity was last sold or the average bid and asked price of such common equity, as of June 30, 2010 was approximately $3,830,711.

The number of shares of the common stock outstanding as of April 11, 2011 was 10,149,838.

DOCUMENTS INCORPORATED BY REFERENCE. NONE

PART I

ITEM 1. BUSINESS.

Unless otherwise indicated, all references to our company include our wholly-owned subsidiaries, Med Enclosure, LLC, a Nevada limited liability company, and CPCA2000, Inc., a Nevada corporation.

Overview

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

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

At the present time, we have no intention of commencing operations based on our counterpulsation technologies, and we are no longer pursuing the potential sale of CPCA 2000, Inc. While we believe that our counterpulsation technologies continue to retain value, we do not believe we will be able to negotiate a sale of CPCA 2000, Inc. or its counterpulsation technologies that will result in a meaningful return to us or our shareholders until such time as the reimbursable patient costs for counterpulsation treatments under the Medicare program are significantly increased. We have historically charged to expense all research and development costs and expenses associated with our counterpulsation technologies. As of December 31, 2010, we had no assets on our consolidated balance sheet relating to our counterpulsation products or technologies, other than trademarks of less than $300.

Our executive offices are located at 5348 Vegas Drive, #89, Las Vegas, Nevada 89108 and our telephone number is (702) 952-9650. Our web page is www.ClosureProductsCo.com

General

CPC of America is engaged in the business of developing and acquiring cardiology therapeutic and disposable devices and products as well as the manufacture and distribution of these devices and products. We are currently engaged in the development of the MedClose internal puncture closure device. MedClose utilizes any approved biological or synthetic sealants to close puncture wounds following surgical procedures utilizing arterial puncture access.

MedClose is in the development stage and has not been approved for sale in the United States or any foreign jurisdiction. We expect to commence revenue producing operations subject to U.S. or foreign regulatory approval of the MedClose device. As of the date of this report, we believe that we are likely to receive foreign regulatory approval of the MedClose device sooner than U.S. approval, and we intend to focus our development efforts on the approval of the MedClose device in the European Union. We intend to submit an application for a CE mark for the MedClose product, as a delivery system consisting of the MedClose device coupled with our proprietary sealant. A CE mark is a mandatory conformance mark on products placed on the market in the European Economic Area. With the CE marking on a product, the manufacturer ensures that the product is in conformity with the essential requirements of the applicable European Conformity directives. CE mark approval is the principal requirement for commercial sale of the MedClose device in the European Union. The filing of our application for a CE mark and the regulatory approval of the MedClose in the European Union is subject to our receipt of additional capital. Until we receive additional capital, we cannot continue progress on the CE mark application.

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We also intend to continue our development of a proprietary synthetic sealant suitable for use in connection with the MedClose device. In March 2009, we entered into a product development agreement with Dr. Olex Hnojewyj, a holder of 13 patents in the field of vascular closure and other medical devices, pursuant to which Dr. Hnojewyj had been retained by us to develop a synthetic sealant on our behalf suitable for utilization with the MedClose device. We have developed a synthetic compound, and in May 2009, we filed our first patent for a synthetic sealant for specific application for the MedClose device. We conducted animal testing of the sealant during April 2009 and have successfully completed animal testing to date, subject only to the completion of Good Laboratory Practices (GLP) animal testing and animal biocompatibility testing. However, our pursuit of the GLP and biocompatibility testing is subject to our receipt of additional capital.

Currently our focus is to acquire the necessary working capital from the issuance of debt instruments or the sale of our securities. However, there can be no assurance we will be able to obtain the required additional working capital on commercially reasonable terms or at all. On February 14, 2011, we submitted a registration statement on Form S-1 to the SEC for approval of up to $3 Million in Equity Capital with Ascendiant Capital Group over a 24 month period. The registration statement is still in the approval process with the SEC at this time.

Internal Puncture Closure Device: "Medclose"

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

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

The MedClose is not presently available for general human use. Extensive animal studies of the MedClose device were successfully completed in 2002 through 2004 and provided to the FDA. We conducted limited human clinical trials, involving 16 enrolled subjects, of the MedClose device in the United States from August to October 2006, and we expect to resume human clinical trials in the United States subject to the FDA’s approval of our pending investigational device exemption, of which there can be no assurance. In the fourth quarter of 2006, we commenced human clinical investigations in Canada, with the knowledge and concurrence of the Canadian regulatory authorities. We conducted human clinical trials, involving 44 enrolled subjects, of the MedClose device in Canada from October 2006 to August 2007. Based on the experiences and input of the clinical investigators, we voluntarily suspended human clinical trials in Canada in August 2007 due to changes in the third party vendor’s sealant formula which was disclosed in a May 2009 FDA warning letter to that third party.

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On November 30, 2007, we submitted to the FDA an investigational device exemption, or IDE, application to clinically investigate the MedClose device in the U.S. Absent an effective exemption from the IDE regulations or a finding that the device is a non-significant, low risk device, compliance with the FDA’s IDE regulations is required before a medical device product can proceed to the last phase of the FDA regulatory process, human testing of the device. In December 2007, the FDA responded to our IDE application with a disapproval letter. We have since filed three IDE supplements to address deficiencies cited by the FDA and the third of these was submitted on September 5, 2008. In October 2008, the FDA responded to our September 2008 IDE supplement with a disapproval letter citing two remaining deficiencies, both of which related to the third party biological sealant we originally used in the application of the MedClose device. Upon receipt of sufficient capital resources we will commence with completing the necessary requirements to amend the IDE with substituting our proprietary synthetic sealant for the original biologic sealant obtained from the vender. With that substitution, we anticipate a transfer back to the Center for Devices and Radiological Health (“CDRH”) branch of the FDA from the Center for Biologics Evaluation and Research (“CBER”) branch since synthetic sealants are determined to be medical devices and not biological like the fibrin sealant.

Upon receipt of significant additional capital, we expect to commence clinical trial testing of the MedClose device utilizing the synthetic sealant formula in multiple European locations.

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

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

We expect to commence revenue producing operations subject to our receipt of U.S. and/or foreign regulatory approvals of MedClose. As of the date of this report, we believe that we are likely to receive foreign regulatory approval of the MedClose device sooner than U.S. approval, and we are currently focusing our development efforts on the approval of the MedClose device in the European Union. The filing of our application for a CE mark and the regulatory approval of the MedClose in the European Union is subject to our receipt of additional capital. Until we receive additional capital, we cannot continue progress on the CE mark application or any other commercial related activity.

Marketing and Distribution

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

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

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Government Regulation and Supervision

United States

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

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

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

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

International

The European Union has adopted rules which require that medical products receive the right to affix the CE mark, an international symbol of adherence to quality assurance standards and compliance with applicable European medical device directives. As part of the CE mark compliance, manufacturers are required to comply with the European quality systems standards. We have commenced the process for applying for the CE mark approval for our MedClose device and certification of our quality system. The filing of our application for a CE mark and the regulatory approval of the MedClose in the European Union is subject to our receipt of additional capital. Until we receive additional capital, we cannot continue progress on the CE mark application.

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

Competition

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

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

Patents and Trademarks

We hold three patents from the U.S. Patent and Trademark Office for the MedClose device and procedure and we have filed two additional patents pending. We also have two registered trademarks in the United States and registrations in Argentina, India, Madrid Protocol, Mexico, New Zealand, Pakistan, Taiwan, and pending applications in Brazil, Canada, and Venezuela for the name MedClose. In May 2009, we submitted a patent application for our proprietary synthetic sealant.

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

Research and Development

Since inception through December 31, 2010, our research and development expenses have amounted to approximately $23,503,780, including $141,319 and $1,736,427 spent on research and development in 2010 and 2009, respectively. At present, none of these research and development expenses have been borne by customers, as we have not begun to market or sell our products and services.

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Employees

As of the date of this report, we employ two persons consisting of our chief executive officer, who is considered a full-time employee, and chief financial officer. We contract with various consultants and professionals to provide services to us including engineering, software, testing, regulatory, quality control, quality certifications, commercial applications/approvals, product development, medical and clinical affairs, clinical trials, clinical research, data management, data analysis, and statistical analysis on a project by project basis.

Financial Information About Geographic Area

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

Available Information

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

ITEM 1A. RISK FACTORS.

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

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

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

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

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We will require additional capital in the future in order to further develop or market our products, but we do not have any commitments to obtain such capital and we cannot assure you that we will be able to obtain adequate capital as and when required. As of December 31, 2010, we had a working capital deficit of ($4,667,109), which includes accrued dividends of $3,789,350 payable on our outstanding shares of Series C, Series D and Series E preferred stock as of such date. In September 2007, we commenced a private placement of our Series E Preferred Stock, and since December 31, 2007, we have sold 566,203 shares of Series E Preferred shares for the gross proceeds of $3,397,219. We believe that we will require a minimum of $3 million of additional working capital in order to fund our proposed operations over the 12 months following the date of this report, assuming we do not receive requests for a substantial amount of dividend payments in cash. In the event we receive substantial requests for dividend payments in cash or we encounter a material amount of unexpected expenses, we may require in excess of $3 million additional capital over the next 12 months. We will seek to obtain additional working capital through the sale of our securities or the issuance of debt instruments. However, we have no agreements or understandings with any third parties at this time for our receipt of such working capital. Consequently, there can be no assurance we will be able to access capital as and when needed or, if so, that the terms of any available financing will be subject to commercially reasonable terms.

The report of our independent registered public accounting firm for the fiscal year ended December 31, 2010 states that due to our working capital deficiency at December 31, 2010 there is a substantial doubt about our ability to continue as a going concern.

We have issued over time multiple series of preferred stock, which as of December 31, 2010 have accrued dividends in the aggregate amount of $3,789,350. Our board of directors has the authority to issue up to 5,000,000 shares of preferred stock and to determine the price, rights, preferences and privileges of those shares without any further vote or action by our stockholders. As of December 31, 2010, we had issued five series of preferred shares (Series A through E), of which all of the Series A and Series B shares had been converted into common shares as of such date and 271,721 shares of Series C Preferred Stock, 594,342 of Series D Preferred Stock and 399,037 of Series E Preferred Stock were issued and outstanding as of such date.

As of December 31, 2010, our outstanding shares of preferred stock had accrued dividends of $3,789,350. Our Series C and Series D preferred stock both have a 5% annual dividend payable in cash or shares of our common stock, at the option of the holder. Our Series E preferred stock has a 10% annual dividend payable in cash or shares of our common stock, at the option of our company. Dividends on our outstanding shares of preferred stock are only payable at the time those shares are converted into shares of our common stock. To date, all dividends to the holders of our Series C and D preferred shares have been paid in common shares. However, there can be no assurance that our Series C and D preferred share holders will continue to elect to receive dividends in common shares instead of cash. As of December 31, 2010, we had cash and cash equivalents of $55,755 and a working capital deficit of ($4,667,109). In the event the holders of a significant number of our Series C and D preferred shares convert their preferred shares and in doing so elect to take their dividends in cash, our working capital will be materially adversely affected.

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

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

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

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

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

We are in breach of contract with our CEO and CFO regarding timely payment of salary. The CEO’s salary breach originally occurred in 2006, and the breach of contract with our CFO extends back to April 1, 2009. Salary currently due the CEO and CFO total $582,569, which includes estimated employer payroll taxes of approximately $24,000. Continued breach of these employment contracts may adversely affect our ability to retain the services of our executive officers, which in turn would have adverse consequences on our ability to move forward with our business plan.

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

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

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

Our business and results of operations may be seriously harmed by changes in third-party reimbursement policies. We could be seriously harmed by changes in reimbursement policies of governmental or private healthcare payors, particularly to the extent any changes affect reimbursement for catheterization procedures in which our products are used. Failure by physicians, hospitals and other users of our products to obtain sufficient reimbursement from healthcare payors for procedures in which our products are used or adverse changes in governmental and private third-party payors’ policies toward reimbursement for such procedures would seriously harm our business. In the United States, healthcare providers, including hospitals and clinics that purchase medical devices such as our products, generally rely on third-party payors, principally federal Medicare, state Medicaid and private health insurance plans, to reimburse all or part of the cost of catheterization procedures. Any changes in this reimbursement system could seriously harm our business. In international markets, acceptance of our products is dependent in part upon the availability of reimbursement within prevailing healthcare payment systems. Reimbursement and healthcare payment systems in international markets vary significantly by country. Our failure to receive international reimbursement approvals could have a negative impact on market acceptance of our products in the markets in which these approvals are sought. The 2010 Healthcare Reform Bill requires medical devices companies to pay approximately 2.3% of sales of medical devices as an additional tax to fund the healthcare deficiencies shortfall.

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The market for our stock is limited and may not provide investors with either liquidity or a market based valuation of our common stock. Our common stock is quoted on the OTC Bulletin Board market under the symbol "CPCF.OB". As of March 31, 2011, the last reported sale price of our common stock as quoted by the OTCBB was $0.40 per share. However, we consider our common stock to be "thinly traded" and any last reported sale prices may not be a true market-based valuation of the common stock. Also, the present volume of trading in our common stock may not provide investors sufficient liquidity in the event they wish to sell their common shares. There can be no assurance that an active market for our common stock will develop. In addition, the stock market in general, and early stage public companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies. If we are unable to develop a market for our common shares, you may not be able to sell your common shares at prices you consider to be fair or at times that are convenient for you, or at all.

We have issued over time multiple series of preferred stock, each of which has rights senior to our common stock including the right to be paid approximately $14.0 million of liquidation preferences. Our board of directors has the authority to issue up to 5,000,000 shares of preferred stock and to determine the price, rights, preferences and privileges of those shares without any further vote or action by our stockholders. As of December 31, 2010, we had issued five series of preferred shares (Series A through E), of which all of the Series A and Series B shares had been converted into common shares as of such date and 271,721 shares of Series C Preferred Stock, 594,342 of Series D Preferred Stock and 399,037 of Series E Preferred Stock were issued and outstanding as of such date. In the event of the liquidation, dissolution or winding up of our corporation, each holder of our preferred shares shall be paid, prior to any payments to the holders of our common stock, a liquidation preference, plus all accrued and unpaid dividends. The Series C, Series D and Series E preferred shares are to be paid a liquidation preference of $8.90 per share, $9.15 per share and $6.00 per share, respectively. The aggregate amount of liquidation preferences, plus accrued dividends, as of December 31, 2010 was $14,040,118. Any additional preferred stock issued by our board of directors may contain similar liquidation preferences and other rights and preferences adverse to the voting power and other rights of the holders of common stock.

We are dependent for our success on a few key executive officers. Our inability to retain those officers would impede our business plan and growth strategies, which would have a negative impact on our business and the value of your investment. Our success depends on the skills, experience and performance of key members of our management team. We are heavily dependent on the continued services of Mr. Rod Shipman, our Chief Executive Officer and Ms. Marcia Hein, our Chief Financial Officer. We are in breach of contract with our CEO and CFO regarding timely payment of salary. The CEO’s salary breach originally occurred in 2006, and the breach of contract with our CFO extends back to April 1, 2009. Salary currently due the CEO and CFO total $582,569, which includes estimated employer payroll taxes of approximately $24,000. Were we to lose one or more of these key executive officers, we would be forced to expend significant time and money in the pursuit of a replacement, which would result in both a delay in the implementation of our business plan and the diversion of limited working capital. We can give you no assurance that we can find satisfactory replacements for these key executive officers at all, or on terms that are not unduly expensive or burdensome to our company. Although we intend to issue stock options or other equity-based compensation to attract and retain key individuals, such incentives may not be sufficient to attract and retain them.

New rules, including those contained in and issued under the Sarbanes-Oxley Act of 2002, may make it difficult for us to retain or attract qualified officers and directors, which could adversely affect the management of our business and our ability to obtain or retain listing of our common stock. We may be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of the recent and currently proposed changes in the rules and regulations which govern publicly held companies, including, but not limited to, certifications from executive officers and requirements for financial experts on the board of directors. The perceived increased personal risk associated with these recent changes may deter qualified individuals from accepting these roles. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in the issuance of a series of new rules and regulations and the strengthening of existing rules and regulations by the SEC. Further, certain of these recent and proposed changes heighten the requirements for board or committee membership, particularly with respect to an individual’s independence from the corporation and level of experience in finance and accounting matters. We may have difficulty attracting and retaining directors with the requisite qualifications. If we are unable to attract and retain qualified officers and directors, the management of our business could be adversely affected.

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Our internal controls over financial reporting may not be effective, which could have a significant and adverse effect on our business. We are subject to various regulatory requirements, including the Sarbanes-Oxley Act of 2002. We, like all other public companies, are incurring additional expenses and, to a lesser extent, diverting management’s time in an effort to comply with Section 404 of the Sarbanes-Oxley Act of 2002. We are evaluating our internal controls over financial reporting in order to allow management to report on our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002 and the rules and regulations of the SEC, which we collectively refer to as Section 404. We are currently performing the system and process evaluation and testing required in an effort to comply with the management assessment of Section 404. At December 31, 2008, management concluded that a lack of audit committee to oversee our accounting and financial reporting processes was a material weakness in our internal control over financial reporting. We remediated that material weakness by expanding our board of directors to include at least one independent director who qualifies as an audit committee financial expert. If, in the future, management identifies the same material weakness or additional material weaknesses, this could result in a loss of investor confidence in our financial reports, have an adverse effect on our stock price and/or subject us to sanctions or investigation by regulatory authorities.

If we are unable to obtain adequate insurance, our financial condition could be adversely affected in the event of uninsured or inadequately insured loss or damage. Our ability to effectively recruit and retain qualified officers and directors could also be adversely affected if we experience difficulty in obtaining adequate directors’ and officers’ liability insurance. We may not be able to obtain insurance policies on terms affordable to us that would adequately insure our business and property against damage, loss or claims by third parties. To the extent our business or property suffers any damages, losses or claims by third parties, which are not covered or adequately covered by insurance, our financial condition may be materially adversely affected. We may be unable to maintain sufficient insurance as a public company to cover liability claims made against our officers and directors. If we are unable to adequately insure our officers and directors, we may not be able to retain or recruit qualified officers and directors to manage the company.

Existing stockholders could experience substantial dilution upon the issuance of common stock pursuant to an equity line we have with Ascendiant Capital Group and Ascendiant Equity Partners. Our equity line with Ascendiant Capital Group and Ascendiant Equity Partners (together, “Ascendiant”) contemplates our future possible issuance of up to an aggregate 3,000,000 shares of our common stock as a result of a registration statement, subject to certain restrictions and obligations. We may need to draw the full amount available under this equity line prior to the expiration of the equity line. If the terms and conditions of the equity line are satisfied, and we choose to exercise our put rights to the fullest extent permitted and sell all of the 3,000,000 shares of our common stock to Ascendiant, our existing stockholders’ ownership will be diluted by approximately 29.6% based on 10,149,841 shares of common stock outstanding on December 31, 2010. There is no floor price for the sale of our stock to Ascendiant under our equity line agreement with them, and declines in future prices of our common stock will result in a greater issuance of shares than higher future prices as the purchase price per share of common stock issuable under the equity line will be based on the daily volume weighted average price during each of the ten trading days immediately following the date of the drawdown date, less a discount of 10%. Thus, we cannot determine at this time the net total proceeds to the Company should we sell the entire 3,000,000 shares to them. We are constrained however by the market volume as to the time frame in which these shares would be sold to Ascendiant. We cannot be assured what the proceeds to the Company will be, or that the price of our common stock will not be adversely affected by these sales.

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ITEM 1B.

UNRESOLVED STAFF COMMENTS.

None.

ITEM 2.

PROPERTIES.

Our executive offices are located in Las Vegas, Nevada and through December 31, 2009 we also maintained warehouse space in Sarasota, Florida. Beginning January 1, 2010, the Florida space is no longer being utilized. Both facilities were leased by us on a month to month basis.

ITEM 3.

LEGAL PROCEEDINGS.

We are not currently involved in any material legal proceedings, and we are not aware of any material legal proceedings pending or threatened against us. We are also not aware of any material legal proceedings involving any of our directors, officers, or affiliates or any owner of record or beneficially or more than 5% of any class of our voting securities.

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PART II

ITEM 5.

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

Market Information

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

Quarter Ended	Low	High

March 31, 2009	$ 1.91	$ 4.75
June 30, 2009	$ 1.80	$ 4.50
September 30, 2009	$ 1.80	$ 2.95
December 31, 2009	$ 0.77	$ 2.15

March 31, 2010	$ 0.60	$ 1.10
June 30, 2010	$ 0.40	$ 0.95
September 30, 2010	$ 0.35	$ 0.60
December 31, 2010	$ 0.25	$ 0.69

Holders

As of April 2, 2010, there were 1,547 record holders of our common stock.

Dividends

We have not paid any cash dividends on our common stock since our inception and do not contemplate paying dividends in the foreseeable future. It is anticipated that earnings, if any, will be retained for the operation of our business. Pursuant to our certificates of designations, holders of shares of our Series C preferred stock and Series D preferred stock are entitled to dividends at a rate of 5% per annum, payable at the option of the holders, in either cash or shares of common stock. In addition, the holders of our Series E preferred stock are entitled to dividends at the rate of 10% per annum, payable at our option, in cash or common stock. Dividends on preferred stock are only payable at the time the preferred shares are converted into shares of common stock. During 2010, we paid no cash dividends on the shares of our preferred stock.

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Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth certain information as of December 31, 2010 concerning our equity compensation plans:

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

Equity compensation plans approved by shareholders		200,000	$	4.75		2,560,534
Equity compensation plans not approved by shareholders (1)		1,653,907	$	7.90		N/A

(1) Represents shares of 1,553,907 common stock issuable to CTM Group, Inc. and 100,000 common stock issuable to Rod A. Shipman pursuant to option agreements entered into in April 2008. The options vest immediately and expire on or before April 24, 2013. If exercised, these shares represent $13,065,865 in capital to the Company.

Sales of Unregistered Securities

During the fiscal year ended December 31, 2010, we issued 491,165 shares of common stock upon the conversion 191,500 shares of our Series E Preferred Stock and related accrued dividends, by the holders of such preferred shares. We also issued 121,622 shares of common stock for services valued at $47,433. The shares of common stock issued upon the conversion of our Series E Preferred Stock and for services were issued pursuant to an exemption under Section 4(2) of the 1933 Act and Rule 506 thereunder.

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ITEM 6.

SELECTED FINANCIAL DATA.

Not applicable

ITEM 7.

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

General

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

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

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

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

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We expect to commence revenue producing operations subject to U.S. and/or foreign regulatory approval of the MedClose device. As of the date of this report, we believe that we are likely to receive foreign regulatory approval of the MedClose device sooner than U.S. approval and we intend to focus our development efforts on the approval of the MedClose device in the European Union. We intend to submit an application for a CE mark for the MedClose product, as a delivery system consisting of the MedClose device coupled with our proprietary sealant. CE mark approval is the principal requirement for commercial sale of the MedClose device in the European Union. The filing of our application for a CE mark and the regulatory approval of the MedClose in the European Union is subject to our receipt of additional capital. Until we receive additional capital, however, we cannot continue progress on the CE mark application or any other commercial related activity.

We also intend to continue our development of a proprietary synthetic sealant suitable for use in connection with the MedClose device. In March 2009, we entered into a product development with Dr. Olex Hnojewyj, a holder of 13 patents in the field of vascular closure and other medical devices, pursuant to which Dr. Hnojewyj had been retained by us to develop a synthetic sealant on our behalf suitable for utilization with the MedClose device. We have developed a synthetic compound, and in May 2009, we filed our first patent for a synthetic sealant for specific application for the MedClose device. We conducted animal testing of the sealant during April 2009 and have successfully completed animal testing to date, subject only to the completion of Good Laboratory Practices (GLP) animal testing and animal biocompatibility testing. However, our pursuit of the GLP and biocompatibility testing is subject to our receipt of additional capital.

Upon receipt of additional capital, we expect to commence clinical trial testing of the MedClose device utilizing the synthetic sealant formula in multiple European locations. Upon successful completion of the European clinical trials utilizing our proprietary synthetic sealant, we intend to respond to the FDA’s outstanding comments on our pending application for an investigational device exemption for the MedClose. We also intend to pursue an ISO 13485 certification of our records and procedures relating to our development and the proposed manufacturing of our MedClose device and proprietary sealant.

We do not expect to purchase or sell significant plant or equipment during 2011, nor do we expect a significant change in the number of our employees during the year.

In order to meet our general working capital requirements and to fund the commercial exploitation of the MedClose, in September 2007, we commenced a private placement of our Series E Preferred Stock. We are offering 1,666,667 shares of our Series E Preferred Stock, at $6.00 per share. As of April 2, 2010, we have sold 566,203 shares of Series E Preferred shares for the gross proceeds of $3,397,220 and issued an additional 17,500 shares in lieu of $105,000 of salary to our chief financial officer and 9,334 shares in lieu of $56,000 in director compensation. The Series E Preferred stock has no voting rights and has a 10% annual dividend payable in cash or common stock at our option. Each Series E Preferred share was convertible into our common shares at a conversion price of $6.00 per share until August 31, 2008, when the conversion price was adjusted to the lower of 75% of the average last sale price of the common stock for the 30 trading days immediately preceding such date on any stock exchange or $4.50 per share; provided that the conversion price could not be adjusted to an amount below $3.92 per share. At August 31, 2008, the conversion price was deemed to be $4.50 per share. Subsequently, our board of directors approved an amendment to the Series E Preferred Stock to set the conversion price at $3.92 per share, and in June 2009 our board approved a further amendment to reduce the conversion price to $2.75 per share. The shares of Series E Preferred Stock have not been, and will not be, registered under the 1933 Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. The Series E preferred shares are being sold by our executive officers and the proceeds of the offering are expected to be used for clinical trials, regulatory compliance, manufacturing and marketing relating to the MedClose device, and working capital.

During the year ended December 31, 2010, the Company issued $610,717 in convertible notes. The debt bears interest at rates from 20% to 30% per annum, compounded monthly, and is due two years from the date the cash is received. In addition, the debt and related accrued interest is convertible into the Company’s common stock at a rate equal to the closing price of the Company’s stock on the day the cash is received, which is the date of the note. Cash proceeds of $410,000 were received from existing shareholders, the Company’s CEO converted amounts owed to him totaling $47,717, and the Company issued notes totaling $153,000 in exchange for consulting expenses.

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Equity Line of Credit

On December 17, 2010, we entered into an equity line of credit agreement with Ascendiant Capital Group, LLC (“Ascendiant”) in order to establish a possible source of funding. The equity line of credit agreement establishes what is sometimes also referred to as an equity drawdown facility pursuant to a Securities Purchase Agreement entered into between the Company and Ascendiant.

Pursuant to a Registration Rights Agreement entered into between the Company and Ascendiant in connection with the equity line of credit, we filed a registration statement with the Securities and Exchange Commission (the “SEC”) on February 14, 2011. The registration statement will register shares of common stock to be purchased under the equity line of credit and the shares of common stock issued to Ascendiant for their commitment to the equity line of credit. There are no penalties assessed to us in connection with the filing and effectiveness deadlines associated with the registration statement.

Under the equity line of credit agreement, Ascendiant has agreed to provide us with up to $3,000,000 of funding prior to 24 months after the seventh trading date after the effective date of the registration statement.. During this period, we may request a drawdown under the equity line of credit by selling shares of our common stock to Ascendiant and Ascendiant will be obligated to purchase the shares. We may request a drawdown once every eleven trading days, although we are under no obligation to request any drawdowns under the equity line of credit. There must be a minimum of two trading days between each drawdown request.

During the nine trading days following a drawdown request, we will calculate the amount of shares we will sell to Ascendiant and the purchase price per share. The purchase price per share of common stock will be based on the daily volume weighted average price of our common stock during each of the nine trading days immediately following the drawdown date, less a discount of 10%.

We may request a drawdown by faxing a drawdown notice to Ascendiant, stating the amount of the drawdown and the lowest price, if any, at which we are willing to sell the shares. The lowest price will be set by our Chief Executive Officer or Chief Financial Officer in their sole and absolute discretion.

No drawdowns on the line of credit will occur until the Registration Statement mentioned above is approved by the SEC, and that process is ongoing at this time.

Results of Operations

Revenue. We have generated no revenue to date and do not expect to generate revenue until we have received commercial regulatory approval of our MedClose device in various countries and markets.

Research and Development. During the 2010 fiscal year, we incurred $141,319 of research and development expenses compared to $1,736,427 during fiscal 2009. Research and development expenses relate to our ongoing development and testing of our internal puncture closure device and technique known as "MedClose", as well as our synthetic sealant device. Our research and development costs were lower in 2010 than in 2009 due to capital constraints, though consulting fees decreased by approximately $173,200 as a result of the expiration of our consulting agreement with CTM Group in April 2009, and officer salaries decreased by approximately $411,900 as a result of a reduction in our CEO’s salary. Subject to our receipt of additional capital, we expect our research and development costs to increase as we get further into human trials and proceed towards the submission of applications for CE Mark/European commercial approval and eventually a FDA pre-market approval thereafter.

Engineering and development costs decreased by $250,363 in 2009. Most of that decrease was a decrease in consulting fees of approximately $378,701 as a result of the expiration of our consulting agreement with CTM Group in April 2009, offset by our continued work on obtaining regulatory approval in Europe with the use of proceeds from the Series E Preferred share offering described above.

General and Administrative. During fiscal 2010, general and administrative expenses decreased by $400,057 over the prior year. The decrease was primarily due to a decrease of $43,000 in consulting fees as a result of the expiration of our consulting agreement with CTM Group in April 2009, and a decrease in officer salaries of $103,000 due to the reduction in our CEO’s salary. Other material decreases include legal fees of $216,900, accounting fees of $25,400, payroll taxes of $47,600, directors’ compensation of $31,000, office rent of $14,700, and transfer agent fees of $15,200, offset by an increase in professional fees of $38,000 and employee benefits of $80,900 as a result of the verbal amendments to the CEO’s and CFO’s employment contracts. We also recognized a gain on settlement of accounts payable with two of our vendors of approximately $36,800.

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During fiscal 2009, we incurred $1,153,300 of general and administrative expenses, compared to administrative expenses of $9,168,935 in fiscal 2008, a decrease of $8,015,635. The decrease consisted primarily of a decrease of $7,712,616 in stock option expenses since no options were granted in 2009, plus decreases of $254,295 in legal fees, $27,231 in accounting fees and $36,903 in professional fees as we cut expenses to conserve cash and $94,676 as a result of the expiration of our consulting agreement with CTM Group in April 2009. These decreases were offset by increases of $60,000 in officers’ salaries as a result of hiring a chief financial officer in July 2008, and director compensation of $56,000.

Interest expense. During the year ended December 31, 2010, we incurred $114,070 in interest expense due to the issuance of the convertible notes described below.

Loss on extinguishment of debt. During the year ended December 31, 2010, we incurred a loss on extinguishment of debt of $157,413, due to modification of terms of convertible debt.

Financial Condition

As of December 31, 2010, we had $57,755 of cash and a working capital deficit of ($4,667,109), which includes accrued dividends of $3,789,350 payable on our outstanding shares of Series C, Series D and Series E preferred stock as of such date. Our Series C and Series D preferred stock both have a 5% annual dividend payable in cash or shares of our common stock, at the option of the holder. Those dividends are convertible into our common shares at the rate of $3.57 per share in the case of the Series C preferred stock and $6.86 per share in the case of the Series D preferred stock. Our Series E preferred stock has a 10% annual dividend payable in cash or shares of our common stock, at the option of our company, subject to the holder’s right to take dividends in common shares. The dividends on Series E preferred stock are convertible into our common shares at the rate of $2.75 per share. Dividends on our outstanding shares of preferred stock are only payable at the time those shares are converted into shares of our common stock. To date, all dividends to the holders of our Series C and D preferred shares have been paid in common shares. However, there can be no assurance that our Series C and D preferred shareholders will continue to elect to receive dividends in common shares instead of cash.

Commencing in July 2009, we began to curtail certain product development and testing due to limited working capital. We believe that we will require a minimum of $3 million of additional working capital in order to fund our proposed operations over the 12 months following the date of this report, assuming we do not receive requests for a substantial amount of dividend payments in cash. In the event we receive substantial requests for dividend payments in cash or we encounter a material amount of unexpected expenses, we may require in excess of $3 million additional capital over the next 12 months. We will seek to obtain additional working capital through the issuance of debt securities or the sale of our securities. However, we have no agreements or understandings with any third parties at this time for our receipt of such working capital. Consequently, there can be no assurance we will be able to access capital as and when needed or, if so, that the terms of any available financing will be subject to commercially reasonable terms.

As noted above, the debt and related accrued interest is convertible into the Company’s common stock, and originally, this conversion rate was equal to the closing price of the Company’s stock on the day the cash was received. As additional money was received from the same individuals who had loaned money in the first and second quarters of 2010, the conversion rate for all notes from these individuals was negotiated downward to reflect the Company’s common stock price at a date near the day the additional cash was received in the third quarter of 2010. ASC 470-50-40-6 requires an exchange of debt instruments with substantially different terms to be treated as a debt extinguishment. The modification of terms on these notes met the definition of significant because the change in the fair value of the embedded conversion option was more than 10 percent of the carrying amount of the original debt instrument immediately before and after the modification of terms.

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According to ASC 470-50, the difference between the net carrying value and the price paid to acquire the debt instruments is recorded as a gain or loss. In the Company’s situation, the acquisition price was calculated as the present value of the principal (using a 1% risk-free interest rate) plus the fair value of the conversion option (calculated using the Black-Scholes Method), less the embedded beneficial conversion feature. Since this acquisition price was greater than the notes’ carrying value, a loss on extinguishment of $157,413 was recorded during the quarter ended September 30, 2010.

The Company has recorded a beneficial conversion feature in accordance with FASB ASC 470-20. The Company measures the embedded beneficial conversion feature by allocating a portion of the proceeds equal to the intrinsic value of the embedded beneficial conversion feature to additional paid-in capital. Intrinsic value is calculated as the difference between the effective conversion price and the fair value of the common stock into which the debt is convertible, multiplied by the number of shares into which the debt is convertible. A beneficial conversion feature totaling $57,378 was recorded as loan discount in the nine months ended December 31, 2010. The loan discount will be amortized over the life of the convertible note. For the year ended December 31, 2010, $10,774 of amortization of loan discount was recorded as interest expense.

A premium of $157,413 on the convertible notes was also recorded as part of the modification of terms. This premium is the present value of the principal (using a 1% risk-free interest rate) plus the fair value of the conversion option (calculated using the Black-Scholes Method) and will be amortized over the life of the loans. For the year ended December 31, 2010, $44,077 of amortization of premium was recorded to additional paid in capital.

The following weighted average assumptions were used to calculate the options granted: term of 1.5-1.83 years, risk-free interest rate of 0.375% - 1%, volatility ranging of 110% and a weighted fair value ranging from $0.18 - $0.36.

Another feature of the convertible notes is that interest is guaranteed for the two year period contingent on early repayment or conversion of the debt. Total interest for the notes outstanding at December 31, 2010 is $473,645 of which $103,296 has been included as interest payable on the accompanying December 31, 2010 balance sheet. The difference of $370,349 represents a contingent liability at December 31, 2010. Management has determined that early repayment or conversion of the convertible notes is remote at this time, so the contingency has not been recorded.

The following cash outlays would be required in 2012 should repayment of the convertible debt and related interest be in cash:

Quarter ending March 31, 2012:	$	423,148
Quarter ending June 30, 2012:	$	255,030
Quarter ending September 30, 2012	$	314,843
Quarter ending December 31, 2012	$	91,341
Total potential cash outlay:	$	1,084,362

The report of our independent registered public accounting firm for the fiscal year ended December 31, 2010 states that due to our working capital deficiency at December 31, 2009 there is a substantial doubt about our ability to continue as a going concern.

-18-

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

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

On February 14, 2011, we submitted a registration statement on Form S-1 to the SEC for approval of up to $3 Million in Equity Capital with Ascendiant Capital Group over a 24 month period. The registration statement is still in the approval process with the SEC at this time. Details of this transaction are described in the “General” section above.

Off-Balance Sheet Arrangements

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

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:

Not applicable

-19-

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets at December 31, 2010 and 2009	F-2
Consolidated Statements of Operations for the two years ended December 31, 2010 and cumulative from inception (April 11, 1996) to December 31, 2010	F-3
Consolidated Statements of Shareholders' Equity (Deficit) from inception (April 11, 1996) to December 31, 2010	F-4
Consolidated Statements of Cash Flows for the two years ended December 31, 2010 and cumulative from inception (April 11, 1996) to December 31, 2010	F-8
Notes to Consolidated Financial Statements	F-10

-20-

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

CPC of America, Inc.

We have audited the accompanying consolidated balance sheets of CPC of America, Inc. and subsidiaries (a development stage company) (the “Company”) as of December 31, 2010 and 2009, and the related consolidated statements of operations, shareholders’ equity (deficit) and cash flows for each of the years in the two year period ended December 31, 2010 and for the period from inception (April 11, 1996) to December 31, 2010. The Company’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company had a net capital deficiency at December 31, 2010, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also included in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of CPC of America, Inc. as of December 31, 2010 and 2009, and the results of its operations and cash flows for each of the years in the two year period ended December 31, 2010 and for the period from inception (April 11, 1996) to December 31, 2010 in conformity with accounting principles generally accepted in the United States of America.

/s/CACCIAMATTA ACCOUNTANCY CORPORATION

Irvine, California

April 15, 2011

F-1

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Consolidated Balance Sheets

	December 31,
	2010			2009
ASSETS
Current assets
Cash and equivalents	$	57,755		$	5,583
Prepaid expenses		51,703			93,933

Total current assets		109,458			99,516

Patents, net of accumulated amortization of $372,373 in 2010 and $326,853 in 2009		185,127			230,647

Trademark, net of accumulated amortization of $5,959 in 2010 and $5,544 in 2009		273			688
TOTAL ASSETS	$	294,858		$	330,851
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Loan from officer	$	-		$	47,717
Accounts payable		276,352			343,977
Accrued payroll and related taxes		582,569			291,808
Accrued directors' compensation		25,000			-
Accrued interest		103,296			-
Accrued dividends payable		3,789,350			3,326,077
Total current liabilities		4,776,567			4,009,579

Convertible notes, net of $46,603 discount and $113,334 premium		677,447			-
Total liabilities		5,454,014			4,009,579

Commitments and contingencies		-			-

Shareholders' deficit
Convertible preferred stock, 5,000,000 shares authorized, $.001 par value, Series C - 271,721 shares issued and outstanding at December 31, 2010 and 2009, respectively		272			272
Series D - 594,342 shares issued and outstanding at December 31, 2010 and 2009, respectively		594			594
Series E - 399,037 and 590,537 shares issued and outstanding at December 31, 2010 and 2009, respectively		399			590
Common stock, 20,000,000 shares authorized, $.0005 par value, 10,149,838 and 9,537,051 shares issued and outstanding at December 31, 2010 and 2009, respectively		5,076			4,769
Additional paid-in capital - preferred		14,808,584			16,622,353
Additional paid-in capital - common		32,077,877			30,578,607
Deficit accumulated during the development stage		(52,051,958	)		(50,885,913	)
Total shareholders' deficit		(5,159,156	)		(3,678,728	)
TOTAL LIABILITIES & SHAREHOLDERS' DEFICIT	$	294,858		$	330,851

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

F-2

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Consolidated Statements of Operations

							Cumulative
							from inception
							(April 11, 1996)
	Year ended December 31,						to December 31,
	2010			2009			2010

Costs and expenses:
Research and development - related party	$	-		$	173,247		$	10,016,111
Research and development - other		141,319			1,563,180			13,487,669
		141,319			1,736,427			23,503,780
General and administrative - related party		-			59,044			1,781,577
General and administrative - other		753,243			1,094,256			18,354,842
		753,243			1,153,300			20,136,419

Operating loss		(894,562	)		(2,889,727	)		(43,640,199	)

Other income (expense):
Interest expense		(114,070	)		-			(123,024	)
Interest income		-			2,496			332,588
Loss on extinguishment of debt		(157,413	)		-			(157,413	)
Increase in cash surrender value of insurance		-			-			790,910

		(271,483	)		2,496			843,061

Net loss	$	(1,166,045	)	$	(2,887,231	)	$	(42,797,138	)

Loss per share calculation:
Net loss	$	(1,166,045	)	$	(2,887,231	)
Beneficial conversion feature		(57,378	)		(2,464,166	)
Preferred dividend		(664,960	)		(746,449	)
Numerator	$	(1,888,383	)	$	(6,097,846	)

Basic and diluted weighted average number of common shares outstanding - Denominator		9,873,454			9,433,757

Basic and diluted net loss per share	$	(0.19	)	$	(0.65	)


Maximum number of common shares (not included in denominator of diluted loss per share calculation due to their anti-dilutive nature) attributable to exercise/conversion of:
Outstanding options		1,853,907			1,853,907
Preferred stock		2,340,771			2,758,435

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

F-3

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Condensed Consolidated Statements of Shareholders' Equity (Deficit) (continued)

From inception (April 11, 1996) to December 31, 2010

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

F-4

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Condensed Consolidated Statements of Shareholders' Equity (Deficit) (continued)

From inception (April 11, 1996) to December 31, 2010

																																						Deficit
	Preferred Stock																						Common Stock									Additional			Additional			Accumulated			Total
	Series A						Series B						Series C						Series D										Stock			Paid-in			Paid-in			During the			Shareholders'
	Number						Number						Number						Number				Number						Option			Capital-			Capital-			Development			Equity
	of Shares			Total			of Shares			Total			of Shares			Total			of Shares		Total		of Shares			Total			Costs			Common			Preferred			Stage			(Deficit)

Balance, December 31, 1999		79,293		$	79			-		$	-			-		$	-			-	$	-		4,124,060		$	2,062		$	-		$	1,797,178		$	872,682		$	(2,711,302	)	$	(39,301	)
Exercise of warrants		-			-			-			-			-			-			-		-		365,500			183			-			639,442			-			-			639,625
Exercise of options		-			-			-			-			-			-			-		-		223,832			113			-			258,528			-			-			258,641
Issuance of preferred stock for cash		-			-			71,429			71			-			-			-		-		-			-			-			-			624,929			-			625,000
Valuation of beneficial conversion feature on Series B Preferred		-			-			-			-			-			-			-		-		-			-			-			-			208,125			(208,125	)		-
Conversion of Series A Preferred into common shares		(70,469	)		(70	)		-			-			-			-			-		-		131,996			66			-			624,659			(598,930	)		-			25,725
Beneficial conversion feature on
Series A Preferred shares		-			-			-			-			-			-			-		-		-			-			-			199,486			(199,486	)		-			-
Settlement of lawsuit		-			-			-			-			-			-			-		-		33,333			17			-			199,983			-			-			200,000
Purchase of patent		-			-			-			-			-			-			-		-		47,042			24			-			235,184			-			-			235,208
Stock option costs		-			-			-			-			-			-			-		-		-			-			(280,000	)		280,000			-			-			-
Amortization of stock option costs		-			-			-			-			-			-			-		-		-			-			105,000			-			-			-			105,000
Cancellation of common shares		-			-			-			-			-			-			-		-		(89,000	)		(45	)		-			-			-			-			(45	)
Net loss for 2000		-			-			-			-			-			-			-		-		-			-			-			-			-			(1,749,444	)		(1,749,444	)

Balance, December 31, 2000		8,824			9			71,429			71			-			-			-		-		4,836,763			2,420			(175,000	)		4,234,460			907,320			(4,668,871	)		300,409
Exercise of options		-			-			-			-			-			-			-		-		360,394			180			-			413,483			-			-			413,663
Issuance of common stock for services		-			-			-			-			-			-			-		-		100,000			50			-			255,450			-			-			255,500
Issuance of preferred stock for cash		-			-			113,715			114			95,123			95			-		-		-			-			-			-			1,841,392			-			1,841,601
Valuation of beneficial conversion
feature on Series B Preferred		-			-			-			-			-			-			-		-		-			-			-			-			331,636			(331,636	)		-
Valuation of beneficial conversion
feature on Series C Preferred		-			-			-			-			-			-			-		-		-			-			-			-			282,233			(282,233	)		-
Conversion of preferred stock and
accrued dividends into common shares		(8,824	)		(9	)		(113,715	)		(114	)		-			-			-		-		330,327			165			-			1,081,316			(1,069,887	)		-			11,471
Preferred stock dividend		-			-			-			-			-			-			-		-		-			-			-			-			(63,397	)		-			(63,397	)
Issuance of common stock
options for services		-			-			-			-			-			-			-		-		-			-			-			20,000			-			-			20,000
Amortization of stock option costs		-			-			-			-			-			-			-		-		-			-			140,000			-			-			-			140,000
Net loss for 2001		-			-			-			-			-			-			-		-		-			-			-			-			-			(1,968,471	)		(1,968,471	)

Balance, December 31, 2001		-			-			71,429			71			95,123			95			-		-		5,627,484			2,815			(35,000	)		6,004,709			2,229,297			(7,251,211	)		950,776
Exercise of options		-			-			-			-			-			-			-		-		282,480			140			-			317,650			-			-			317,790
Conversion of preferred stock and
accrued dividends into common shares		-			-			(71,429	)		(71	)		(18,576	)		(19	)		-		-		241,627			120			-			790,205			(783,495	)		-			6,740
Valuation of beneficial conversion
feature on Series C & D Preferred		-			-			-			-			-			-			-		-		-			-			-			-			1,122,521			(1,122,521	)		-
Cancellations of shares		-			-			-			-									-		-		(535,933	)		(268	)		-			(199,732	)		-			-			(200,000	)
Issuance of preferred stock for cash		-			-			-			-			264,657			265			110,627		111		-			-			-						3,367,233			-			3,367,609
Amortization of stock option costs		-			-			-			-			-			-			-		-		-			-			35,000			-			-			-			35,000
Preferred stock dividend		-			-			-			-			-			-			-		-		-			-			-			-			(122,861	)		-			(122,861	)
Purchase of Med Enclosure Stock		-			-			-			-			-			-			-		-		10,000			5			-			53,495			-			-			53,500
Net loss for 2002		-			-			-			-			-			-			-		-		-			-			-			-			-			(3,460,574	)		(3,460,574	)
Balance December 31, 2002		-		$	-			-		$	-			341,204		$	341			110,627	$	111		5,625,658		$	2,812		$	-		$	6,966,327		$	5,812,695		$	(11,834,306	)	$	947,980

F-5

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Condensed Consolidated Statements of Shareholders' Equity (Deficit) (continued)

From inception (April 11, 1996) to December 31, 2010


	Preferred Stock																				Common Stock											Deficit
	Series A				Series B				Series C						Series D												Additional		Additional			Accumulated			Total
	Number				Number				Number						Number						Number				Stock		Paid-in		Paid-in			During the			Shareholders'
	of				of				of						of						of				Option		Capital-		Capital-			Development			Equity
	Shares		Total		Shares		Total		Shares			Total			Shares			Total			Shares		Total		Costs		Common		Preferred			Stage			(Deficit)


Balance, December 31, 2002		-	$	-		-	$	-		341,204		$	341			110,627		$	111			5,625,658	$	2,812	$	-	$	6,966,327	$	5,812,695		$	(11,834,306	)	$	947,980
Exercise of options		-		-		-		-		-			-			-			-			775,117		388		-		1,351,807		-			-			1,352,195
Conversion of preferred stock and
accrued dividends into common shares		-		-		-		-		(26,786	)		(27	)		-			-			73,800		37		-		263,034		(244,973	)		-			18,071
Valuation of beneficial conversion
feature on Series D Preferred		-		-		-		-		-			-			-			-			-		-		-		-		2,161,694			(2,161,694	)		-
Issuance of preferred stock for cash		-		-		-		-		-			-			708,824			709			-		-		-		-		6,484,373			-			6,485,082
Preferred stock dividend		-		-		-		-		-			-			-			-			-		-		-		-		(390,289	)					(390,289	)
Net loss for 2003		-		-		-		-		-			-			-			-			-		-		-		-		-			(2,759,466	)		(2,759,466	)
Balance, December 31, 2003		-		-		-		-		314,418			314			819,451			820			6,474,575		3,237		-		8,581,168		13,823,500			(16,755,466	)		5,653,573
Exercise of options		-		-		-		-		-			-			-			-			460,775		230		-		1,082,034		-			-			1,082,264
Conversion of preferred stock and
accrued dividends into common shares		-		-		-		-		(11,236	)		(11	)		(27,873	)		(28	)		70,918		36		-		383,428		(354,961	)		-			28,464
Preferred stock dividend		-		-		-		-		-			-			-			-			-		-		-		-		(478,594	)					(478,594	)
Stock option costs		-		-		-		-		-			-			-			-			-		-		-		4,527,784		-			-			4,527,784
Net loss for 2004		-		-		-		-		-			-			-			-			-		-		-		-		-			(8,314,255	)		(8,314,255	)
Balance, December 31, 2004		-		-		-		-		303,182			303			791,578			792			7,006,268		3,503		-		14,574,414		12,989,945			(25,069,721	)		2,499,236
Exercise of options		-		-		-		-		-			-			-			-			470,393		235		-		777,724		-			-			777,959
Conversion of preferred stock and																																				-
accrued dividends into common shares		-		-		-		-		(6,180	)		(6	)		(106,922	)		(107	)		176,405		88		-		1,150,457		(1,033,109	)		-			117,323
Preferred stock dividend		-		-		-		-		-			-			-			-			-		-		-		-		(501,921	)					(501,921	)
Issuance of common stock for patent		-		-		-		-		-			-			-			-			4,000		2		-		153,998		-			-			154,000
Net loss for 2005		-		-		-		-		-			-			-			-			-		-		-		-		-			(1,625,516	)		(1,625,516	)
Balance, December 31, 2005		-		-		-		-		297,002			297			684,656			685			7,657,066		3,828		-		16,656,593		11,454,915			(26,695,237	)		1,421,081
Exercise of options		-		-		-		-		-			-			-			-			732,699		367		-		1,187,471		-			-			1,187,838
Conversion of preferred stock and
accrued dividends into common shares		-		-		-		-		(5,618	)		(6	)		(28,418	)		(28	)		60,219		30		-		358,881		(309,966	)		-			48,911
Preferred stock dividend		-		-		-		-		-			-			-			-			-		-		-		-		(430,176	)		-			(430,176	)
Stock option costs		-		-		-		-		-			-			-			-			-		-		-		264,297		-			-			264,297
Expenses paid by officer/shareholder		-		-		-		-		-			-			-			-			-		-		-		61,252		-			-			61,252
Net loss for 2006		-		-		-		-		-			-			-			-			-		-		-		-		-			(2,811,855	)		(2,811,855	)
Balance, December 31, 2006		-		-		-		-		291,384			291			656,238			657			8,449,984		4,225		-		18,528,494		10,714,773			(29,507,092	)		(258,652	)
Exercise of options		-		-		-		-		-			-			-			-			621,551		311		-		1,553,566		-			-			1,553,877
Conversion of preferred stock and																																				-
accrued dividends into common shares		-		-		-		-		(2,809	)		(3	)		(27,014	)		(28	)		52,964		26		-		333,659		(272,117	)		-			61,537
Preferred stock dividend		-		-		-		-		-			-			-			-			-		-		-		-		(434,044	)		-			(434,044	)
Stock option costs		-		-		-		-		-			-			-			-			-		-		-		23,063		-			-			23,063
Net loss for 2007		-		-		-		-		-			-			-			-			-		-		-		-		-			(2,435,774	)		(2,435,774	)
Balance, December 31, 2007		-	$	-		-	$	-		288,575		$	288			629,224		$	629			9,124,499	$	4,562	$	-	$	20,438,782	$	10,008,612		$	(31,942,866	)	$	(1,489,993	)

F-6

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Condensed Consolidated Statements of Shareholders' Equity (Deficit)

From inception (April 11, 1996) to December 31, 2010

																										Deficit
	Preferred Stock														Common Stock						Additional		Additional			Accumulated			Total
	Series C				Series D						Series E								Stock		Paid-in		Paid-in			During the			Shareholders'
	Number				Number						Number				Number				Option		Capital-		Capital-			Development			Equity
	of Shares		Total		of Shares			Total			of Shares		Total		of Shares		Total		Costs		Common		Preferred			Stage			(Deficit)


Balance, December 31, 2007		288,575	$	288		629,224		$	629			-	$	-		9,124,499	$	4,562	$	-	$	20,438,782	$	10,008,612		$	(31,942,866	)	$	(1,489,993	)
Exercise of options		-		-		-			-			-		-		154,150		77		-		592,502		-			-			592,579
Conversion of preferred stock and
accrued dividends into common shares		-		-		(4,826	)		(5	)		-		-		8,045		4		-		55,159		(44,145	)		-			11,013
Valuation of beneficial conversion
on Series E Preferred		-		-		-			-			-		-		-		-		-		-		2,459,959			(2,459,959	)		-
Issuance of preferred stock		-		-		-			-			551,703		552		-		-		-		-

CPC OF AMERICA INC 10-K