UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

T QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Quarter Ended ~~June~~September 30, 2013



£	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission file number: 000 – 52077

MEDPRO SAFETY PRODUCTS, INC.

(Exact name of registrant as specified in its charter)



Nevada	91-2015980
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)



145 Rose Street, Lexington, KY	40507
(Address of Principal Executive Offices)	(Zip Code)

(859) 225-5375

(Registrant’s telephone number, including area code)

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

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

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

Large accelerated filer £ Accelerated filer £

Non-accelerated filer (Do not check if a smaller reporting company.) £ Smaller reporting company T

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

As of ~~August~~November 812, 2013, 34,540,878 shares of the registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

INDEX

PART I –	FINANCIAL INFORMATION	3
ITEM 1.	FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION	3534
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	43
ITEM 4.	CONTROLS AND PROCEDURES	43
PART II –	OTHER INFORMATION	43
ITEM 1.	LEGAL PROCEEDINGS	43
ITEM 1A.	RISK FACTORS	43
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	4344
ITEM 3.	DEFAULT UPON SENIOR SECURITIES	44
ITEM 4.	MINE SAFETY DISCLOSURES	44
ITEM 5.	OTHER INFORMATION	44
ITEM 6.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	44
	SIGNATURES	4647
	INDEX TO EXHIBITS FILED HEREWITH	4748

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

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

Balance Sheets as of ~~June~~September 30, 2013 and December 31, 2012

Statements of Operations for the Three and ~~Six~~Nine Months ~~June~~September 30, 2013 and 2012

Statements of Shareholders' (Deficiency) For the ~~Six~~Nine Months Ended ~~June~~September 30, 2013 and the Year Ended December 31, 2012

Statements of Cash Flows ~~for~~For the ~~Six~~Nine Months Ended ~~June~~September 30, 2013 and 2012

Notes to Unaudited Financial Statements

MedPro Safety Products, Inc.

Balance Sheets

September 30, 2013 and December 31, 2012

	June 30, 2013		December 31, 2012
	September 30, 2013		December 31, 2012
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	~~106~~210,~~995~~704	$	406,961
Restricted cash	—		539,510
Accounts receivable, net	~~102~~3,~~986~~487		102
Prepaid expenses and other current assets	4038,~~801~~721		44,699
Total current assets	~~250~~252,~~782~~912		991,272
Property and Equipment
Equipment and tooling	935,374		1,324,922
Leasehold improvements	790,046		790,046
Computers, network and phones	247,092		250,307
Furniture and fixtures	140,726		140,726
Trade show booth	31,900		31,900
Total property and equipment	2,145,138		2,537,901
Less: accumulated depreciation	~~812~~870,~~530~~803		880,006
Property and equipment, net	1,~~332~~274,~~608~~335		1,657,895
Other Assets
Intangible assets, net of amortization of $750 and $1,558,096, respectively	5,845,000		7,063,080
Option payment for asset acquisition	—		50,000
Deferred financing costs, net of amortization of $0 and $1,142,071, respectively	—		902,429
Recoupable royalties	—		100,000
Total other assets	5,845,000		8,115,509
Total assets	$	7,~~428~~372,~~390~~247	$	10,764,676

See notes to financial statements.

MedPro Safety Products, Inc.

Balance Sheets (Continued)

~~June~~September 30, 2013 and December 31, 2012

	June 30, 2013			December 31, 2012
	September 30, 2013			December 31, 2012
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ DEFICIENCY
Current Liabilities
Accounts payable and accrued expenses	$	1,~~281~~269,~~151~~783		$	603,025
Accrued interest payable	~~201~~299,~~387~~516			700,000
Senior Note - Series D, including discount accretion of $571,855 and $123,569, respectively	3,040,153			1,615,906
Senior Note - Series D, including discount accretion of $905,041 and $123,569, respectively	3,860,564			1,615,906
Derivative liabilities – fair value of warrants	1238,~~199,883~~256			1,175,893
Current portion of accrued royalties	~~500~~750,000			—
Senior Notes -Short Term	—			5,606,029
Total current liabilities	6,~~222~~418,~~574~~119			9,700,853
Long-Term Liabilities
Non current portion of accrued royalties	1800,~~050,~~000			—
Senior Notes - long term portion	—			24,393,971
Total long-term liabilities	1800,~~050,~~000			24,393,971
Total liabilities	7,~~272~~218,~~574~~119			34,094,824
Convertible Redeemable Preferred Stock, Each Share Convertible into 16.67 Shares of Common Stock
Series D Preferred, $0.01 par value, 220,000 shares authorized, 112,915 and 84,946 shares issued and outstanding, respectively	1,216,702			949,672
Series D Preferred, $0.01 par value, 220,000 shares authorized, 126,415 and 84,946 shares issued and outstanding, respectively	1,329,477			949,672
Series E Preferred, $0.01 par value, 20,000 shares authorized, 20,000 and 0 issued and outstanding, respectively	1,000,000			—
Total convertible redeemable preferred stock	2,~~216~~329,~~702~~477			949,672
Shareholders’ Deficiency
Preferred stock $.01 par value: 10,000,000 shares authorized:
Series A Preferred 6,668,229 shares issued and outstanding. Liquidation preference $3,333,212 and $3,033,057, respectively	66,682			66,682
Series A Preferred 6,668,229 shares issued and outstanding. Liquidation preference $3,477,006 and $3,025,640, respectively	66,682			66,682
Common stock $.001 par value; 90,000,000 shares authorized; 34,540,478 issued and outstanding	34,541			34,541
Additional paid-in capital	70,~~259~~370,~~780~~398			70,999,395
Accumulated deficit	(72,~~421~~646,~~889~~970		)	(95,380,438		)
Total shareholders’ deficiency	(2,~~060~~175,~~886~~349		)	(24,279,820		)
Total liabilities and shareholders’ deficiency	$	7,~~428~~372,~~390~~247		$	10,764,676

See notes to financial statements.

MedPro Safety Products, Inc.

Statements of Operations

for the Three and Nine Months September 30, 2013 and 2012

For the Three Months

For the ~~Six~~Nine Months

June 30, 2013

June 30, 2012

June 30, 2013

June 30, 2012

September 30, 2013

September 30, 2012

September 30, 2013

September 30, 2012

(Unaudited)

Revenues

Product royalty income

—

890,625

—

12,~~781~~671,~~250~~875

Gain on sale of patents

—

26,548,981

—

Other revenue

~~100,000~~—

—

100,000

—

Total revenue

~~100,000~~—

890,625

26,648,981

12,~~781~~671,~~250~~875

Cost of revenues and amortization of intellectual property

—

171,586

—

~~343~~514,~~173~~759

Gross profit

~~100,000~~—

719,039

26,648,981

12,~~438~~157,~~077~~116

Operating Expenses

Salaries, wages, and payroll taxes

~~383~~398,~~229~~023

~~689~~674,~~680~~233

~~982~~1,~~907~~380,930

12,~~626~~301,~~848~~081

Qualified profit sharing plan

89,~~739~~602

1720,~~519~~109

1626,~~995~~598

3858,~~548~~657

Advertising and promotion

—

~~166~~162,~~485~~387

14,632

~~366~~528,~~339~~727

Product development costs

2621,~~787~~399

~~273,~~276,653

5778,~~349~~749

~~642~~919,~~496~~149

Professional fees

~~227~~90,~~402~~046

~~348~~381,~~476~~361

~~539~~629,~~229~~276

~~939~~1,~~328~~320,689

Insurance

5450,~~955~~515

8691,~~118~~349

~~121~~171,~~108~~624

~~212~~303,~~374~~723

General and administrative

9192,~~495~~345

~~206~~147,~~969~~274

~~795~~887,~~334~~675

~~398~~545,~~085~~359

Travel and entertainment

35,~~667~~190

7766,~~209~~692

79114,~~689~~879

~~231~~297,~~053~~745

Write downs of abandoned equipment, leasehold improvements and technology

~~263,654~~—

—90

263,654

244,~~561~~651

Depreciation

7258,~~851~~273

7372,~~414~~601

~~145~~204,~~884~~156

~~146~~219,~~503~~104

Total operating expenses

1755,~~164,779~~393

1,~~939~~892,~~146~~749

3,~~016~~772,~~781~~173

46,~~846~~738,~~135~~885

Income or (loss) from operations

(1755,~~064,779~~393

)

(1,~~220~~173,~~107~~710

)

2322,~~632~~876,~~200~~808

(34,~~408~~581,~~058~~769

)

Other Income/(Expenses)

Interest expense - including amortization of financing costs

(8498,~~295~~129

)

(1,173,~~097~~098

)

(~~201~~299,~~387~~516

)

(23,~~346~~519,~~195~~292

)

Interest income

—

~~317~~75

2,~~526~~601

Change in fair value of derivative liabilities

20961,~~377~~626

~~564~~617,~~171~~023

~~(23~~937,~~990~~637

)

~~388~~1,~~178~~005,201

Total other income /(expenses)

~~(63~~863,~~918~~497

)

(~~608~~556,~~609~~000

)

~~(225~~638,~~365~~133

)

(12,~~955~~511,~~491~~490

)

Provision for income taxes

—

Net income or (loss)

(1108,~~128,697~~104

)

(1,~~828~~729,~~716~~710

)

23,~~406~~514,~~835~~941

(57,~~363~~093,~~549~~259

)

Preferred stock

Debt discount accretion

~~(283~~333,~~247~~187

)

—7,766

~~(448~~781,~~286~~473

)

07,766

Net income or (loss) available to common shareholders

(1225,~~411,944~~083

)

(1,~~828~~737,~~716~~476

)

22,~~958~~733,~~549~~468

(57,~~363~~101,~~549~~025

)

Net income or (loss) per common share

Basic net income or (loss) per share

(0.0401

)

(0.1413

)

0.66

(0.4155

)

Diluted net income or (loss) per share

(0.0401

)

(0.1413

)

0.66

(0.4155

)

Shares used in computing earnings per share

Weighted average number of shares outstanding - basic

34,540,478

12,~~946~~883,~~725~~319

34,540,478

12,~~978~~947,~~842~~241

Weighted average number of shares outstanding - diluted

34,540,478

12,~~946~~883,~~725~~319

34,540,478

12,~~978~~947,~~842~~241

See notes to financial statements.

MedPro Safety Products, Inc.

Statements of Shareholders’ Deficiency

For the ~~Six~~Nine Months Ended ~~June~~September 30, 2013

(Unaudited)

and For the Year Ended December 31, 2012

	Common Stock					Preferred Stock					Paid-In			Accumulated
	Shares		Amount			Shares		Amount			Capital			Deficiency
Balance December 31, 2011	13,042,313		$13,043			9,733,531		$97,334			$70,842,537			$(84,498,684)
Earned portion of share-based compensation	—		—			—		—			646,477			—
Purchases of treasury shares	(212,670	)	(212		)	—		—			(493,058		)	—
Exercise of employee options	3,517		3			—		—			(5,523		)	—
Exercise of investor warrants	16,972		17			—		—			—			—
Conversion of preferred stock to common stock	21,690,346		21,690			(3,065,302	)	(30,652		)	8,962			—
Debt discount accretion	—		—			—		—			—			(123,569		)
Net loss for the period ended December 31, 2012	—		—			—		—			—			(10,758,185		)
Balance December 31, 2012	34,540,478		$	34,541		6,668,229		$	66,682		$	70,999,395		$	(95,380,438	)
Earned portion of share-based compensation	—		—			—		—			~~260~~371,~~385~~003			—
Series E preferred shares granted to senior noteholders	—		—			—		—			(1,000,000		)	—
Debt discount accretion	—		—			—		—			—			(~~448~~781,~~286~~473		)
Net loss for the period ended June 30, 2013	—		—			—		—			—			23,406,835
Net income or (loss) for the period ended September 30, 2013	—		—			—		—			—			23,514,941
Balance June 30, 2013	34,540,478		$34,541			6,668,229		$66,682			$70,259,780			$(72,421,889)
Balance September 30, 2013	34,540,478		$34,541			6,668,229		$66,682			$70,370,398			$(72,646,970)

See notes to financial statements.

MedPro Safety Products, Inc.

Statements of Cash Flows

For the ~~Six~~Nine Months ~~June~~September 30, 2013 and 2012

	June 30, 2013			June 30, 2012
	September 30, 2013			September 30, 2012
	(Unaudited)			(Unaudited)
Cash Flows From Operating Activities
Net income (loss)	$	22,~~958~~733,~~549~~468		$	(57,~~363~~101,~~549~~025	)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation	~~145~~204,~~884~~156			~~146~~219,~~503~~104
Amortization of financing costs and intangible assets	—			~~498~~748,~~738~~106
Debt discount accretion	~~448~~781,~~286~~473			—7,766
(Gain) or loss on disposition of assets	(26,360,327		)	244,~~561~~651
Share based compensation	~~260~~371,~~385~~003			~~312~~476,~~564~~414
Change in fair value of warrant (derivative liabilities)	23(937,~~990~~637		)	(~~388~~1,~~178~~005,201		)
Changes in operating assets and liabilities
Accounts receivable and accrued interest	(~~102~~3,~~884~~385		)	1012,~~605~~766
Other current assets	35,~~898~~978			~~(728~~2,658		)
Accounts payable and accrued expenses	1,~~038~~125,~~503~~264			(84277,~~536~~539		)
Accrued interest payable	(539,510		)	—
Net cash flows from operating activities	(2,~~123~~619,~~226~~517		)	(46,~~624~~672,~~020~~300		)
Cash Flows From Investing Activities
Purchases of property, equipment and intangibles	(9,250		)	(91120,~~355~~064		)
Option payment for asset acquisition	50,000			—
Interest Reserve paid to Noteholders	539,510			~~332~~498,~~312~~226
Net cash flows from investing activities	580,260			~~240~~378,~~957~~162
Cash Flows From Financing Activities
Withholding taxes on cashless stock option exercise	—			(5,503		)
Purchase of treasury shares	—			(~~386~~443,~~201~~838		)
Cash from issuance of preferred stock	~~267~~379,~~039~~814			—416,869
Proceeds from borrowings	~~975~~1,~~961~~463,186			—1,022,131
Net cash flows from financing activities	1,~~243~~843,000			~~(391~~989,~~704~~659		)
Net increase / (decrease) in cash	(~~299~~196,~~966~~257		)	(45,~~774~~304,~~767~~479		)
Cash at the beginning of the period	406,961			6,173,627
Cash at the end of the period	$	~~106~~210,~~995~~704		$	1869,~~398,860~~148
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	539,510		$	23,~~100~~150,000
Non-Cash Activity
Non cash portion of balance sheet effects from sale of patents	$	(26,548,981	)	$	—

See notes to financial statements.

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

NOTE 1 – BASIS OF PRESENTATION A ND NATURE OF BUSINESS

Nature of Business – MedPro Safety Products, Inc. (“MedPro” or “the Company”) is a medical device company that develops and acquires safety products that include technology designed to prevent needlestick injuries. A needlestick is a skin puncture by a hypodermic needle, syringe, or other sharp. Injury by a non-sterile device can expose the harmed individual to bloodborne pathogens. MedPro focuses on devices with passive safety features that deploy with little or no effort by the user. The Company is developing several safety products that target four key segments within the medical device industry, including two traditional fillable and prefilled syringes for medication delivery, an IV shuttle drug delivery device, a vial device for fillable syringes, an add on safety needle for prefilled syringes and is investigating two IV catheters for possible purchase. MedPro plans to commercialize these products through global distribution partners.

The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the ~~six~~nine months ended ~~June~~September 30, 2013 and 2012 are not necessarily indicative of the results that may be expected for the year ended December 31, 2013. For further information, refer to the Company’s financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2012.

The Company estimates that the total global market addressed by its present product portfolio could exceed $10 billion.

MedPro has headquarters in Lexington, Kentucky, and its common stock is quoted on the OTC.QB Platform under the symbol “MPSP.”

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

The following is a summary of the significant accounting policies followed in the preparation of the accompanying financial statements.

Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenues and Costs Recognition – Revenues in 2012 were derived from royalties on our blood collection products pursuant to our minimum volume contract. In 2013 we recognized significant gain from the sale of the patents associated with these products. Revenues and accounts receivable under our contracts and within existing customer relationships are recognized when the price has been fixed, delivery has occurred and collectability is reasonably assured. In the case of our royalty income, revenues are recognized when the amount is determined based on contract terms and no possibility of refund exists.

Cost of revenues sold includes all direct production costs, shipping and handling costs, royalty expenses and amortization of patents. General and administrative costs are charged to the appropriate expense category as incurred.

Accounts Receivable – As is customary in the industry, the Company does not require collateral from customers in the ordinary course of business. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollected amounts through a charge to earnings and a credit to the allowance for doubtful accounts based on its assessment of the current status of individual accounts. The Company does not accrue finance charges on its past due accounts receivable. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance and a credit to accounts receivable. There were no allowances for doubtful accounts at the end of the periods reflected for 2013 or 2012. The Company had only one customer during 2012 and revenue received was pursuant to a minimum volume contract. That customer also manufactured the products.

Property and Equipment – Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization for assets placed in service is provided using the straight line method over their estimated useful lives. The cost of normal maintenance and repairs is charged against earnings. Expenditures which

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

significantly increase asset values or extend useful lives are capitalized. The gain or loss on the disposition of property and equipment is recorded in the year of disposition.

Intangible Assets – Intangible assets consist principally of intellectual properties such as regulatory product approvals and patents. Intangible assets are amortized using the straight line method over their estimated period of benefit, ranging from one to ten years upon being placed in full production. We evaluate the recoverability of intangible assets periodically and take into account potential triggering events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. Amortization of the Vacumate technology began in December 2010 when products were shipped for human use evaluation by our customer. The Company entered into a contract to sell the patents for these devices on December 31, 2012 which closed with respect to the Company with a title transfer on March 1, 2013. The balance of the cost of these assets sold were written off.

Research and Development Costs – Research and development costs are charged to expense as incurred. These expenses do not include an allocation of salaries and benefits for the personnel engaged in these activities. Although not expensed as research and development, all salaries and benefits for the three and ~~six~~nine months ended ~~June~~September 30, 2013 and 2012, have been expensed.

Advertising – Advertising costs are expensed as incurred.

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

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax assets, projected future taxable income and tax planning strategies in making this assessment. Management believes it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company's tax returns for the years ended 2013 through 2009 are open for examination by Federal Tax authorities.

Management has evaluated the positions taken in connection with the tax provisions and tax compliance for the periods included in these financial statements as required by ASC 740. The Company does not believe that any of the positions it has taken will not prevail on a more likely than not basis. As such no disclosure of such positions was deemed necessary.

Cash and Cash Equivalents – For the purposes of the Statements of Cash Flows, the Company considers cash and cash equivalents to be cash in all unrestricted bank accounts, including money market and temporary investments that have an original maturity of three months or less.

Concentration of Credit Risk – From time to time during the ~~six~~nine months ended ~~June~~September 30, 2013 and the year ended December 31, 2012, certain bank account balances exceeded federally insured limits. The Company utilized overnight repurchase agreements in 2012 to minimize risks. The repurchase agreements were suspended in 2013. The Company has not experienced losses in such accounts and believes it is not exposed to any significant credit risk on cash.

NOTE 3 – ACQUISITIONS AND CAPITAL FUNDING

In September 2011, the Company formed a wholly owned subsidiary MedPro Investments, LLC (“MPI”), which issued 14% Senior Notes due October 30, 2016 ("14% Senior Notes") in the aggregate principal amount of $30 million in private placements to institutional investors on September 1, 2010 and October 1, 2010. MPI is a single member Delaware limited liability company whose accounts are included with MedPro for financial statement purposes and is disregarded for tax purposes. In connection with the 14% Senior Note issuance, MedPro transferred the rights to receive all royalties under the GBO agreement to MPI. All of the royalties payable under the GBO agreement were committed to pay the principal and interest due on the 14% Senior Notes. The Company received approximately $23,294,000 in net proceeds after ~~the~~ establishing a $4,500,000 interest reserve (reflected as Restricted Cash) and paying offering expenses. The Company used the net proceeds

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

from the sale of the 14% Senior Notes to pay off all of its bank debt and all principal and accrued interest on the loans made in 2011 by VOMF, which together totaled $4,360,000.

On December 31, 2012, the Company entered into an irrevocable agreement to sell the patents associated with the manufacturing agreement to GBO effective on March 1, 2013. GBO agreed to pay off $29,400,000 of the 14% Senior Notes as consideration for the patents. The payoff is in two payments of $22,000,000 on March 1, 2013 and $7,400,000 on February 1, 2014. The Senior Noteholders ("Noteholders") agreed to release the Company on March 1, 2013 with the initial payment and look only to GBO and its parent's guarantee for collection of the remaining debt. The Company was relieved from its obligation to pay marketing assistance payments under the manufacturing agreement. The Company also settled the royalty obligation with VCI in exchange for $1,550,000 of payments commencing on December 31, 2013 and ending on December 31, 2014. The Company also received a license back ~~for~~to use the patents outside the areas of blood collection and phlebotomy.

As of the filing of this report, the Company's principal investor had agreed, in writing, as of December 31, 2012, to continue to fund the Company's operations while the Company seeks additional capital or debt financing to continue its operations. The Company is working with an investment banking firm to secure equity and/or debt to continue development and acquisition of additional products. The Company has substantially reduced its monthly cash requirement and has reduced staff to a level necessary to maintain operations. Increasing our staff to a level necessary to support products in the market place will not be necessary until later in the current year or early in 2014. Without funding from the Company's principal investor, there would be substantial doubt about the Company's ability to continue as a going concern.

NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements

Not Yet Adopted

NoIn ~~updates~~July ~~which~~2012, ~~are~~the ~~applicable~~FASB issued Accounting Standards Update 2013-11, Income Taxes (Topic 740), Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, a consensus of the FASB Emerging Issues Task Force. The standard applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the ~~Company~~reporting ~~are~~date. The standard is effective for public entities for fiscal years, and interim reporting periods within those fiscal years, beginning after December 15, 2013. The standard provides guidance on the presentation of an unrecognized tax benefit as ~~yet~~a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The Company has not yet adopted this standard and has not determined the impact of adoption on its financial statements.

Adopted

In July 2012, the FASB issued Accounting Standards Update 2012-02, Intangibles-Goodwill and Other (Topic 350)

Testing Indefinite-Lived Intangible Assets for Impairment (ASU 2012-02). It is effective for annual and interim reporting periods beginning after September 15, 2012. The Company has adopted this standard. The standard permits a company to utilize a more likely than not standard on a qualitative basis to perform an impairment analysis then moving to quantitative testing for impairment of indefinite-lived intangible assets. The Company has always utilized a quantitative impairment analysis for its intellectual property (patents) to determine impairment.

In August 2012 the FASB issued Accounting Standards Update 2012-03, Technical Amendments and Corrections to SEC Sections - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22. The standard has been adopted and the technical corrections therein, if applicable, have been applied to its financial statements.

In October of 2012, the FASB issued Accounting Standards Update 2012-04, Technical Corrections and Improvements (ASU 2012-04). The guidance provided by the standard is effective for fiscal periods beginning after December 15, 2012 and is effective for our 2013 financial statements. The Company has adopted this update and the impact on our financial statements is not material.

Reclassifications

Certain amounts in the 2012 financial statements have been reclassified to conform to the classifications used to prepare the 2013 financial statements. These reclassifications had no material impact on the Company’s financial position, results of operations, or cash flow as previously reported.

NOTE 5 – INTANGIBLE ASSETS

The Company’s intangible assets consist primarily of intellectual properties (medical device patents) that give the Company the right to produce or license certain medical devices. These various patents include the skin and tube-activated blood collection

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

~~devices~~Certain ~~with~~amounts anin ~~original cost of $2,525,425,~~ the ~~syringe~~2012 ~~guard~~financial ~~prefilled~~statements ~~family~~have ofbeen ~~products~~reclassified atto ~~$4,845,000~~conform ~~and~~to the ~~winged~~classifications ~~infusion~~used ~~set~~to atprepare ~~$1,250,000. The~~the ~~blood~~2013 ~~collection~~financial ~~and~~statements. These ~~winged~~reclassifications ~~infusion~~had ~~patents~~no ~~were~~material ~~sold~~impact on ~~March~~the 1Company’s financial position, ~~2013~~results ~~leaving~~of ~~the~~operations, ~~syringe~~or ~~guard~~cash ~~prefilled~~flow ~~family~~as ofpreviously ~~patents~~reported.

~~The~~NOTE ~~Company~~5 ~~acquired~~– aINTANGIBLE ~~royaty free license to utilize the patents sold to GBO in the sale of patents transaction which was recorded at $1,000,000 based on estimates of future cash flow from the patents.~~ ASSETS

~~For~~The ~~the~~Company’s ~~three~~intangible ~~months~~assets ~~ended~~consist ~~June 30,~~primarily ~~2012, amortization expense was $249,369, including $126,272 amortization~~ of intellectual ~~property~~properties ~~and~~(medical ~~$123,097~~device ~~amortization~~patents) ofthat ~~loan~~give ~~fees. For~~ the ~~six~~Company ~~months~~the ~~ended~~right ~~June~~to ~~30,~~produce ~~2012,~~or ~~amortization~~license ~~expense~~certain ~~was~~medical ~~$498,738,~~devices. ~~including~~These ~~$252,544~~various ~~amortization~~patents ofinclude ~~intellectual~~the ~~property~~syringe ~~and~~guard ~~$246,194~~prefilled ~~amortization~~family of ~~loan~~products ~~fees. There~~with ~~was~~an nooriginal ~~amortization~~cost ~~expense~~of ~~for the three and six months ended June 30~~$4, ~~2013~~845,000.

On March 1, 2013, the Company sold the patents for its skin and tube-activated blood collection devices with an original cost of $2,525,425, and its winged infusion set with an original cost of $1,250,000. In the transaction, the Company acquired a royalty-free license to utilize the patents, which was recorded at $1,000,000 based on estimates of future cash flow.

For the three months ended September 30, 2012, there was $249,369 of amortization expense, including $126,272 of amortization of intellectual property and $123,097 of amortization of loan fees. For the nine months ended September 30, 2012, amortization expense was $748,106, including $378,814 amortization of intellectual property and $369,292 amortization of loan fees. There was no amortization expense for the three and nine months ended September 30, 2013. The Company is developing products for market which rely on current patents and they will not be commercially sold until 2015. As a result, we will not amortize the patent cost until production and commercialization begins.

Estimated future amortization of these intangibles is expected to consist of the following amounts for the twelve month periods ended on December 31:

12 month periods ended December 31,	Amortization
2013	$0
2014	$~~1,169,000~~0
2015	$1,169,000
2016	$1,169,000
2017	$1,169,000
2018	$1,169,000
After 2017	$2,338,000
After 2018	—

NOTE 6 – LONG-TERM DEBT

Long-term debt at ~~June~~September 30, 2013 and December 31, 2012 consisted of the following:

	June 30, 2013		December 31, 2012
	September 30, 2013		December 31, 2012
14% Senior Notes, interest at 14%, payable quarterly beginning on October 30, 2010, secured by the royalty contract on blood collection devices, guaranteed by MedPro Safety Products, Inc. on behalf of MedPro Investments, LLC, the issuer	$	—	$	30,000,000
Series D Note payable, interest at 10%, payable at maturity on December 31, 2013, all assets not otherwise encumbered are pledged as collateral for the note	3,~~040~~860,~~153~~564		1,615,906
	$	3,~~040~~860,~~153~~564	$	31,615,906
Less: current portion	3,~~040~~860,~~153~~564		7,221,935
Long-term portion	$	—	$	24,393,971

14% Senior Notes Due 2016

The Company's wholly-owned subsidiary issued $30,000,000 of 14% Senior Notes due 2016 in two tranches on September 1, 2010 and October 1, 2010. Gross proceeds from the issuance of the 14% Senior Notes were reduced by $2,206,858 of issuance expenses, $4,500,000 of funds held in reserve to pay interest during the ramp up of royalty income, and $7,870,000 held in a reserve payable to the Company upon the receipt of FDA clearance for the Wing device. The Company used the net proceeds of the issuance of the 14% Senior Notes to pay off all of its outstanding debt in September 2011. The FDA cleared the Wing device in November 2011, and the Company received the $7,870,000 plus interest on January 30, 2011.

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

The interest reserve was used to supplement royalty revenues received under the GBO agreement. Royalty revenues were deposited into a collection account held in trust and were supplemented from the interest reserve as necessary to complete the scheduled payments on the 14% Senior Notes~~. There~~ ~~was~~Due no balance in the interest reserve account (Restricted Cash) at June 30, 2013 and $539,510 as of December 31, 2012. The loan was partially paid by GBO on March 1, 2013 and the balance was assumed by GBO, at which time the Company was released from liability on its guarantee of the payments of principal and interest to the Noteholders. The collateral for the 14% Senior Notes was released on March 1, 2013 in favor of a commitment by GBO which was guaranteed by its parent. On January 30, 2013, the balance of the interest reserve account was paid to the Noteholders by the trustee as the Company's contribution to the transaction. As of March 1, 2013, the patents were transferred to GBO. The Company retained a license to use the patents on a license and royalty free basis.2016

On December 31, 2012, the Company entered into an irrevocable agreement to pay off the 14% Senior Notes and sell the patents associated with its manufacturing agreement, effective March 1, 2013. GBO agreed to pay $29,400,000 to the holders of the 14% Senior Notes ("Noteholders") as consideration for its purchase of the patents. The Noteholders were to receive $22,000,000 on March 1, 2013 and $7,400,000 on February 1, 2014. On January 30, 2013, the $539,510 balance of the interest reserve account was also paid to the Noteholders by the trustee as the Company's contribution to the transaction. The Noteholders released the Company from its guarantee of the payments of principal and interest on the 14% Senior Notes effective upon the initial payment on March 1, 2013 and now look only to GBO and the guarantee of GBO’s parent for collection of the second payment. The Company was also relieved from its obligation to pay marketing assistance payments to GBO under the manufacturing agreement. In addition, the Company received a license back from GBO to use the transferred patents outside the areas of blood collection and phlebotomy on a license and royalty-free basis. The Company also agreed to settle its royalty obligation related to the transferred patents for $1,550,000, with payments commencing on December 31, 2013 and ending on December 31, 2014.

Prior to the release discussed above, the 14% Senior Notes indenture limited the debt the Company could incur to an additional $7,500,000 of new senior debt and $15,000,000 of unsecured debt. These restrictions expired with respect to the Noteholders with the payment by GBO on March 1, 2013.

Series D Senior Secured Promissory Note

On September 12, 2012, the Company entered into a Series D Senior Secured Promissory Note (the “Series D Note”) that ~~provides~~provided for a $4,285,000 senior secured line of credit (the “Credit Line”) to be funded by Vision Opportunity Master Fund, Ltd. (“VOMF”) or its affiliates (who, together with VOMF, are referred to as “Vision”).

MedPro ~~may~~was authorized to make periodic drawdowns in specific amounts totaling $4,285,000 through ~~September~~August 3031, 2013, provided that any conditions to funding have been satisfied prior to any specific drawdown and that no event of default is then in effect. The draw schedule was amended and extended one month on July 17, 2013. The drawdowns taken by the Company through ~~June~~September 30, 2013 are shown in the table under "Valuation and Allocation of Consideration", below. The original borrowing limit has been increased by $75,000 from $4,210,000 for specific expenditures by the Company and approved by the lender. We have fully drawn down the Series D Note.

The outstanding principal amount borrowed pursuant to the Credit Line bears interest at a rate of 10% per annum, payable on the maturity date, which is December 31, 2013. Accrued interest through ~~June~~September 30, 2013 on the note is $~~201~~299,~~387~~516.

In consideration for entering into the Series D Note, the Company agreed to issue Vision up to 126,~~413~~415 shares of new Series D Convertible Preferred Stock (“Series D Preferred Stock”). Shares of Series D Preferred Stock (“Series D Shares”) ~~will~~were be issued in conjunction with each draw down. The Series D Preferred Stock has a $50.00 per share liquidation preference that is senior to the Company's other series of preferred stock and its common stock.

The terms of the Series D Note are described in greater detail below.

Funding Schedule

VOMF's lending commitment as Noteholder pursuant to the Series D Note, totals $4,285,000, subject to the satisfaction of the conditions to funding. MedPro made an initial $727,000 draw on September 12, 2012. Thereafter, the Company may make drawdowns on the last day of each calendar month through September 30, 2013 , in the specific monthly amounts set forth in the funding schedule attached to the Series D Note as subsequently modified on July 17, 2013. As a condition to each draw, MedPro must certify that as of the applicable funding date, (i) no Event of Default is or will be in effect, (ii) the Company has complied and is in compliance with all affirmative covenants set forth in the Series D Note, and (iii) the representations and warranties of the Company are true and correct in all material respects. The Company must also provide any other documentation reasonably requested by the Noteholder.

Interest; Maturity Date

The outstanding principal amount borrowed pursuant to the Series D Note bears interest at a rate of 10% per annum. Accrued interest through June 30, 2013 was $201,387. The outstanding principal amount of, and all accrued and unpaid interest on, the Series D Note becomes due and payable on the maturity date, which is December 31, 2013.

Additional Financing

If the Company enters into a new equity financing (an “Additional Financing”) before December 31, 2013, then the Company will have the right to cancel all remaining borrowings under the funding schedule of all of the Series D Notes. Any Additional

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

Financing must be (i) made on terms no less favorable to the Company than those set forth in the Series D Note, and (ii) in an aggregate amount which equals or exceeds the amount of the aggregate amount of funding available under all Series D Notes at the time of the closing of such Additional Financing, plus $500,000.

If the Company elects to cancel all remaining borrowings, then the Noteholder will have the right, at its sole discretion, to invest up to an amount equal to amount of the funding that was available under the Series D Note before cancellation on the same terms and conditions as the other investors in such Additional Financing.

In addition, if the Company enters into an Additional Financing, and the proceeds to the Company from the Additional Financing equal or exceed the amount of funding then available under the Series D Note plus $2,000,000, then unless the Company has exercised its right to cancel all remaining borrowings, the Noteholder will have the right to reduce the amount of funding that remains available under the Series D Note by 50% (by reducing each loan contemplated in the funding schedule thereafter by 50%). If the Noteholder elects to reduce the amount of available funding in this manner, then the amounts of Series D Shares that the Company would be required to issue to the Noteholder in connection with each such loan (as described below) will also be reduced by 50%.

Issuance of Series D Shares

In consideration of each loan made on a funding date and for no additional consideration, the Company will issue to the Noteholder a number of Series D Shares equal to the product of (i) the aggregate amount borrowed by the Company from the Noteholder on the applicable funding date, and (ii) 0.0225.

In addition, ~~unless the Series D Note is canceled as the result of an Additional Financing before the applicable funding date (in which event no additional Series D Shares will be granted),~~ VOMF ~~will~~received ~~have~~ the ~~right to receive the~~ following number of Series D Shares on the following dates ~~without regard as to whether the VOMF lends any amounts as of such date~~:



Date		Series D Shares Granted
September 12, 2012		7,500
October 31, 2012		11,250
December 31, 2012		11,250

The rights and preferences of the Series D Shares are described under “Series D Preferred Stock” in Note 12.

Prepayment

The Company may prepay the Credit Line, in whole or in part at any time or from time to time, without penalty or premium by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment upon ten days prior written notice to the Noteholder. Prepayments must be made in minimum increments of $100,000. Any prepayments will not affect the Company's rights to borrow amounts under the Series D Note in accordance with the funding schedule, and no amount so prepaid will be available for borrowing by the Company thereafter. Nor will any prepayments affect the Series D Shares previously issued by the Company to the Noteholder. The Company must make any prepayments to all holders of Series D Notes pro rata in accordance with the relative principal amounts of such Series D Notes.

Collateral

The Company granted a security interest to VOMF, in its capacity as Collateral Agent for the holders of Series D Notes (the “Noteholder Group”) all of Company's rights, title and interest in all of its tangible and intangible assets. The Collateral is specifically identified on Schedule II to the Series D Note.

As described under “Remedies upon an Event of Default” below, upon an Event of Default, the Collateral Agent, on behalf of the Noteholder Group, will have all the rights and remedies of a secured party provided by New York law.

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

Events of Default

Each of the following events constitutes an “Event of Default” under the Series D Note:


(a)	the outstanding principal amount borrowed pursuant to the Series D Note and/or any interest accrued thereon is not paid when due;

(b)

subject to the following section c), the Company breaches any of its covenants, agreements or other obligations hereunder (including, without limitation, the affirmative covenants described below) or set forth in or otherwise applicable to the Certificate of Designation for the Series D Shares, and such breach is not cured within 30 days after notice from the Noteholder (if capable of being cured);


(c)	the Company breaches any of its negative covenants described below related to transfers of its assets, granting liens on its assets, or transactions with related parties;


(d)	the occurrence of an event of default under the Series D Note of any other lender;


(e)	any representation or warranty of the Company made in the Series D Note or in any funding notice being false or incorrect when made in any material respect;


(f)	the Company or any of its subsidiaries:

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)


•	breaches any of their respective obligations under any material agreement to which the Company or any subsidiary is a party, the effect of which breach results in damages and/or losses to the Company and/or the subsidiary in excess of $250,000; or

•

defaults in the payment when due (subject to any applicable grace period), whether by acceleration or otherwise, of any indebtedness of the Company or the subsidiary involving the borrowing of money or extension of credit in excess of $250,000, or a default occurs in the performance or observance of any obligation or condition with respect to such indebtedness if the effect of such default is to accelerate the maturity of any such Indebtedness, or such default continues unremedied for any applicable period of time sufficient to permit the holder or holders of such indebtedness, or any trustee or agent for such holders, to cause such indebtedness to become due and payable prior to its expressed maturity;


(g)	any judgment or order for the payment of money in excess of $250,000 is rendered against the Company or any of its subsidiaries and will not be covered by insurance;


(h)	upon a Change of Control of the Company (other than if such Change of Control occurs solely by virtue of a sale by VOMF and/or its affiliates of their equity of the Company (unless substantially all of the outstanding equity of the Company is sold in such transaction));

(i)

a court enters a decree or order for relief in respect of the Company or any of its subsidiaries in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appoints a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Company or any subsidiary or for any substantial part of the property of the Company or any subsidiary or ordering the winding up or liquidation of the affairs of the Company or any subsidiary, and such decree or order remains unstayed and in effect for a period of 60 consecutive days; or

(j)

the Company or any of its subsidiaries commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, or consents to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Company or any subsidiary or for any substantial part of the property of the Company or any subsidiary, or the Company or any subsidiary makes any general assignment for the benefit of creditors.

The Series D Note defines a “Change of Control” as any transaction or series of related transactions (including any reorganization, merger, consolidation, sale of assets or sale of stock) that will result in:


•	the sale of all or substantially all of the assets of the Company,


•	a change in ownership of 50% or more of the Company's then outstanding capital stock, in one or a series of transactions occurring within a period of six months, or more than 50% of the existing board of directors of the Company are replaced and the replacement directors are not reasonably acceptable to VOMF, or


•	a consolidation or merger of the Company with or into any other entity (or other corporate reorganization) immediately after which the shareholders of the Company hold less than 50% of the voting power of the surviving entity.

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

Remedies upon an Event of Default

Upon the occurrence and during the continuance of an Event of Default, the holders of a majority of principal amount of the Series D Notes then outstanding (the “Majority Noteholders”), in their sole discretion, without notice of their election and without demand, may take any one or more of the following actions:


•	declare all obligations of the Company under the Series D Note immediately due and payable (provided that upon the occurrence of an Event of Default described in i) or j) above, all such obligations will become immediately due and payable without any action by the Majority Noteholders);


•	cease making any loans, advancing money or extending credit to or for the benefit of Company under the Series D Note;


•	settle or adjust disputes and claims directly with account debtors for amounts, upon terms and in whatever order that the Majority Noteholders reasonably consider advisable;


•	make such payments and do such acts as the the Majority Noteholders consider necessary or reasonable to protect their security interest in the Collateral;

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)


•	set off and apply to the obligations of the Company any and all (a) balances and deposits of the Company held by the Noteholder, or (b) indebtedness at any time owing to or for the credit or the account of the Company held by the Noteholder;

•

ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. The Collateral Agent is granted a license or other right to use, without charge, the Company's labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with the Collateral Agent's exercise of its rights, the Company's rights under all licenses and all franchise agreements will inure to the Collateral Agent's benefit;


•	dispose of the Collateral by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including the Company's premises) as the Majority Noteholders determine is commercially reasonable, and apply any proceeds to the obligations of the Company under the Series D Note in whatever manner or order the Majority Noteholders deem appropriate;


•	the Collateral Agent may credit bid and purchase any Collateral at any public sale; and


•	any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by the Company and any surplus will be paid immediately to the Company.

Affirmative Covenants

In the Series D Note, the Company has made the following affirmative covenants, which will remain in effect for so long as any amounts under the Notes remain unpaid, unless otherwise consented to by the Majority Noteholders.


•	the Company will (and will cause each subsidiary to) maintain its existence and authority to conduct its business as presently contemplated to be conducted, comply in all material respects with all applicable laws, rules, regulations and orders, and pay all applicable taxes as they come due;


•	the Company will keep, and cause each subsidiary to keep, adequate records and books of account in accordance with GAAP, and will timely file all reports required to be filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, and the Company will not terminate its status as an issuer required to file reports under that Act;

•

the Company will operate in accordance with a detailed monthly budget approved by the Company's board of directors and VOMF, will use the net proceeds from the Series D Notes in the manner contemplated in the budget, and will provide VOMF with monthly reconciliations of its spending as compared to the budget which will provide for an aggregate adverse variance on the total amount expended of not more than 5% in the aggregate from September 1, 2012 through each month-end (unless otherwise consented to by the Majority Noteholders);


•	if the Company (a) does not enter into a definitive agreement with respect to an additional equity funding of at least $10,000,000 prior to November 30, 2012, and (b) does not receive such funds prior to December 31, 2012, then the Company will implement a strategic alternative process to be agreed to by the parties.


•	at any time that an Event of Default has occurred and is continuing, the Majority Noteholders will have a right to audit the Company's accounts and appraise the Collateral;

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

•

the Company will (and will cause each subsidiary to) maintain insurance in such amounts and against such risks as are customary to businesses similar to the Company's, will keep the Collateral insured against loss or damage by fire, theft, explosion and all other hazards and risks, and in such amounts, as ordinarily insured against by other owners of similar businesses, and will make all filings that are necessary or reasonably requested by the Majority Noteholders, in connection with the perfection of the Noteholder Group's security interest in the Collateral.

Negative Covenants

The Company has also agreed not to take (and to cause each subsidiary not to take) any of the following actions without the consent of the Majority Noteholders for so long as any amounts under the Notes remains unpaid, except as is otherwise necessary for the Company to comply with the terms of agreements and other instruments governing the 14% Senior Notes:


•	sell, transfer or otherwise dispose of any of its properties, assets and/or rights including, without limitation, its intellectual property, to any person,

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

•

grant, create, incur, assume or suffer to exist any lien, encumbrance, charge or other security interest senior or pari passu to the Series D Notes upon any of its property, assets or revenues, whether now owned or hereafter acquired including, without limitation, the Collateral, other than in connection with automation equipment leases entered into in the ordinary course of the Company's business, or

•

any action which could reasonably be expected to have a material adverse effect on the value or marketability of the Collateral or the priority of VOMF's lien on the Collateral; provided, however, that the Company may grant licenses, exclusivity arrangements, technology access or sharing rights, and other similar rights to its products and the Intellectual Property Rights related thereto in connection with bona fide commercial transactions with customers, suppliers, strategic partners or other similar counterparties entered into in the ordinary course of the Company's business;

•

except with respect to the transactions contemplated by the Series D Note, become a party to any transactions which exceed, individually or in the aggregate, $50,000 with any person who is an affiliate of the Company or any subsidiary, except transactions in the ordinary course of business that are upon fair and reasonable terms that are fully disclosed to VOMF and are no less favorable to the Company or such subsidiary than would be obtained in a comparable arm's length transaction with a person who is not an affiliate;


•	enter into any agreement the terms of which would restrict or impair the right or ability of the Company or any subsidiary to perform its obligations under the Series D Notes;


•	incur any indebtedness that is senior or pari passu in right of payment to the Series D Notes, other than in connection with automation equipment leases entered into in the ordinary course of the Company's business; and


•	liquidate or dissolve or instruct or grant resolutions to any liquidator of the Company or any subsidiary.

Transfers

The Company may not transfer or assign the Series D Note nor any right or obligation thereunder to any person or entity without the prior written consent of the Majority Noteholders. VOMF may freely transfer, assign or pledge in whole or in part the Series D Note without the prior consent of the Company, provided that any such transfer, assignment or pledge complies with applicable federal and state securities laws.

Valuation and Allocation of Consideration

In accordance with the note agreement, the consideration for the Series D note and the related issuance of the Series D Preferred shares ~~issued~~was ~~with the debt were~~ valued based on the relative fair values of the two components. The liquidation preference of $50 per share times the number of shares issued divided by the $3.00 conversion price was used to calculate the equivalent number of common shares. The common share value at the issue date was applied to each block of Series D Preferred to arrive at a tentative value of the equivalent common at issue. This tentative value and the face of the debt were compared to the sum of the two tentative values to arrive at a ratio of relative fair value. The resulting ratios were used to apportion the cash received between debt and the Series D Preferred temporary equity. The discount on the debt is being amortized as interest expense based on a yield to maturity method to accrete the debt to face at maturity. The Company believes this method resulted in a more accurate fair value allocation due to the current market price being below the conversion price, the immediate conversion feature available on the Series D Preferred and the high volatility of the Company's common stock.

The following table summarizes the allocation of the consideration received in exchange for the note and preferred shares in connection with the Senior Notes and Preferred Shares - Series D.

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

The following table summarizes the allocation of the consideration received in exchange for the note and preferred shares in connection with the Senior Notes and Preferred Shares - Series D.



Series D Senior Debt and Preferred Shares Allocation	Cash Received	Debt Value	Preferred Stock Value	Preferred Shares
Draws against note through December 31, 2012	$2,442,000	$1,492,328	$949,672	84,946
Debt discount accretion		123,569
Balance at December 31, 2012	$2,442,000	$1,615,897	$949,672	84,946
Draws against the note through September 30, 2013	1,843,000	1,463,194	379,805	41,469
Debt discount accretion		781,473
Balance September 30, 2013	$4,285,000	$3,860,564	$1,329,477	126,415

	Draw Date	Draw Amount	Debt Allocation
Relative Values	9/12/2012	$727,000	$505,717
	9/28/2012	712,000	516,410
	11/1/2012	372,000	197,052
	11/30/2012	309,000	162,306
	12/28/2012	322,000	110,843
	1/31/2013	361,000	259,708
	2/28/2013	190,000	138,182
	3/28/2013	96,000	77,186
	3/29/2013	183,000	147,132
	5/8/2013	100,000	85,561
	5/22/2013	50,000	42,781
	5/31/2013	61,000	52,193
	6/20/2013	55,000	49,438
	6/28/2013	147,000	123,789
	7/31/2013	225,000	192,513
	8/30/2013	175,000	138,614
	9/30/2013	200,000	156,097
Discount Accretion 2012			123,569
Discount Accretion 2013			781,473
Gross Draws and Allocated Debt and Accretion		$4,285,000	$3,860,564

Series D Senior Debt and Preferred Shares Allocation	Cash Received	Debt Value	Preferred Stock Value	Preferred Shares
Draws against note through December 31, 2012	$2,442,000	$1,492,328	$949,672	84,946
Debt discount accretion		$123,569
Balance at December 31, 2012	$2,442,000	$1,615,897	$949,672	84,946
Draws against the note through June 30, 2013	$1,243,000	$975,970	$267,030	27,969
Debt discount accretion		$448,286
Balance June 30, 2013	$3,685,000	$3,040,153	$1,216,702	112,915
	Draw Date	Draw Amount	Debt Allocation
Relative Values	9/12/2012	$727,000	$505,717
	9/28/2012	$712,000	$516,410
	11/1/2012	$372,000	$197,052
	11/30/2012	$309,000	$162,306
	12/28/2012	$322,000	$110,843
	1/31/2013	$361,000	$259,708
	2/28/2013	$190,000	$138,182
	3/28/2013	$96,000	$77,186
	3/29/2013	$183,000	$147,132
	5/8/2013	$100,000	$85,561
	5/22/2013	$50,000	$42,781
	5/31/2013	$61,000	$52,193
	6/20/2013	$55,000	$49,438
	6/28/2013	$147,000	$123,789
Discount Accretion 2012			$123,569
Discount Accretion 2013			$448,286
Gross Draws and Allocated Debt and Accretion		$3,685,000	$3,040,153

The following table summarizes the maturities of long-term debt:

12 month periodsended December 31,
2013	$3,040,153
2014	—
2015	—
2016	—
2017	—
Total	$3,040,153

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)



12 month periods ended December 31,

2013	$3,860,564
2014	—
2015	—
2016	—
2017	—
Total	$3,860,564

NOTE 7 – NOTES PAYABLE TO AND ADVANCES TO/FROM SHAREHOLDERS

As of ~~June~~September 30, 2013 and December 31, 2012, the Company had minor receivables from employees totaling $23,~~986~~487 and $102 respectively. As of ~~June~~September 30, 2013 there were no accounts payable to officers ~~was $311~~ and as of December 31, 2012, the payable to officers was $2,221. The employee receivables related to unreimbursed UPS personal charges from the current month and unreimbursed personal expenses on the Company credit card that are billed to the employees and have not been collected by the Company.

NOTE 8 – RELATED PARTY TRANSACTIONS

On January 11, 2010, we signed a new agreement with SC Capital, which was an extension and modification of our previously existing agreement, to provide the Company with assistance in securing debt or equity and to assist the Company with acquisition or disposition services. We had paid SC Capital a consulting fee of $15,000 per month until the agreement was terminated as of July 1, 2012. We agreed to pay additional compensation to SC Capital in connection with any definitive agreements we enter into with parties specifically identified by SC Capital during and within 24 months after termination of the agreement.

In consideration for the termination of the contract, the Board of Directors agreed to extend the exercise period on warrants held by employees and members of SC Capital for one year.

During 2012 and prior years, the Company leased its office and storage facility in Lexington, Kentucky from a company owned by the Company’s Chairman, which is described in Note 11. This lease terminated on August 31, 2012.

The Company is obligated to issue 690,608 common shares to its CEO in the event the Company recognizes $5,000,000 or more in revenue on the Syringe Guard family of products. Additional triggers for these shares to be awarded include a change in control of the Company, the termination of the CEO or the sale or licensing of any part of the technology to another entity.

NOTE 9 – SHAREHOLDERS’ EQUITY

The Company is authorized to issue 90,000,000 shares of common stock with a par value of $0.001 per share, and 10,000,000 shares of preferred stock with a par value of $0.01 per share, which is issuable in series. Of the 10,000,000 shares of preferred stock authorized, 6,668,229 shares are designated as Series A Convertible Preferred Stock (“Series A Stock”), 220,000 shares are designated as Series D Convertible Preferred Stock ("Series D Stock") and 20,000 shares are designated as Series E Convertible Preferred Stock. The Series D and Series E Stock are reflected as Temporary Equity, see Note 12.

Series B and C Preferred shares previously outstanding have been converted to common shares as of the end of 2012.

The following table sets forth the number of the shares of the Company’s capital stock issued and outstanding at ~~June~~September 30, 2013 and December 31, 2012:

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

			Shares outstanding at	Shares outstanding at
	Shares Authorized	Par Value	~~June~~September 30, 2013	December 31, 2012
Common stock	90,000,000	$0.001	34,540,878	34,540,878
Preferred Shares	10,000,000	$0.01	—	—
Series A Preferred	6,668,229	$0.01	6,668,229	6,668,229
Series B Preferred	1,493,779	$0.010	—	—
Series C Preferred	1,571,523	$0.010	—	—
Series D Preferred - Temporary Equity	220,000	$0.01	~~112~~126,~~915~~415	84,946
Series E Preferred - Temporary Equity	20,000	$0.01	20,000	—
Common stock underlying outstanding stock purchase warrants			957,190	957,190

The following is a summary of the material rights, preferences, privileges, and restrictions of the Company's three series of convertible preferred Stock. See Note 13 for a description of the terms of the Company's stock purchase warrants and how they have been valued under the Black-Scholes methodology. See Note 12 to see details of the Company's issuance of the Series D Stock and Note 6 for the details of Series D Notes.

Series A Convertible Preferred Stock

Dividends. The Series A Stockholders are entitled to receive cash dividends at the rate of 5% of the stated liquidation preference amount ($1.81 per share). Dividends are cumulative, and will only accrue and be payable upon any liquidation of the Company. Dividends on Series A Stock will be paid before dividends on any junior stock.

Liquidation Rights. Upon any liquidation, dissolution or winding up of the affairs of the Company, the holder of Series A Stock is entitled to receive $1.81 per share, plus any accrued and unpaid dividends, before any amounts are paid on common stock or any junior stock. The amount of this preferential liquidation distribution would have been $3,~~333~~477,~~212~~006 through ~~June~~September 30, 2013 and $3,~~033~~025,~~057~~640 through December 31, 2012. These amounts have not been recorded in the financial statements.

Voting Rights. The Series A Stockholders have had voting rights since August 31, 2012. In addition, the Series A Stockholders have these specific voting rights that as long as there are 200,000 shares of Series A Stock outstanding, the affirmative vote of 75% of the Series A Stock is required for the Company to take the following actions:


•	To authorize the issuance of shares of a series of stock ranking equal or senior to the Series A Stock with respect to liquidation rights.


•	To repurchase, redeem, or pay dividends on shares of common stock other than de minimus repurchases or contractual redemption obligations.


•	To reclassify any outstanding securities in a way that materially and adversely affects the rights of Series A Stock.


•	To make any unauthorized distribution to the holders of stock junior to the Series A Stock.


•	To voluntarily file for bankruptcy, liquidate assets or make an assignment for the benefit of our creditors.


•	To discontinue involvement in the Company's current business.

Conversion Rights. The Series A Stock is convertible into common stock at any time, in whole or in part, at the option of the holder. Each share of Series A Stock is convertible into the number of common shares equal to the quotient of: (1) $1.95, divided by (2) the conversion price then in effect.

The conversion price is initially $1.95 per share, but is subject to adjustment for certain events, including stock splits, stock dividends, distributions, reclassifications or reorganizations. In addition, the conversion price is subject to adjustment if the Company issues additional shares of common stock or securities convertible into, or exchangeable for, common stock, in either

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

case at a price per common share less than the conversion price then in effect. The conversion price adjustment does not apply to the issuance of shares in certain transactions identified in the certificate of designations.

Buy-In Rights. If the Company fails to timely deliver common stock issuable upon conversion of Series A Stock, and the holder is required to purchase common stock to deliver in satisfaction of a sale of the shares to have been issued upon the conversion, then the Company must pay the holder in cash the difference between the total purchase price the holder paid to acquire the common stock to complete the sale and the amount obtained by multiplying (1) the number of shares of common stock issuable upon conversion of the Series A Stock times (2) the price at which the holder's sell order for those shares was executed.

Redemption Rights. Upon the occurrence of a “major transaction,” each holder of Series A Stock can require the Company to redeem all or a portion of the holder's Series A Stock equal to 100% of the liquidation preference amount plus any accrued but unpaid dividends. The Company can elect to pay in common shares based on the conversion price then in effect. A “major transaction” includes a change of control of our company, the sale of more than 50% of our assets, or the purchase of more than 50% of the outstanding shares of our common stock.

Upon the occurrence of one of the triggering events listed below, each holder of Series A Stock can require the Company to redeem all or a portion of the holder's Series A Stock at a price per share equal to 120% of the liquidation preference amount plus any accrued but unpaid dividends and liquidated damages.


(1)	The holder's common stock cannot be sold in the public securities market due to the lapse of the effectiveness or unavailability of a resale registration statement for 20 consecutive trading days, unless due to factors solely within the control of the holder.


(2)	Our common stock is suspended from listing or trading on the OTC Bulletin Board or a stock exchange for 5 consecutive trading days.


(3)	Our inability to convert Series A Stock into shares of common stock.


(4)	Our failure to comply with a conversion notice for 15 days.


(5)	Our common stock is deregistered under the Securities Exchange Act of 1934.


(6)	We consummate a “going private” transaction so that our common stock is no longer registered under the Securities Exchange Act of 1934.


(7)	We breach a term of the Series A Stock purchase agreement, the certificate of designation or any related agreement that has a materially adverse effect on the Series A Stock and is not curable or continues for more than 10business days.

For triggering events (1), (2), (3), and (7), the Company can elect to pay in cash or shares of common stock (the price per share is the conversion price then in effect). For (4), (5), and (6), the Company will redeem for cash.

Registration Rights. The Company entered into a registration rights agreement with the Series A Stockholders at the time of their investment. The agreement required us to register shares of common stock issuable upon the conversion of the Series A Stock and the exercise of the accompanying warrants with the SEC for resale by the holders. The agreement also provides that the Series A Stockholders have certain “piggy-back” registration rights if the Company registers securities for an offering (other than registrations in connection with the acquisition of a business or with employee benefit plans).

In addition, Series A Stockholders may make a written request for registration of shares of common stock not previously registered that are issued upon the occurrence of a "major transaction" or "triggering event." A "major transaction" includes certain consolidation or merger transactions, the sale of more than 50% of the Company's assets, or the purchase of more than 50% of the outstanding shares of our common stock. “Triggering events” are events (1), (2), (3), and (7) listed under “Redemption Rights” above.

The foregoing summaries of the material terms and conditions of our three series of preferred stock classified as equity are subject to their respective Certificates of Designation of Relative Rights and Preferences, which are exhibits to this report and are incorporated herein by reference. See Part IV, Item 15 - Exhibits and Financial Statement Schedules of Form 10-K for December 31, 2012.

Stock Repurchase Program

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

OnStock ~~June~~Repurchase 25, 2009, the Company announced that its Board of Directors had authorized the repurchase of up to 1,000,000 shares of the Company’s common stock. Through December 31, 2012 the Company had repurchased 700,509 shares in open market transactions at an average price per share of $2.66. During the three and six months ended June 30, 2013, the Company acquired no additional shares. The Company has spent $1,863,483 on share repurchases since the inception of the buy-back program.Program

On June 25, 2009, the Company announced that its Board of Directors had authorized the repurchase of up to 1,000,000 shares of the Company’s common stock. Through December 31, 2012 the Company had repurchased 700,509 shares in open market transactions at an average price per share of $2.66. During the three and nine months ended September 30, 2013, the Company acquired no additional shares. The Company has spent $1,863,483 on share repurchases since the inception of the buy-back program.

See Note 13 for a detailed description of the terms of our stock purchase warrants issued and outstanding, including the accounting treatment.

NOTE 10 - INCOME TAXES

The Company incurred no net current or net deferred income tax expense or benefit for the three and ~~six~~nine months ended ~~June~~September 30, 2013 or the year ended December 31, 2012. Income tax expense (benefit) varies from the amounts expected by applying ordinary federal income tax rates to income before income taxes versus taxable income as determine after applying permanent and temporary differences. The Company has provided allowances for the entire amount of its operating losses ~~for~~incurred in prior years. Deferred income taxes reflect the net effects of temporary differences between the carrying amount of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Our open tax years include all returns filed for 2009 and later.

The Company had no net deferred tax liabilities as of December 31, 2012. As of December 31, 2012, the majority of its deferred tax asset consisted of net operating loss carryforwards (tax effect) of $18,786,069, directly related to its total net operating loss carryforwards of $57,100,515 These net operating loss carryforwards begin expiring in 2015 and are entirely offset by valuation allowances at December 31, 2012 and ~~June~~September 30, 2013. The Company estimates that it will utilize sufficient net operating loss carryforwards in 2013 to offset all taxable income. Although the Company does not expect to owe and Federal or State income taxes, it has provided and estimated local net profits license fee accrual of $592,597

Management has evaluated the positions taken in connection with the tax provisions and tax compliance for the years included in these financial statements as required by ASC 740. The Company does not believe that any of the positions it has taken will not prevail on a more likely than not basis. As such no disclosure of such positions was deemed necessary.

As a result of its reverse merger on December 28, 2007, the Company’s ability to utilize loss carryforwards from the former MedPro (the loss corporation and the acquired corporation for tax purposes) to offset taxable income will be limited by Internal Revenue Code ("IRC") Section 382. Future utilization of net operating loss will be based on the long-term tax exempt rate at the date of merger applied against the value of the loss corporation. The value of the loss corporation, $(22,000,000) for purposes of the merger, was established by arms-length negotiation. The available net operating loss will be further adjusted by the recognition, for tax purposes, of built-in gains or losses as of the date of acquisition. The net operating loss carryforwards limited by IRC Section 382 totaled $14,729,870. The carryforwards incurred since the reverse takeover total $42,370,645. Since expected income is less than the post reverse takeover losses, no IRC Section 382 limitation will apply.

NOTE 11 – LEASE COMMITMENT

Until April 1, 2011, our Lexington, Kentucky offices were located in space we leased from a partnership in which our Chairman and CEO owns an interest. The lease was non-cancelable and ran through August 31, 2012 at a monthly rent of $6,975. Rental expense for this property terminated in the prior year and therefore we had no expense in 2013. Total expense for this property was $55,800 through the August 31, 2012. ~~As of June 30, 2012 lease expense was $41,850.~~

On April 1, 2011, we leased new office space at 145 Rose Street, Lexington, Kentucky. The owner of the building is an unrelated party. Our monthly rent for the initial five year term is $8,000 per month. We have an option to terminate the lease by giving 90 days notice before the third anniversary of the lease and by paying one year's rent as a penalty for early termination. The initial term of the lease is five years commencing on April 1, 2011 and terminates on March 31, 2016. We have three renewal options of three years each. Rent will escalate based on the Consumer Price Index for all U.S. City

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

by giving 90 days notice before the third anniversary of the lease and by paying one year's rent as a penalty for early termination. The initial term of the lease is five years commencing on April 1, 2011 and terminates on March 31, 2016. We have three renewal options of three years each. Rent will escalate based on the Consumer Price Index for all U.S. City Average, all items (1982-1984 = 100). Rent expense for the three and ~~six~~nine months ended ~~June~~September 30, 2012 was $24,000 and $4872,000.

We leased space in New York for the year ended December 31, 2012. We had a renewal option with two months free rent for 2013. The 2012 rent was $3,110 per month for March through October. We did not pay rent for January, February, November or December. Total lease expense through ~~June~~September 30, 2012 was $1727,~~154~~593. We did not renew this lease.

Future minimum annual lease payments, including renewals, for the twelve month periods ended December 31 are as follows:



12 Month Period Ended December 31	Amount
2013	$96,000
2014	96,000
2015	96,000
2016	24,000
	$312,000

NOTE 12 - TEMPORARY EQUITY

On September 12, 2012, the Company designated the new series of Series D Stock which has been characterized as temporary equity by the Company. Due ~~in part~~ to the optional redemption feature, it is reflected as a mezzanine level temporary equity between debt and equity on the Company's balance sheet. The Series D Stock are being issued in connection with newly issued debt. The Company has authorized 220,000 shares of Series D Stock and had issued ~~112~~126,~~915~~415 shares as of ~~June~~September 30, 2013.

Series D Preferred Stock

The following is a summary of the material rights, preferences, privileges, and restrictions of the Series D Stock.

Designation. The board of directors has designated 220,000 shares of the Company's preferred stock, par value $0.01 per share, as a new series of preferred stock of the Company named “Series D Convertible Preferred Stock.”

Ranking. The Series D Stock ranks senior as to liquidation rights and certain other matters set forth in the certificate of designation of the Series D Stock to the Company's three other series of preferred stock and the Company's common stock. The Series D Stock is subordinate and ranks junior to all current and future outstanding indebtedness of the Company.

Liquidation Rights. Upon liquidation, dissolution or winding up of the Company, the holder of Series D Stock is entitled to a liquidation preference of $50.00 per share plus any accrued and unpaid dividends, prior to any amounts being paid on MedPro common stock or any junior stock. If MedPro's assets are not sufficient to pay in full the liquidation preference, then all of the assets will be distributed pro rata among the holders of the Series D Stock.

Dividend Rights. The Series D Stock ranks junior to the Series A Stock with respect to the payment of dividends. If declared by the Company, dividends on the Series D Stock will be paid on a pro rata basis with the common stock and all other equity securities of the Company ranking pari passu with the common stock as to the payment of dividends.

Voting Rights. Holders of Series D Stock have no voting rights except in the limited circumstances outlined below:

So long as there are 10,000 shares of Series D Stock outstanding, the affirmative vote of 51% of the Series D Stock is required for MedPro to take the following actions:

• Authorize the issuance of shares of a series of stock ranking equal or senior to the Series D Stock with respect to dividends, the distribution of assets on liquidation, dissolution, and winding up.

• Amend provisions of the Series D Stock that will adversely affect any rights of the Series D Stock.

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)


•	Authorize the issuance of shares of a series of stock ranking equal or senior to the Series D Stock with respect to dividends, the distribution of assets on liquidation, dissolution, and winding up.


•	Amend provisions of the Series D Stock that will adversely affect any rights of the Series D Stock.


•	Repurchase, redeem, or pay dividends on shares of common stock other than the Series A Stock and de minimus repurchases or contractual redemption obligations.


•	Amend the articles of incorporation or bylaws to materially and adversely affect the rights of Series D Stock.


•	Make any unauthorized distribution to the holders of stock junior to the Series D Stock.


•	Reclassify the Company's outstanding securities in a way that adversely affects Series D Stock rights.


•	Voluntarily file for bankruptcy, liquidate assets or make an assignment for the benefit of MedPro's creditors.


•	Discontinue involvement in the business of commercializing medical devices.


•	Incur aggregate indebtedness (excluding indebtedness existing as of immediately following the date of the initial issuance of the Series D Stock) in excess of $250,000, other than any indebtedness relating to equipment leases entered into by the Company in the ordinary course of its business.

Conversion Rights. Shares of Series D Stock are convertible into shares of common stock at any time, in whole or in part, at the option of the holder thereof; provided that no fewer than 10,000 shares may be converted at any one conversion unless the holder owns fewer than 10,000 shares.

For each share of Series D Stock converted, the holder will be entitled to receive a number of shares of common stock equal to the quotient of, (1) $50.00 (the liquidation preference amount), divided by (2) the conversion price in effect as of the date of the delivery of the holder's notice of election to convert. The conversion price is initially $3.00 per share, but is subject to adjustment in the event of stock splits, stock dividends, distributions, reclassifications or reorganizations.

In addition, if the Company issues additional shares of common stock or securities convertible into, or exchangeable for, common stock, in either case at a price per common share less than the conversion price then in effect, then the conversion price will be adjusted to the lower issuance price.

The Company is not required to make any adjustment to the conversion price in the event of any of the following:


•	The issuance of securities (other than for cash) in connection with a merger, acquisition, or consolidation,


•	the issuance of securities pursuant to the conversion or exercise of convertible or exercisable securities issued or outstanding on or prior to the date of the Series D Note or issued pursuant to the Series D Note (so long as the conversion or exercise price of such securities is not amended to lower such price and/or adversely affect the holders of Series D Stock),


•	the issuance of common stock and stock-based awards granted pursuant to the MedPro Safety Products, Inc. 2008 Stock and Incentive Compensation Plan,


•	the issuance of common stock pursuant to the Company's Technology Development and Option Agreement with SGPF, LLC, or


•	the issuance of common stock in connection with any future strategic acquisitions approved by the holders of at least 51% of the then outstanding shares of the Series D Stock.

Buy-In Rights. If, upon receipt of a notice of conversion, the Company fails to transmit to the holder of Series D Stock, certificates representing the shares of common stock issuable upon conversion, and the holder is required to purchase shares of common stock to deliver in satisfaction of a sale of the shares to have been issued upon the conversion, then the Company must pay the holder in cash the amount by which the holder's total purchase price for the common stock exceeds the amount obtained by multiplying (1) the number of shares of common stock issuable upon conversion of the Series D Stock that the Company was required to deliver times, by (2) the price at which the sell order giving rise to such purchase obligation was executed. In addition, at the option of the holder, the Company must either reinstate the shares of Series D Stock and the equivalent number of shares of common stock or deliver to the holder the number of shares of common stock that would have been issued if the Company has timely complied with its conversion and delivery obligations.

Participation Rights. If at any time following the date of the initial issuance of Series D Stock the Company proposes to sell or issue for consideration any of its equity securities to any person (an “Acquiror”), each holder of Series D Stock will be entitled to purchase or be issued additional equity securities on the same terms and for the same consideration as the Acquiror. This Participation Right will not reduce the amount of equity securities the Company can sell or issue to the Acquiror. Rather, it will entitle each holder of Series D Stock to acquire, and require the Company to issue, up to an amount of equity securities as will allow each holder to maintain its relative ownership interest in the Company on a fully diluted basis. All equity securities of the Company directly or indirectly owned by a holder of Series D Stock (including any equity securities owned by affiliates of such holder) on a fully diluted and as-converted, exchanged or exercised basis will be included in making the pro rata calculation with respect to that holder.

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

Company directly or indirectly owned by a holder of Series D Stock (including any equity securities owned by affiliates of such holder) on a fully diluted and as-converted, exchanged or exercised basis will be included in making the pro rata calculation with respect to that holder.

Notwithstanding the foregoing, the Participation Right will not apply to any offering for the sole purpose of issuing equity securities:


•	To directors, officers, employees, consultants, advisers or other service providers of the Company,

pursuant to the conversion or exercise of convertible or exercisable securities,


•	In connection with a bona fide acquisition of or by the Company, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise which is otherwise permitted hereunder,


•	In connection with any stock split, stock dividend, recapitalization, reclassification or similar event,


•	Pursuant to the Company's Technology Development and Option Agreement with SGPF, LLC, as amended, and

the issuance of common stock issued in connection with any future strategic acquisitions approved by the holders of at least 51% of the then outstanding shares of the Series D Stock.

Redemption by the Company at the Option of the Holder. Beginning 18 months following the date of initial issuance date, the holders of at least 51% of the shares of the Series D Stock then outstanding at such time will have the right at any time, upon receipt of notice by such holders, to require the Company to redeem all (or such portion as is described in the redemption notice) of such holder's shares of Series D Stock at a price per share of Series D Stock equal to the $50.00 per share liquidation preference amount, plus any accrued but unpaid dividends thereon. The Company is obligated to pay, in cash, all amounts required in such an event not less than 30 calendar days following the Company's receipt of such notice.

Restriction on Issuance of Stock. The affirmative vote of 51% of the outstanding shares of Series D Stock is required to issue shares of the Series D Stock other than as contemplated by the Series D Note.

Vote to Change Terms. The affirmative vote of 51% of the outstanding shares of Series D Stock is required to change the certificate of designation or the articles of incorporation in a manner that alters the rights of the Series D Stock.

Registration Rights. The Company and Vision have agreed to amend the September 5, 2007 registration rights agreement between the Company's predecessor and VOMF to provide certain customary demand and piggyback registration rights with respect to the shares of the Company's common stock upon conversion of the Series D Stock.

Series E Preferred Stock

In connection with the sale of the GBO patents, MedPro issued to the Noteholders a total of 20,000 shares of new Series E Convertible Preferred Stock (“Series E Preferred Stock”), on March 1, 2013. The Series E Preferred Stock has a $50.00 per share liquidation preference that ranks pari passu with the Series D Preferred Stock and is senior to the Company's other Series of Preferred Stock and its common stock.

Except as noted below, the material rights, preferences, privileges, and restrictions of the Series E Preferred Stock are the same as, and equal in priority to, the Series D Preferred Stock.

Designation. The board of directors has designated 20,000 shares of the Company's preferred stock, par value $0.01 per share, as a new series of preferred stock of the Company named “Series E Convertible Preferred Stock.”

Ranking. The Series E Preferred Stock ranks pari passu with the Company's Series D Preferred Stock and senior to the Company's Series A Preferred Stock and common stock as to liquidation rights and certain other matters set forth in the certificate of designation of the Series E Preferred Stock. The Series E Preferred Stock is subordinate and ranks junior to all current and future outstanding indebtedness of the Company.

Redemption by the Company at the Option of the Holder. Beginning 36 months following the date of initial issuance date, the holders of at least 51% of the shares of the Series E Preferred Stock then outstanding at such time will have the right at any time, upon receipt of notice by such holders, to require the Company to redeem all (or such portion as is described in the redemption notice) of such holder's shares of Series E Preferred Stock at a price per share of Series E Preferred Stock equal to the $50.00 per share liquidation preference amount, plus any accrued but unpaid dividends thereon. The Company is obligated to pay, in cash, all amounts required in such an event not less than 30 calendar days following the Company's receipt of such notice.

The foregoing summary of the material terms and conditions of the Series D Preferred Stock and the Series E Preferred Stock is subject to their respective Certificates of Designation of the Relative Rights and Preferences. See Part IV, Item 15 - Exhibits and Financial Statement Schedules of Form 10-K for 2012.

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

NOTE 13 – STOCK OPTIONS, WARRANTS AND DERIVATIVE LIABILITIES

Stock Option Awards

The Company grants share-based awards under the 2008 Stock and Incentive Compensation Plan ("2008 Plan") and the ~~2012~~2011 Non-Employee Director Stock Option Program under the 2008 Plan ("Director Program"), which, among other things, (a) encourages employees and directors to help increase the profitability and growth of the Company; (b) provide competitive compensation to employees; (c) attract and retain exceptional personnel and encourage excellence in the performance of individual responsibilities; and (d) motivate key employees and directors to contribute to the Company's success.

The fair value of the share-based payments is recognized as compensation expense over the various expected lives of the different options. For the the ~~three~~nine months ended ~~June~~September 30, 2013 and 2012, share-based compensation expense was $~~115~~371,~~483~~003 and $~~160~~476,~~269~~414, respectively.

The amount of unrecognized compensation expense for all share-based awards as of ~~June~~September 30, 2013 was approximately $1979,~~090~~648,~~267,~~ which is expected to be recognized over a weighted-average remaining life of approximately 6.7550 years.

The table below identifies the Company's outstanding options for officers, directors and employees granted over the last two fiscal years as of ~~June~~September 30, 2013 and the year ended December 31, 2012 and the factors used to value the share-based compensation expense for each option.

Option Schedule and Valuation Assumptions for 2012 and 2011 Options
Option Schedule and Valuation Assumptions for 2013 and 2012 Options
Grant Date	Expiration Date	Option Term in Years	Number of Options	Exercise Price		Market Price at Grant Date		Estimated Life for Valuation (Years)	Volatility Factor		Risk Free Return Factor		Valuation Per Option		Total Compensation Expense
2/2/2011	2/2/2021	10.00	100,000	$	2.62	$	2.62	3.5	72.15	%	1.12	%	$	1.344	$	134,350
2/2/2011	2/2/2021	10.00	100,000	$	2.62	$	2.62	4.5	72.15	%	2.10	%	$	1.523	$	152,272
2/2/2011	2/2/2021	10.00	100,000	$	2.62	$	2.62	5.5	72.15	%	2.10	%	$	1.578	$	157,843
8/15/2011	8/15/2021	10.00	50,000	$	2.96	$	2.96	3.0	78.36	%	0.34	%	$	1.496	$	74,794
8/23/2011	8/23/2021	10.00	125,000	$	2.96	$	2.96	3.0	77.821	%	0.38	%	$	1.488	$	186,001
12/9/2011	12/9/2021	10.00	300,000	$	2.25	$	2.25	9.95	104.088	%	0.82	%	$	1.712	$	513,480
12/9/2011	12/9/2021	10.00	275,000	$	2.25	$	2.25	9.95	104.088	%	1.82	%	$	2.045	$	562,507
3/5/2012	3/5/2022	10.00	100,000	$	2.73	$	2.73	5.0	113.393	%	0.87	%	$	2.180	$	217,910
8/28/2012	8/28/2022	10.00	125,000	$	1.50	$	1.50	3.0	102.38	%	0.36	%	$	0.940	$	117,242

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

During the year ended December 31, 2011

On February 2, 2011, the Compensation Committee of the Board granted service-based options to purchase 300,000 shares to the CEO. Options to purchase 100,000 shares become exercisable on each of December 31, 2011, 2012 and 2013 if the CEO is employed by us on each date. The valuation and the factors used to value these options are listed in the table above.

Under the terms of our employment agreement the Company's new COO, we granted him an option for 50,000 shares on August 15, 2011. It is now exercisable. The valuation and the factors used to value these options are listed in the table above.

On August 23, 2011, the board of directors adopted the Director Program and reserved 500,000 of the shares authorized for issuance under the 2008 Plan for the stock options to be awarded under the Director Program. The Director Program provides that each non-employee director automatically receives an award of options to purchase 25,000 shares each year upon election at each annual meeting. The options have a ten-year term and become exercisable on the first anniversary of the award date. The exercise price is the trading price at close of trading on the award date, which was $2.96 for the initial grant of 125,000 options to our five non-employee directors on August 23, 2011. Vested options may be exercised for one year following termination of service due to death or disability. Unvested options will become fully exercisable upon a change of control, as defined by the 2008 Plan. The valuation and the factors used to value these options are listed in the table above.

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

In addition, one director was granted an option to acquire 50,000 common shares on August 23, 2011 under the same terms granted to the officers, employees and directors present for the August 18, 2008 award. The valuation and the factors used to value these options are listed in the table above. These options have expired without exercise.

On December 9, 2011, the Company awarded options to purchase 300,000 common shares to the Executive Officers other than the CEO and options to purchase 275,000 common shares to for the other employees. The valuation and the factors used to value these options are listed in the table above. As employees have been terminated or have resigned many of these options have lapsed due to failure to timely exercise.

On February 2, 2011, the Executive Compensation Committee approved awards of performance-based options to purchase up to 100,000 shares annually to our CEO based upon the achievement of predetermined goals for financial results, business and product development, capital market milestones, and organizational initiatives in each of December 31, 2011, December 31, 2012 and December 31, 2013.

During the year ended December 31, 2012

On March 5, 2012, the committee determined that Mr. Turner's performance in 2012 had satisfied the objective and subjective criteria for performance-based options and awarded him 100,000 options exercisable at $2.725 per share. The valuation and the factors used to value these options are listed in the table above.

On August 28, 2012, each of our five non-employee directors was granted options to purchase 25,000 shares under the Director Program. These options ~~become~~became exercisable one year from the grant date at $1.50 per share.

~~Six~~Nine Months Ended ~~June~~September 30, 2013

As a result of employee terminations and resignations 220,735 options lapsed one month after the departure date of these employees. In addition, the 2,100,000 of options expired on January 31, 2013. During the quarter ended ~~June~~September 30, 2013 194,173 options lapsed related to employee departures.

The valuation and the factors used to value these options are listed in the table above.

A summary of stock option activity for 2013 and 2012 is as follows:



	Shares			Weighted average exercise price
Outstanding at December 31, 2011	3,770,809			$2.200
Granted	225,000			$2.044
Exercised	(33,000	)		$2.250
Outstanding at December 31, 2012	3,962,809			$2.192
Granted	—			—
Expired	(2,100,000	)		$1.810
Forfeited	(220,735	)		$2.663
Outstanding March 31, 2013	1,642,074			$2.617
Granted	—			—
Expired	—			—
Forfeited	(194,173	)		$2.746
Outstanding June 30, 2013	1,447,901			$2.600
Granted	—		—	—
Expired	—		—	—
Forfeited	—		—	—
Outstanding September 30, 2013	1,447,901		1,447,901	$2.600

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

The following table summarizes information about stock options outstanding and exercisable at September 30, 2013:

		Shares		Weighted average exercise price
Exercise Price		Optionsoutstanding		Weighted average remaining contractuallife (years) 2	Optionsexercisable
Outstanding at December 31, 2011		3,770,809		$2.200
$3.85		70,130		5.65 years	70,130
Granted		225,000		$2.044
$4.24		25,974		0.65 years	25,974
Exercised		(33,000	)	$2.250
$3.65		20,547		6.01 years	20,547
Outstanding at December 31, 2012		3,962,809		$2.192
$2.70		277,000		7.00 years	277,000
Granted		—
$2.62		100,000		2.34 years	100,000
Expired		(2,100,000	)	$1.810
$2.62		100,000		2.34 years	100,000
Forfeited		(220,735	)	$2.663
$2.62	1	100,000		2.34 years	—
Outstanding March 31, 2013		1,642,074		$2.617
$2.96		50,000		7.87 years	50,000
Granted
$2.96		125,000		7.89 years	125,000
Expired
$2.25		354,250		8.19 years	354,250
Forfeited		(194,173	)	$2.746
$2.73		100,000		8.42 years	100,000
Outstanding June 30, 2013		1,447,901		$2.600
$1.50		125,000		8.90 years	125,000
$2.62		1,447,901		6.50 years	1,347,901

Exercise Price		Optionsoutstanding	Weighted average remaining contractuallife (years) 2	Optionsexercisable
$3.85		70,130	5.91 years	70,130
$4.24		25,974	0.91 years	25,974
$3.65		20,547	6.27 years	20,547
$2.70		277,000	7.25 years	277,000
$2.62		100,000	2.59 years	100,000
$2.62		100,000	2.59 years	100,000
$2.62	1	100,000	2.59 years	—
$2.96		50,000	8.12 years	50,000
$2.96		125,000	8.15 years	125,000
$2.25		354,250	8.44 years	354,250
$2.73		100,000	9.18 years	100,000
$1.50	1	125,000	9.16 years	—
$2.62		1,447,901	6.75 years	1,222,901

1- Non-vested at September 30, 2013 or December 31, 2012.

12 - ~~Non-vested~~ atWeighted ~~June 30,~~average ~~2013~~remaining orlife ~~December~~at September 3130, ~~2012~~2013.

2The -weighted ~~Weighted~~ average ~~remaining~~fair ~~life~~value atper ~~June~~ share of options granted during 2012 was $1.246. There have been no options granted for the nine months ended September 30, 2013. The fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model.

~~The~~Warrants ~~weighted~~outstanding ~~average~~were ~~fair~~valued ~~value~~based ~~per~~on ~~share of options granted during 2012 was $1.246. There have been no options granted for~~ the ~~six~~weighted ~~months~~average ~~ended~~factors ~~June~~represented ~~30,~~in ~~2013. The fair value of each grant is estimated on~~ the ~~date~~following ~~of grant using the Black-Scholes option-pricing model.~~table:

Warrants outstanding were valued based on the factors represented in the following table:



	2013		2012
Dividend yield	—	%	—	%
Expected volatility	177.07	%	148.92	%
Expected lives	1.57		2.32
Risk-free interest rate	0.23	%	0.25	%

	2013		2012
Dividend yield	—	%	—	%
Expected volatility	172.326	%	148.915	%
Expected lives	1.82		2.32
Risk-free interest rate	0.36	%	0.25	%

The weighted average remaining contractual life of all options outstanding at December 31, 2012 was 4.64 years and at September 30, 2013 is 6.50 years. In addition to outstanding stock options, our stockholders have authorized an additional 2,010,702 shares of common stock that may be issued under the share-based payment plans.

The following table summarizes our outstanding non-vested stock options:



Grant	Number	Exercise	Remaining Contractual
Date	of Shares	Price	Life in Years
2/22/2011	100,000	$2.62	2.34 years

As of September 30, 2013, we had $979,648 of total unrecognized compensation cost related to unvested options, net of expected forfeitures, which is expected to be recognized over the following periods: 2013 - $136,818, 2014 - $389,888, 2015 - $231,126, 2016 - $162,154 and $59,662 from 2017 and later years.



	2013	2014	2015	2016	2017
Unearned Compensation to be Expensed by Year	$136,818	$389,888	$231,126	$162,154	$59,662

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

The weighted average remaining contractual life of all options outstanding at December 31, 2012 was 4.64 years and at June 30, 2013 is 6.76 years. In addition to outstanding stock options, our stockholders have authorized an additional 1,691,529 shares of common stock that may be issued under the share-based payment plans.

The following table summarizes our outstanding non-vested stock options:

Grant	Number	Exercise	Remaining Contractual
Date	of Shares	Price	Life in Years
2/22/2011	100,000	$2.62	2.59 years
8/28/2012	125,000	$1.50	9.16 years
Totals	225,000	$2.00

As of June 30, 2013, we had $1,090,267 of total unrecognized compensation cost related to unvested options, net of expected forfeitures, which is expected to be recognized over the following periods: 2013 - $216,627, 2014 - $380,165, 2015 - $246,627, 2016 - $205,264 and $41,585 from 2017 and later years.

	2013	2014	2015	2016	2017
Unearned Compensation to be Expensed by Year	$216,627	$380,165	$246,627	$205,264	$41,585

Stock purchase warrants

Series AA Warrants

The Company issued Series AA warrants to purchase 533,458 common shares for $1.81 per share as compensation for financial advisory services rendered by SC Capital Partners, LLC in connection with the sale of the preferred stock and warrants on December 28, 2007. One warrant holder exercised 79,663 of these warrants, on a cashless basis, in exchange for 16,972 common shares on June 29, 2012. The fair value on the date of exchange was based on $2.30 for the Company's stock and the exercise price of $1.81. The remaining Series AA warrants totaled 453,795. The terms of the Series AA warrants are similar to the Series A warrants and most of them expired on December 28, 2012. The 215,518 Series AA warrants held by affiliates of SC Capital were granted a one year extension of the exercise date for their warrants in consideration of the termination of the Company's financial services agreement with SC Capital on July 1, 2012.

Warrants issued with 2010 bridge financing

As consideration for interim financing provided to the Company by VOMF in 2011, the Company issued warrants to purchase 416,672 shares of our common stock at $3.00 per share and 325,000 shares of our common stock at $4.00 per share. Each warrant has a five-year term. Each warrant provides that the warrant price will adjust if specified corporate transactions occur, including a provision that if we issue any additional shares of common stock at either a price per share less than the warrant exercise price (or the adjusted price then in effect) or without consideration, then the warrant price will adjust to the price per share paid for the additional shares of common stock upon each such issuance.

See the table below for information about the valuation of the Company's outstanding warrants pursuant to the Black-Scholes method.

Derivative Liabilities and Valuation

The Series A Stockholders have the right to redeem their shares if certain events occur. In accounting for this embedded conversion feature, the Company considered ASC 815 (formerly FASB SFAS 133, Accounting for Derivative Instruments and Hedging Activities and EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in a Company’s own stock) and ASC 470 (formerly EITF 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Features, and EITF 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments). Under this guidance, the classification of an issuer’s convertible preferred stock as permanent equity depends upon the issuer having control with respect to the manner of redemption of the convertible preferred stock.

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

Instruments). Under this guidance, the classification of an issuer’s convertible preferred stock as permanent equity depends upon the issuer having control with respect to the manner of redemption of the convertible preferred stock.

The right of Series A Stockholders to redeem their shares arises first in the event of a consolidation or merger that would result in a change of control of the Company, the sale of 50% of its assets, or a purchase of 50% of the outstanding shares of the Company’s common stock. Mergers, consolidations and asset sales require approval by the board of directors. A third party could purchase 50% of the outstanding shares only from the Company directly or in a voluntary sale by one or more common shareholders. These circumstances, being characteristic of all equity, do not preclude classification as equity.

Of the other seven events triggering the right of Series A Stockholders to redeem their shares, four are events for which the issuer has the option to redeem in either cash or common shares. The redemption ratio is fixed and adjusts only if the Company sells common shares at a price less than the price per share at which the preferred stock converts into common stock. In other words, the adjustments to the ratio are not of a dilutive nature that would generally give rise to liability treatment.

The other triggering events would occur only through purposeful actions by the Company or otherwise within its control.

• As of ~~June~~September 30, 2013, the Company had 90,000,000 common shares authorized and 34,540,878 common shares issued and outstanding. Therefore, the Company had a sufficient number authorized and unissued common shares to convert all of the preferred Series A stock at the conversion ratio then in effect had a notice of conversion been presented as of that date, meeting the “current status” test of ASC 815 (formerly EITF 00-19).


•	The deregistration of Company’s common stock is within its control;


•	The consummation of a going private transaction is within the Company’s control.

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

Based on the foregoing analysis, the Company concluded that the embedded conversion feature would not be separately accounted for as a derivative liability from the Series A Stock.

In accordance with this guidance, the Company recorded a deemed dividend in the amount of $3,975,120 by increasing the retained deficit and increasing additional paid in capital by that amount effective on December 28, 2007 to reflect the estimated fair value of the embedded conversion feature in the Series A Stock. The $3,975,120 amount represents the approximately $0.60 difference per share between the $1.81 liquidation value per share of the preferred stock and the $1.21 per share value of the warrants. This amount would normally be amortized over the period between the issue date and the conversion date, but because the Series A Stock is convertible immediately upon issuance, the entire amount was charged to retained earnings as a deemed dividend and an increase to additional paid in capital.

We have used the Black-Scholes option valuation model to value our stock purchase warrants. However, the Black-Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of subjective assumptions including the expected stock price volatility and appropriate adjustments for restrictions on exercising the options. Because our warrants have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, this model does not necessarily provide a reliable single measure of the fair value of its warrants. Assumptions used in valuing the Series A and Series B warrants included an expected term of 2.5 years, volatility of 43.54%, and an equivalent bond yield of 4.36%.

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

To reflect the cumulative effect of adopting ASC 815, the Company reduced Additional Paid in Capital by $6,321,081, increased its Accumulated Deficiency by $35,081,114 and recorded a liability of $41,402,196 as of January 1, 2009. The amount of the liability was determined by reference to the fair value of the warrants on that date under FASB ASC 820 (formerly SFAS 157).

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)


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


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


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

We concluded there was insufficient trading frequency and volume in MedPro's shares to use the Level 1 inputs to value our warrants in a Black-Scholes calculation under ASC 820 as of January 1, 2009. In particular, we considered that almost all of our outstanding common shares were restricted securities that could not be traded in public markets through January 4, 2009, and our stock continued to trade sporadically thereafter. We also considered the volatility of the trading price, and the time it would take the market to absorb an influx of over this volume of shares upon conversion of the preferred shares and shares underlying the warrants based on then current trading volumes. Accordingly, we used level 2 inputs and level 3 inputs for purposes of our ASC 815 and ASC 820 analysis.

As of August 12, 2009, the Company's registration statement became effective, terminating the cashless exercise feature.

All of the warrants we issued in 2010 possess cashless exercise and anti-dilution features covered by ASC 815. The following factors were used to value those warrants.

3130

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

	Warrants Issued with 2010 Bridge Financing
Grant Date	2/26/2010			3/31/2010			4/30/2010			6/3/2010			6/30/2010			8/5/2010			Totals
Stock Price at Issue	$	3.40		$	3.10		$	3.00		$	3.00		$	3.00		$	2.70
Exercise Price	$	4.00		$	4.00		$	3.00		$	3.00		$	3.00		$	3.00
Warrants Granted in Connection with Debt	212,500			112,500			208,334			50,001			75,002			83,335			741,672
Warrant Term in Years	5			5			5			5			5			5
12/31/2012
Volatility	148.915		%	148.915		%	148.915		%	148.915		%	148.915		%	148.915		%
Risk Free Rate of Return	0.25		%	0.25		%	0.25		%	0.25		%	0.25		%	0.25		%
Change in Value	$244,378			$131,182			$253,470			$61,430			$92,816			$104,062			$887,338
Value at Quarter End	$315,497			$170,281			$340,076			$82,833			$125,637			$141,569			$1,175,893
3/31/2013
Volatility	165.055		%	165.055		%	165.055		%	165.055		%	165.055		%	165.055		%
Risk Free Rate of Return	0.25		%	0.25		%	0.25		%	0.25		%	0.25		%	0.25		%
Change in Value	$12,520			$7,005			$11,970			$2,989			$4,607			$5,276			$44,367
Value at Quarter End	$328,017			$177,286			$352,046			$85,822			$130,244			$146,845			$1,220,260
6/30/2013
Volatility	172.326		%	172.326		%	172.326		%	172.326		%	172.326		%	172.326		%
Risk Free Rate of Return	0.36		%	0.36		%	0.36		%	0.36		%	0.36		%	0.36		%
Change in Value	$(7,898)			$(3,625)			$(5,175)			$(1,054)			$(1,375)			$(1,250)			$(20,377)
Value at Quarter End	$320,119			$173,661			$346,871			$84,768			$128,869			$145,595			$1,199,883
9/30/2013
Volatility	177.068		%	177.068		%	177.068		%	177.068		%	177.068		%	177.068		%
Risk Free Rate of Return	0.10		%	0.10		%	0.33		%	0.33		%	0.33		%	0.33		%
Change in Value	$	(261,953	)	$	(140,922	)	$	(276,366	)	$	(67,070	)	$	(101,441	)	$	(113,875	)	$	(961,627	)
Value at Quarter End	$	58,166		$	32,739		$	70,505		$	17,698		$	27,428		$	31,720		$	238,256

Liabilities measured at fair value on a recurring or non-recurring basis as of ~~June~~September 30, 2013 and December 31, 2012 were as follows:

	Level 1	Level 2		Level 3	Total
2013
Derivative liabilities	—	$	1,199,883	—	1,199,883
Total Liabilities at Fair Value	—	$	1,199,883	—	1,199,883
2012
Derivative liabilities	—	1,175,893		—	1,175,893
Total Liabilities at Fair Value	—	1,175,893		—	1,175,893

Note- No assets or other liabilities were measured at fair value during 2013 or 2012.

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

The following table summarizes the terms and values of the Company’s stock purchase warrants outstanding at June 30, 2013 and December 31, 2012:



	Level 1	Level 2		Level 3	Total
2013
Derivative liabilities	—	$	238,256	—	238,256
Total Liabilities at Fair Value	—	$	238,256	—	238,256

2012
Derivative liabilities	—	1,175,893		—	1,175,893
Total Liabilities at Fair Value	—	1,175,893		—	1,175,893

Warrant Issue Date	ExercisePrice	WarrantsOutstanding	WeightedAverageRemainingLife	SharesExercisable	Black-ScholesValuation
At June 30,2013
February 26, 2010	$4.00	212,500	1.65	212,500	$320,119
March 31, 2010	$4.00	112,500	1.75	112,500	$173,661
April 30, 2010	$3.00	208,334	1.83	208,334	$346,871
June 3, 2010	$3.00	50,001	1.92	50,001	$84,768
June 30, 2010	$3.00	75,002	2.00	75,002	$128,869
August 5, 2010	$3.00	83,335	2.10	83,335	$145,595
AA Warrants	$1.81	215,518	0.50	215,518	$85.619
Totals		957,190		957,190	$1,285,502
Weighted Average Exercise Price					$3.07
At December 31, 2012
February 26, 2010	$4.00	212,500	2.15	212,500	$315,497
March 31, 2010	$4.00	112,500	2.25	112,500	$170,282
April 30, 2010	$3.00	208,334	2.33	208,334	$340,076
June 3, 2010	$3.00	50,001	2.42	50,001	$82,833
June 30, 2010	$3.00	75,002	2.50	75,002	$125,637
August 5, 2010	$3.00	83,335	2.68	83,335	$141,570
AA Warrants	$1.81	215,518	1.00	215,518	$85,619
Totals		957,190		957,190	$1,261,514
Weighted average exercise price					$3.07

Note- No assets or other liabilities were measured at fair value during 2013 or 2012.

The following table summarizes the terms and values of the Company’s stock purchase warrants outstanding at September 30, 2013 and December 31, 2012:



Warrant Issue Date	Exercise Price	Warrants Outstanding	Weighted Average Remaining Life	Shares Exercisable	Black-Scholes Valuation
At September 30,2013
February 26, 2010	$4.00	212,500	1.41	212,500	$320,119
March 31, 2010	$4.00	112,500	1.50	112,500	$173,661
April 30, 2010	$3.00	208,334	1.58	208,334	$346,871
June 3, 2010	$3.00	50,001	1.67	50,001	$84,768
June 30, 2010	$3.00	75,002	1.75	75,002	$128,869
August 5, 2010	$3.00	83,335	1.85	83,335	$145,595
AA Warrants	$1.81	215,518	0.33	215,518	$85.619

Totals		957,190		957,190	$1,285,502
Weighted Average Exercise Price					$3.07

At December 31, 2012
February 26, 2010	$4.00	212,500	2.15	212,500	$315,497
March 31, 2010	$4.00	112,500	2.25	112,500	$170,282
April 30, 2010	$3.00	208,334	2.33	208,334	$340,076
June 3, 2010	$3.00	50,001	2.42	50,001	$82,833
June 30, 2010	$3.00	75,002	2.50	75,002	$125,637
August 5, 2010	$3.00	83,335	2.68	83,335	$141,570
AA Warrants	$1.81	215,518	1.00	215,518	$85,619

Totals		957,190		957,190	$1,261,514
Weighted average exercise price					$3.07

NOTE 14 – EARNINGS PER SHARE

~~Basic~~ earnings/(loss) per common share represents the amount of earnings/ (loss) for the period available to each share of common stock outstanding during the reporting period. Diluted earnings (loss) per common share is the amount of earnings (loss) for the period available to each share of common stock outstanding during the reporting period and to each share that would have been outstanding assuming the issuance of common shares for all dilutive potential common shares outstanding during the period.32

Potentially dilutive securities consist of options, warrants and convertible preferred stock. There were 1,447,901 outstanding options convertible into one share each of common stock at June 30, 2013. Stock purchase warrants outstanding at June 30, 2013 totaled 957,190 warrants convertible into an equal number of common shares. There were also three series of convertible preferred shares outstanding. Series A Preferred totaled 6,668,229 and convert into one share each of common stock. As of June 30, 2013 there were 112,915 shares of Series D Preferred stock listed as temporary equity. Based on their liquidation preference of $50.00 per share and the stated conversion rate of $3.00, the potential gross dilution represents 1,881,917 shares of common stock.

MedPro Safety Products, Inc.

Notes to Financial Statements

(Unaudited)

AsBasic ofearnings/(loss) ~~June 30,~~per ~~2013~~common ~~there~~share ~~were~~represents ~~20,000~~the ~~shares~~amount of ~~Series~~earnings/(loss) Efor ~~Preferred~~the ~~stock~~period ~~listed~~available asto ~~temporary~~each ~~equity. Based~~share onof ~~their~~common ~~liquidation~~stock ~~preference~~outstanding ofduring ~~$50~~the reporting period.00 Diluted earnings (loss) per common share ~~and~~is the ~~stated~~amount ~~conversion~~of ~~rate~~earnings (loss) for the period available to each share of ~~$3.00,~~common stock outstanding during the ~~potential~~reporting ~~gross~~period ~~dilution~~and ~~represents~~to ~~333,333~~each ~~shares~~share that would have been outstanding assuming the issuance of common ~~stock~~shares for all dilutive potential common shares outstanding during the period.

~~Since~~Potentially ~~the~~dilutive ~~Company~~securities ~~had~~consist aof ~~loss for the 2012, the potentially dilutive~~ options, warrants and convertible preferred ~~shares~~stock. There were ~~not~~1,447,901 ~~considered~~outstanding ~~and~~options ~~earnings~~convertible ~~per~~into one share ~~were~~each ~~only~~of ~~presented~~common onstock aat ~~non-dilutive~~September 30, ~~basis~~2013. ~~All~~ Stock ofpurchase ~~the available options and~~ warrants outstanding at ~~June~~September 30, 2013 ~~had~~totaled an957,190 ~~exercise~~warrants ~~price~~convertible ininto ~~excess~~an equal number of ~~current~~common ~~market~~shares. There ~~value~~were ~~therefor~~also ~~would~~three ~~not~~series ~~have~~of ~~been~~convertible ~~exercised~~preferred shares outstanding. Series A Preferred totaled 6,668,229 and ~~the~~convert ~~calculations~~into ~~were~~one ~~not~~share ~~performed~~each of common stock. ~~Had~~As ~~calculations~~of ~~been~~September 30, ~~performed~~2013 ~~assuming~~there ~~exercise~~were 126,415 shares of ~~all~~Series ~~options~~D Preferred stock listed as temporary equity. Based on their liquidation preference of $50.00 per share and the ~~effect~~stated ~~would~~conversion ~~have~~rate ~~been~~of ~~anti-dilutive~~$3. 00, the potential gross dilution represents 2,106,917 shares of common stock.

As 34of September 30, 2013 there were 20,000 shares of Series E Preferred stock listed as temporary equity. Based on their liquidation preference of $50.00 per share and the stated conversion rate of $3.00, the potential gross dilution represents 333,333 shares of common stock.

Since the Company had a loss for the 2012, the potentially dilutive options, warrants and preferred shares were not considered and earnings per share were only presented on a non-dilutive basis. All of the available options and warrants outstanding at September 30, 2013 had an exercise price in excess of current market value therefor would not have been exercised and the calculations were not performed. Had calculations been performed assuming exercise of all options the effect would have been anti-dilutive.

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

The following discussion and analysis of the financial condition and results of operations of MedPro Safety Products, Inc. as of ~~June~~September 30, 2013 and December 31, 2012 should be read in conjunction with our audited financial statements and the notes to those financial statements that are included elsewhere in this report or in our 2012 Annual Report on Form 10-K. References in this Management’s Discussion and Analysis or Plan of Operations to “us,” “we,” “our,” and similar terms refers to MedPro Safety Products, Inc.

Preliminary Note Regarding Forward-Looking Statements

This report contains statements about future expectations, activities and events that constitute forward-looking statements. Forward-looking statements are based on our beliefs, assumptions and expectations of our future financial and operating performance and growth plans, taking into account the information currently available to us. Any statements that are not statements of historical fact are forward-looking statements. Words such as “believe,” “may,” “should,” “anticipate,” “estimate,” “expect,”, “intend,” , “likely,” “objective,” “seek,” “plan,” “strive” or similar words, or the negatives of these words, identify forward-looking statements.

Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements. In addition to the other factors discussed in “Item 1A Risk Factors” of our Annual Report on Form 10-K, for the year ended December 31, 2012 and our subsequent reports, factors that could contribute to those differences include, but are not limited to:


•	Our limited financial resources and our ability to fund development of our products and operations from third party financing and cash flow from operations.

• New product introductions by current or future competitors ~~could~~that adversely affect our ability to compete in the global market.


•	The ability of our competitors with greater financial resources to develop and introduce products and services that enable them to compete more successfully than we can.


•	The continued service of key management personnel.


•	Our ability to attract, motivate and retain qualified employees.

•

Difficulties inherent in product development, including the potential inability to successfully continue technological innovation, complete clinical trials, obtain regulatory approvals in the United States and abroad, or gain and maintain market approval of products, as well as the possibility of encountering infringement claims by competitors with respect to patent or other intellectual property rights, all of which can preclude or delay commercialization of a product.


•	Potential litigation or other proceedings, including product liability and patent infringement claims adverse to us.


•	Product efficacy or safety concerns resulting in product recalls, regulatory action on the part of the FDA (or foreign counterparts) or declining sales.


•	Our ability to maintain favorable supplier arrangements and relationships with manufacturers and distributors of our products.


•	The effects, if any, of adverse media exposure or other publicity regarding our business, products or operations.


•	Changes in government laws and regulations affecting the medical device industry, sales practices, price controls, licensing and regulatory approval of new products, or changes in enforcement practices with respect to any such laws and regulations.

Forward-looking statements are not guarantees of performance or results. A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. We believe we have chosen these assumptions or bases in good faith and that they are reasonable. We caution you, however, that actual results almost always vary from forward looking statements, and the differences can be material. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this report. These statements speak only as of the date of this report (or an earlier date to the extent applicable). We do not intend to update these statements unless applicable laws require us to do so.

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Overview

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

Our first line of safety products was developed for phlebotomy, blood collection and infusion uses. In July 2010, we entered into a contract with Greiner Bio-One GmbH (“GBO”) that granted GBO exclusive rights to manufacture, market and distribute MedPro's three blood collection and infusion products (the “GBO agreement”). During the six-year term of the GBO agreement, beginning with the fourth quarter of 2010, we were to receive quarterly royalty payments totaling not less than $43,750,000 over the six years, and would pay quarterly contributions over the six years totaling approximately $6,650,000 to cover a portion of the anticipated marketing expenses.

On September and October 2010, we sold Senior Secured 14% Notes due 2016 (the “14% Senior Notes”) in the aggregate principal amount of $30 million to institutional investors. The guaranteed royalty revenues from the GBO agreement were dedicated to covering the quarterly principal and interest payment due on the 14% Senior Notes through maturity in 2016. We received approximately $23,294,000 in net proceeds after establishing an interest reserve and paying offering expenses. We used the net proceeds to pay off all of our outstanding bank debt and bridge loans, pay the marketing contributions and royalties on our blood collection technology, and finance the development of other safety products in our portfolio through August 2012.

On December 31, 2012 the Company executed agreements with GBO and the holders of the 14% Senior Notes, to sell its patents to GBO for $29,400,000. ~~These~~Effective ~~agreements provided, effective~~ March 1, 2013, the agreements resulted in:

• The sale by MedPro ~~sold~~of the patents and other intellectual property underlying the three blood collection and infusion products to GBO, and the GBO agreement and the obligations of MedPro and GBO thereunder were terminated. As a result, MedPro was relieved of all obligations ~~for~~under ~~marketing assistance payments or royalties based on production of~~ the GBO ~~products~~agreement ~~under~~for ~~the~~marketing ~~Medical~~assistance ~~Supply Manufacturing Agreement of 2010~~payments.

• The payment by GBO ~~paid~~of $22 million to the Noteholders and ~~has~~the ~~agreed~~commitment to pay an additional $7.4 million to the Noteholders on February 1, 2014.

• ~~Our~~The termination and cancellation of our 14% Senior Notes and all of the agreements and instruments related to them. ~~were~~All ~~terminated and canceled, and all~~ of our obligations thereunder were discharged.

• ~~GBO~~The ~~granted~~grant ~~back~~by GBO to usMedPro an exclusive, worldwide, royalty-free, fully paid up license to use certain of the transferred intellectual property in specific fields of use other than blood collection and phlebotomy. We valued the license at $1,000,000 based on estimated future revenue during the remainder of the patent term.


•	The Company agreed to settle its royalty obligation related to the transferred intellectual property for $1,550,000, with payments commencing on December 31, 2013 and ending on December 31, 2014.

Our current strategy focuses on completing the steps necessary to attain pre-market product development milestones for our family of drug delivery devices. Our objective is to enter into strategic partnership agreements with major medical products distribution partners that, whenever possible, can make a financial contribution toward product development costs.

Since September 2012, we have been funding our operations from a line of credit extended by our principal investor. The credit agreement ~~allows~~allowed us to draw ~~up to~~ $4,285,000 over twelve months ~~ending~~ended August 2013, and matures on December 31, 2013. On July 17, 2013, the agreement was modified to stretch the funding out through October with an amended draw schedule through September 30, 2013. There was no change in the overall amount of the draws.

IfThe ~~fully~~debt ~~funded,~~has webeen ~~will~~fully befunded ~~obligated~~and towe ~~issue~~have ~~128~~issued 126,~~875~~415 shares of newly created Series D Stock. The Series D Stock has a liquidation preference of $50.00 per share and is convertible into common stock at a conversion price of $3.00 per common share. The investor also has right to put the Series D Stock back to the Company at $50 per share beginning March 12, 2014. The terms of our financing arrangement with our principal investor are more fully discussed in Notes 6, 9 and 12 of the notes to our financial statements included in this report.

For several months we have been actively seeking short-term and long-term funding from a number of potential financing sources, and have been working with an investment banking firm to assist us in those efforts. If we are unable to ~~obtain additional funding on acceptable terms when needed, we may be required to take actions that constrain our business and~~

3635

obtain additional funding on acceptable terms when needed, we may be required to take actions that constrain our business and our ability to achieve cash flow in the future, including possibly the surrender of our rights to some technologies or product opportunities, delaying product development and commercialization, or curtailing or suspending operations.

Critical Accounting Estimates and Judgments

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

We recognize sales and associated cost of sales when delivery has occurred and collectability is probable. ~~We began recognizing revenue under the GBO agreement for the fourth quarter of 2010.~~ Historically, we have had minimal returns for credit, so no reserve for product returns has been established. Our former customer ~~has~~had manufacturing responsibility and ~~would~~was be responsible for returns of product. We provide for probable uncollected amounts through a charge to earnings and a credit to the allowance for doubtful accounts based on our assessment of the current status of individual accounts.

Our intangible assets consist principally of intellectual properties such as regulatory product approvals and patents. Our current amortization policy calls for using the straight line method based on an estimated economic life, after the products are introduced into the market.

Our Syringe Guard family of products are currently not in production for distribution. We expect to use the straight line method to amortize our other intellectual properties over their estimated period of benefit, ranging from one to ten years, when our products are placed in full production and we can better evaluate market demand for our technology.

Our license to use certain safety needle technology is not in service and has not been amortized. We will begin amortization when production commences.

We will continue to review impairment of all of our intellectual property and intangibles during the intervening periods. We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or indicate that impairment exists. Once our intellectual property has been placed into productive service and after an impairment determination, we utilize a net present value of future cash flows analysis to calculate carrying value. Our forecasted revenue on our current portfolio of intellectual property over the next seven years, discounted to the balance sheet date based on a 7.5% discount factor ($3726.13 million), exceeds our cost of our patents and expected development costs ($137.13 million) by approximately ~~three~~two and one-half times.

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

3736

Results of Operations for the ~~Six~~Nine Month Periods Ended ~~June~~September 30, 2013 and 2012

A summary of operating results for the nine month periods ended September 30, 2013 and 2012 is reflected in the following table:

	June 30, 2013		June 30, 2012		Change
	September 30, 2013		September 30, 2012		Change
Revenue	$100,000		$12,~~781~~671,~~250~~875		$(12,~~681~~571,~~250~~875)
Gain on Sale of Assets	26,548,981		—		26,548,981
Cost of Sales	—		(~~343~~514,~~173~~759	)	~~343~~514,~~173~~759
Gross Profit (Loss)	26,648,981		12,~~438~~157,~~077~~116		2524,~~210~~491,~~904~~865
Operating Expenses	3,~~016~~772,~~781~~176		46,~~846~~738,~~135~~885		(12,~~829~~966,~~354~~709	)
Income or (Loss) from Operations	2322,~~632~~876,~~200~~805		(34,~~408~~581,~~058~~769	)	27,~~040~~458,~~258~~574
Other Income/(Expense)	~~(225~~638,~~365~~133	)	(12,~~955~~511,~~491~~490	)	13,~~730~~149,~~126~~623
Net Income or (Loss)	$23,~~406~~514,~~835~~938		$(57,~~363~~093,~~549~~259)		$2830,~~770~~608,~~384~~197
Debt Discount Accretion	(~~448~~781,~~286~~473	)	—(7,766	)	(~~448~~773,~~286~~707	)
Net Income or (Loss) Available to Common Shareholders	$22,~~958~~733,~~549~~465		$(57,~~363~~101,~~549~~025)		$2829,~~322~~834,~~098~~490

MedPro recorded a net loss of $(1225,~~411,946~~083) for the three months ended ~~June~~September 30, 2013, as compared to a net loss of $(1,~~828~~737,~~716~~476) for three months ended ~~June~~September 30, 2012. Income or (loss) from operations was $(1755,~~064,781~~393) for the three months ended ~~June~~ September 30, 2013 and $(1,~~220~~173,~~107~~710) for the same period in 2012. Debt discount accretion for the ~~second~~third quarter of 2013 was $~~283~~333,~~247~~187.

There were no product ~~sales~~royalty ~~revenue~~revenues for the three ~~or six~~ months ended ~~June~~September 30, 2013 compared to $890,625 and $12,~~781~~671,~~250~~875 for the same periods in the prior year. We did receive fee income of $100,00 in connection with product development activity in the current year. Revenue for ~~both~~the three month ~~periods~~period ended ~~June~~September 30, ~~2013 and~~ 2012 consisted entirely of ~~either~~ royalty income from the Company's minimum volume contract for its blood collection devices ~~or fee income for access to the Company's licensed or patented technology~~. Cost of revenue and amortization of intellectual property was $~~343~~171,~~173~~586 for the ~~six~~three months ended September 30, 2012 and $~~171~~514,~~586~~759 for the ~~three~~nine months ended ~~June~~September 30, 2012.

A table of comparison of 2013 and 2012 compensation and related expenses follows:

	June 30, 2013	June 30, 2012	Change
	September 30, 2013	September 30, 2012	Change
Salaries	$~~671~~950,~~559~~464	$1,~~228~~715,~~122~~908	$(~~556~~765,~~563~~444)
Share-Based Compensation	~~260~~371,~~384~~003	~~312~~476,~~564~~414	(52105,~~180~~411	)
Payroll Taxes	5059,~~964~~463	86108,~~162~~759	(3549,~~198~~296	)
Total Compensation Related	$~~982~~1,~~907~~380,930	$12,~~626~~301,~~848~~081	$(~~643~~920,~~941~~151)

The decreases in ~~Salaries~~salaries and payroll taxes were primarily due to staffing changes in 2013 and a $200,000 performance based bonus paid to the CEO in 2012. There have been no bonuses paid in 2013 based on 2012 performance and no staff bonuses in either 2012 or 2013. Share-based compensation decreased by $52105,~~180~~411 in 2013. Only the CEO and the Board were ~~awarded options in 2012. In addition, as the result of a decline in staffing in 2013, many share-based options lapsed and the compensation expense was adjusted accordingly.~~

In ~~2012 the Company granted 225,000 options valued at $335,432. Remaining unearned compensation at June 30, 2013 was $1,090,267.~~37

awarded 38options in 2012. In addition, as the result of a decline in staffing in 2013, many share-based options lapsed and the compensation expense was adjusted accordingly.

~~Total~~In ~~compensation~~2012 ~~expense,~~the ~~share-based~~Company ~~compensation~~granted ~~and~~225,000 ~~payroll~~options ~~taxes~~valued inat ~~the~~$335,432. Remaining ~~second~~unearned ~~quarter~~compensation ofon ~~2013~~all ~~was~~outstanding ~~$383,229~~options ~~versus~~at ~~$689~~September 30,~~680~~ in2013 ~~the~~was ~~same quarter of 2012~~$979,648.

	June 30, 2013	June 30, 2012	Change
Company 401(k) Match	$16,995	$38,548	$(21,553)
Profit Sharing Contribution	—	—	—
Total Qualified Plan Expenses	$16,995	$38,548	$(21,553)

Total compensation expense, share-based compensation and payroll taxes in the third quarter of 2013 was $110,619 versus $163,850 in the same quarter of 2012.

Costs associated with our qualified defined contribution plan are reflected in the following table:

There were no 2013 or 2012 discretionary contributions to the profit sharing plan. The second quarter costs for the plan were $8,739 and $17,519 for 2013 and 2012, respectively. The change is due to reduction in staffing and related compensation.



	September 30, 2013	September 30, 2012	Change
Company 401(k) Match	$26,598	$58,657	$(32,059)
Profit Sharing Contribution	—	—	—
Total Qualified Plan Expenses	$26,598	$58,657	$(32,059)

There were no 2013 or 2012 discretionary contributions to the profit sharing plan. The third quarter costs for the plan were $9,602 and $19,704 for 2013 and 2012, respectively. The change is due to reductions in staffing and related compensation.

Details of the advertising and promotion expenses in 2013 and 2012 are as follows:

	June 30, 2013	June 30, 2012	Change
	September 30, 2013	September 30, 2012	Change
Investor Relation Expenses	$3,525	$2742,~~742~~647	$(2439,~~217~~122)
Marketing Assistance Payment	—	~~270~~406,~~750~~125	$(~~270~~406,~~750~~125)
Promotional Expenses	10,260	18,~~461~~984	$(8,~~201~~724)
Trade Show Expenses	847	4960,~~386~~971.2	$(4860,~~539~~124)
Total Advertising and Promotion	$14,632	$~~366~~528,~~339~~727	$(~~351~~514,~~707~~095)

Advertising and promotion expense decreased significantly from 2012 as a result of implementation of cost control measures. ~~Second~~Third quarter costs for advertising and promotion were $~~166~~162,~~485~~387 in 2012 and nothing in 2013. Our obligation to make marketing assistance payments terminated in 2013 with the the December 31, 2012 agreement to sell patents to GBO.

Product development costs for 2013 and 2012 are reflected below:

	June 30, 2013	June 30, 2012	Change
	September 30, 2013	September 30, 2012	Change
Completed Parts	$2,721	$27,692	$2(24,~~721~~971)
Engineering	4768,~~484~~883	$~~535~~730,~~892~~654	$(~~488~~661,~~408~~771)
Materials and Components	6,132	92142,~~571~~017	$(86135,~~439~~885)
Research and Development	1,~~012~~013	3,~~110~~183	$(2,~~098~~170)
Testing	—	1015,~~923~~603	$(1015,~~923~~603)
Total Product Development Costs	$5778,~~349~~749	$~~642~~919,~~496~~149	$(~~585~~840,~~147~~400)

The decrease in product development costs is as a result of deferring development cost due to limited financial resources. The Company intends to ramp up these expenses as soon as funding is available in 2013. Costs in this category were $2621,~~787~~399 and $~~273,~~276,653 in the ~~second~~third quarter of 2013 and 2012, respectively.

3938

The following tables compares 2013 and 2012 professional fees:

	June 30, 2013	June 30, 2012	Change
	September 30, 2013	September 30, 2012	Change
Patent - Legal	$~~140~~186,~~637~~158	$~~172~~268,~~226~~669	$(3182,~~589~~511)
General - Legal	6586,~~427~~960	~~182~~327,~~445~~440	(~~117~~240,~~018~~480	)
Accounting and Auditing	6680,~~429~~888	7792,~~346~~373	(1011,~~917~~485	)
Regulatory Audits	4,870	47,~~720~~557	~~150~~(2,687	)
Consulting Fees	~~261~~270,~~866~~400	~~498~~620,~~647~~706	(~~236~~350,~~781~~306	)
Quality Testing and Other	—	3,944	(3,944	)
Total Professional Fees	$~~539~~629,~~229~~276	$~~939~~1,~~328~~320,689	$(~~400~~691,~~099~~413)

The majority of the decrease in professional fees is due to the curtailment of the involvement of consultants in day to day operations. Legal fees are down a combined $~~148~~322,~~607~~990 for 2013. The Company has limited the use of outside counsel during the ~~first~~nine ~~half~~months ofended September 30, 2013. Professional fees in the ~~second~~third quarter of 2013 were $~~227~~90,~~402~~046 versus $~~348~~381,~~476~~361 in the same period in 2012.

Comparative travel and entertainment expenses between 2013 and 2012 are reflected in the table that follows:

	June 30, 2013	June 30, 2012	Change
	September 30, 2013	September 30, 2012	Change
Airfare, cars, ground, parking, mileage and travel insurance	$5378,~~854~~254	$~~146~~195,~~778~~099	$(92116,~~924~~845)
Hotels, conference rooms, entertainment, meals and gratuities	2536,~~835~~625	84102,~~275~~646	(5866,~~440~~021	)
Total Travel and Entertainment	$79114,~~689~~879	$~~231~~297,~~053~~745	$(~~151~~182,~~364~~866)

The decrease in total travel and entertainment expenses reflected a concerted effort to reduce travel costs in 2013. For the ~~second~~third quarter of 2013, travel expenses were $35,~~667~~190 versus $7766,~~209~~692 in the prior year ~~second~~third quarter.

The following table compares general and administrative expenses for 2013 and 2012:

	June 30, 2013	June 30, 2012	Change
	September 30, 2013	September 30, 2012	Change
Office and Warehouse Lease	$47,649	$107,004	$(59,355)
Office Lease	$71,649	$155,393	$(83,744)
Director Fees	—	62,500	(62,500	)
Network Support	5577,~~291~~181	6586,~~223~~771	(9,~~932~~590	)
Software and Website Development	40,~~597~~815	3149,~~764~~713	(8,~~833~~898	)
Contributions	—	2,350	(2,350	)
Office Expense, Utilities etc...	1744,~~820~~186	8375,~~333~~317	(6531,~~513~~131	)
Parking	710,~~600~~960	913,~~200~~999	(13,~~600~~039	)
Other General and Administration Expense	712,~~960~~036	1363,~~420~~382	(551,~~460~~346	)
Local Taxes	~~600~~604,~~828~~804	56,~~448~~877	~~595~~597,~~380~~927
Transfer Agent Costs	69,032	610,~~212~~864	(~~180~~1,832	)
Bank Charges	69,~~653~~828	58,~~176~~331	1,~~477~~497
Repairs and maintenance	47,~~904~~184	69,~~454~~862	(12,~~550~~678	)
Total G&A	$~~795~~887,~~334~~675	$~~398~~545,~~084~~359	$~~397~~342,~~250~~316

Office and warehouse lease costs were down due to the termination of the former office location lease in August 2012 and the non-renewal of our calendar year New York office lease. Director fees were suspended in late 2012 and have not been reinstated in 2013. The most significant change this year was the accrual of local taxes as a result of the gain on the sale of the GBO patents. Local taxes were $600,828 this year versus $5,448 in the first half of 2012. Total general and administrative expenses were $91,495 in the second quarter of 2013 versus 206,968 in the same quarter of 2012.

4039

reinstated in 2013. The most significant change this year was the accrual of local taxes as a result of the gain on the sale of the GBO patents. Local taxes were $600,828 this year versus $5,448 in the first nine months of 2012. Total general and administrative expenses were $92,344 in the third quarter of 2013 versus $147,274 in the same quarter of 2012.

The following table compares insurance expense items for 2013 and 2012:

	June 30, 2013	June 30, 2012	Change
	September 30, 2013	September 30, 2012	Change
Health Insurance	$6283,~~304~~638	$~~134~~185,~~656~~405	$(72101,~~352~~767)
Product Liability Coverage	35,~~849~~775	2639,~~321~~498	(2233,~~472~~723	)
Property and Casualty Coverage	911,~~218~~773	912,~~750~~937	(~~532~~1,164	)
Disability Insurance	12,~~590~~128	23,~~280~~417	(~~690~~1,289	)
D&O and Other	4468,~~147~~310	3962,~~367~~466	45,~~780~~844
Total Insurance Expense	$~~121~~171,~~108~~624	$~~212~~303,~~374~~723	$(91132,~~266~~099)

We had fifteen employees in the prior year and only six by the end of the ~~second~~third quarter of 2013 which caused a decrease in our health and benefits coverage costs. In addition, the Company elected to fund HSA contributions monthly this year versus all upfront as in the prior year. The combined impact of healthcare insurance changes and HSA funding resulted in a decrease of $72101,~~352~~767 in these costs in 2013. We have no products in the market in 2013 and, as a result, our products liability coverage has declined by $2233,~~472~~723. Insurance expense was down $3140,~~163~~834 in the ~~second~~third quarter of 2013.

Depreciation of $~~145~~204,~~884~~156 for the ~~six~~nine months ended ~~June~~September 30, 2013 was substantially unchanged from the prior year. All depreciation and amortization costs through the ~~three~~nine months ended ~~June~~September 30, 2013 totaled $72204,~~851~~156 versus $~~199~~597,~~685~~918 in 2012.

Interest expense for 2013 and 2012 was $~~201~~299,~~387~~516 and $23,~~346~~519,~~195~~292, respectively. The decrease was due to the suspension of interest on the 14% Senior Notes pending payoff in the first quarter of 2013 versus ~~two~~three quarters of interest expense in 2012.

Interest income was $12 in 2013, compared to $2,~~526~~601 in 2012, a decrease of $2,~~514~~589. The change is due primarily to the decline in our cash balance.

The net ~~loss~~gain from the change in fair value of the derivative liabilities associated with the outstanding warrants in the 2013 was $23937,~~990~~637 compared to a net ~~loss~~gain of $~~388~~1,~~178~~005,201 for 2012. The difference is attributable to variations in the inputs utilized to value the underlying derivative liabilities on the respective measurement dates and the closer proximity of the current year valuation to the expiration of the warrant exercise period. Our share price has declined and our volatility is up this year. This has resulted in the decline in the derivative liability and the resulting gain.

In 2013, the Company recorded a gain of $26,548,981 on the sale of patents to ~~a customer~~GBO. We also wrote off $263,654 of assets associated with the technology sold during 2013.

Liquidity and Capital Resources

Total assets were $7,~~428~~372,~~390~~247 as of ~~June~~September 30, 2013 and $10,764,676 as of December 31, 2012. The $3,~~336~~392,~~286~~429

decline in total assets reflects the impact of the negative cash flow from operations of $2,~~123~~619,~~226~~517. In addition, the Company sold assets for $29,400,000, but all of the proceeds, plus an additional $539,510 of cash held as an interest reserve, were used to pay off debt. Net other assets declined by $2,270,509 representing the remaining basis of assets sold or written off in 2013. Gross cost of assets sold was $3,270,509 less the addition to intellectual property of $1,000,000, for the net decline of $2,270,509.

Shareholders' deficiency decreased by $22,~~218~~104,~~934~~471. This represented the net income of $2223,~~958~~514,~~549~~941, the earned portion of share-based compensation of $~~260~~371,~~385~~003 and debt discount accretion of $~~448~~781,~~286~~473. In addition, we issued $1,000,000 of Series E Preferred Stock as a part of the payoff of the 14% Senior Notes.

~~Restricted~~ ~~cash held in the interest reserve for our 14% Senior Notes was $539,510 at the beginning of the year and zero at June 30, 2013.~~ 40

Restricted cash held in the interest reserve for our 14% Senior Notes was $539,510 at the beginning of the year was transferred to the Senior 14% Noteholders in early 2013. Our unrestricted cash decreased from $406,961 to $~~106~~210,~~995~~704 during the ~~first~~nine ~~half~~months ofended September 30, 2013, a decline of $~~299~~196,~~966~~257.

Fixed assets decreased $392,763 during the first ~~half~~nine months of 2013. During the ~~first~~three ~~half~~quarters ~~of the~~ended ~~year~~September 30, 2013 we wrote off $3,775,425 of intellectual property having a net book value of $2,218,~~079~~080 and loan fees having a net book value of $902,429 as a result of the sale of patents on March 1, 2013. In addition, the Company added patent rights granted in the sale valued at $1,000,000.

Accounts 41payable, accrued expenses and accrued interest increased by $266,274 during 2013 mostly as a result of accrued local taxes, net of the $400,484 decline in accrued interest. Accrued royalties of $1,550,000 were recorded in 2013. The current portion of accrued royalties is $750,000. The current portion of long term debt declined from $7,221,935 to $3,860,564 in the first three quarters of 2013.

Since September 2012, we have been funding our operations from a ~~result~~line of ~~the~~credit ~~sale~~extended by our principal investor, Vision Opportunity Master Fund Ltd. (“VOMF”). The credit agreement allowed us to draw up to $4,285,000 over thirteen months ending September 2013. The outstanding principal balance bears interest at an annual rate of ~~patents~~10% and matures on ~~March~~December 131, 2013. InAs ~~addition~~of December 31, 2012, the ~~Company~~amount ~~added~~available ~~patent~~for ~~rights~~future ~~granted~~draws inunder the ~~sale~~credit ~~valued~~agreement attotaled $1,843,000. During the first three quarters of 2013, the Company drew an additional $2,442,000 and the total draws now equal $4,285,000. There are no future draws available under the credit facility.

~~Accounts~~In ~~payable~~consideration for the credit line, ~~accrued~~we ~~expenses~~agreed ~~and~~to ~~accrued~~issue ~~interest~~VOMF ~~increased~~up byto ~~$678,~~126,415 ~~during~~shares ~~2013~~of ~~mostly~~new asSeries aD ~~result~~Stock, ofto ~~accrued~~be ~~local~~issued ~~taxes. Accrued~~in ~~interest~~conjunction ~~payable~~with, ~~declined~~and ~~$498,613. Accrued~~based ~~royalties~~on ofthe ~~$1,550,000~~amount ~~were~~of ~~recorded~~each indraw ~~2013~~down. The ~~current~~Series ~~portion~~D ofStock ~~long~~has ~~term~~a ~~debt~~$50.00 ~~declined~~per ~~from~~share ~~$7,221,935~~liquidation topreference ~~$3,040,153~~that inis senior to the ~~first~~Company's ~~half~~Series ofA ~~2013.~~Preferred Stock and its common stock.

Since September 2012, we have been funding our operations from a line of credit extended by our principal investor, Vision Opportunity Master Fund Ltd. (“VOMF”). The credit agreement allows us to draw up to $4,285,000 over thirteen months ending September 2013. The outstanding principal balance bears interest at an annual rate of 10% and matures on December 31, 2013. As of December 31, 2012, the amount available for future draws under the credit agreement totaled $1,843,000. During the first half, the Company drew an additional $1,243,000 and the total draws now equal $3,685,000. The amount available for future draws at June 30, 2013 was $600,000.

In consideration for the credit line, we agreed to issue VOMF up to 128,875 shares of new Series D Stock, to be issued in conjunction with, and based on the amount of each draw down. The Series D Stock has a $50.00 per share liquidation preference that is senior to the Company's Series A Preferred Stock and its common stock.

Effective on March 1, 2013, we sold the patents and other intellectual property underlying our three blood collection and infusion products to GBO, and the GBO agreement was terminated, ending our obligation to pay a quarterly marketing contribution to GBO. GBO paid $22 million to the Noteholders and has agreed to pay an additional $7.4 million to the Noteholders on February 1, 2014. As a result of these transactions, our 14% Senior Notes were canceled and all of our obligations thereunder were discharged. GBO also granted back to us an exclusive, worldwide, royalty-free, fully paid up license to use certain of the transferred intellectual property in specific fields of use other than blood collection and phlebotomy.

In connection with the termination of the GBO Agreement and the cancellation of our 14% Senior Notes, we agreed to pay a total of $1,550,000 to settle any royalty obligations arising from our original acquisition of the blood collection technology sold to GBO. We have agreed to pay four quarterly payments of $250,000 each beginning on October 31, 2013, due on December 31, 2013 and a final $550,000 payment on December 31, 2014. We have reflected $~~500~~750,000 of the total in current liabilities as of ~~June~~September 30, 2013. The balance of $1800,~~050,~~000 is reflected in long term debt.

We estimate our cash required to fund operations at the current level will be approximately $200,000 per month. Our primary cash requirements will be to fund the launch of our drug delivery devices, our prefilled syringe series of products and two new products we are evaluating for purchase and development. Our ability to continue operations at their current level will depend upon our cash position from time to time.

We have no outstanding bank debt and no debt associated with our leasehold improvements or equipment. We have taken numerous actions to reduce operating expense. To avoid the capital costs associated with replacement of our existing servers, we converted to virtual private servers and are utilizing cloud technology.

For several months we have been actively seeking short-term and long-term funding from a number of potential financing sources, and have been working with an investment banking firm to assist us in those efforts. Covenants in our credit line agreement preclude us from borrowing more than $250,000 without approval by VOMF.

We cannot be certain that additional financing will be available on acceptable terms, or at all. To the extent we raise additional capital through the sale of equity securities, the ownership position of our existing shareholders could be substantially diluted. To the extent we raise additional capital through the sale of debt securities or by incurring additional indebtedness, the value of our existing equity securities could be negatively affected.

If we are unable to obtain additional funding on acceptable terms, we may need to take actions that restrain our business and our ability to achieve cash flow in the future, including the surrendering our rights to some technologies or product opportunities, delaying product development and commercialization, or curtailing operations. The Series D Note includes a covenant that if we do not enter into a definitive agreement with respect to an additional equity funding of at least $10 million before November 30, 2012, and do not receive such funds before December 31, 2012, then we must implement a strategic alternative process to be agreed to by us and our principal investor. We began this process during the first quarter of 2013 and it continues through the current quarter.

opportunities, delaying product development and commercialization, or curtailing or suspending operations. The Series D Note includes a covenant that if we do not enter into a definitive agreement with respect to an additional equity funding of at least $10 million before November 30, 2012, and do not receive such funds before December 31, 2012, then we must implement a strategic alternative process to be agreed to by us and our principal investor. We began this process during the first quarter of 2013 and it continues through the current quarter.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are not party to any forwards and futures, options, swaps, or other instruments that would expose us to market risk associated with activities in derivative financial instruments, other financial instruments, and derivative commodity instruments. We currently have no bank indebtedness. Our 14% Senior Notes were canceled and our obligations thereunder discharged on March 1, 2013.

Our line of credit from our principal investor bears interest at an annual rate of 10% and matures on December 31, 2013. This obligation is recorded at relative fair market value based upon an allocation of the face amount of the debt between the amount we draw on the credit line and the Series D Preferred Stock issued in conjunction with those draws. The discount on the debt is being amortized over the period beginning on the loan date and ending on December 31, 2013, based on a yield to maturity method. The actual interest and discount accretion results in an effective interest rate substantially above the 10% stated rate.

Item 4. Controls and Procedures

MedPro’s management, under the supervision and with the participation of the Chief Executive Officer (the “CEO”) and Chief Financial Officer (the “CFO”), evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of ~~June~~September 30, 2013. Based on that evaluation, the CEO and CFO concluded that MedPro’s disclosure controls and procedures are effective in timely making known to them material information required to be disclosed in the reports filed or submitted under the Securities Exchange Act. There were no changes in MedPro’s internal control over financial reporting during the year that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.

Limitations on the Effectiveness of Controls

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

PART II

Item 1. Legal Proceedings

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

Item 1A. Risk Factors.

Information regarding risk factors appears in our Annual Report on Form 10-K for the year ended December 31, 2012 under Item 1A-Risk Factors. Except as noted below, there have been no material changes from the risk factors previously discussed in our Form 10-K filed for the year ended December 31, 2012.

~~Information~~We ~~regarding~~will ~~risk~~need ~~factors~~substantial ~~appears~~additional infunding ~~our~~to ~~Annual~~develop ~~Report~~our onproducts ~~Form~~and ~~10-K~~ for ~~the~~our ~~year~~future ~~ended~~operations. ~~December~~If ~~31,~~we ~~2012~~cannot ~~under~~obtain ~~Item~~the ~~1A-Risk~~funds ~~Factors. There~~necessary ~~have~~to ~~been~~do noso, ~~material~~we ~~changes~~may ~~from~~be ~~the~~required ~~risk~~to ~~factors~~delay, ~~previously~~scale ~~discussed~~back inor eliminate our ~~Form~~product ~~10-K~~development ~~filed~~and ~~for~~may ~~the~~be ~~year~~unable ~~ended~~to ~~December~~continue ~~31,~~our ~~2012~~business.

Since September 2012, we have been funding our operations from a line of credit extended by our principal investor, Vision Opportunity Master Fund Ltd., which allowed us to draw up to $4,285,000 over thirteen months ending September 2013. It also includes covenants that restrict our ability to incur additional debt without VOMF's consent. The outstanding principal balance bears interest at an annual rate of 10% and matures on December 31, 2013. As of the date of this report, we have drawn the full amount available under this line of credit.

We have no outstanding bank debt and no debt associated with our leasehold improvements or equipment. Our principal outstanding obligations are the line of credit from VOMF which matures on December 31, 2013, royalty payments

totaling $1,550,000 payable quarterly from December 31, 2013 through December 31, 2014, and amounts payable to professional advisors.

We will need financing in addition to our limited amount of cash on hand to meet our outstanding obligations and maintain our present operations in the fourth quarter of 2013 and beyond. However, we cannot be certain that additional financing will be available on acceptable terms, or at all.

Failure to successfully address our funding requirements will have a material adverse effect on our business. If we are unable to obtain additional capital on acceptable terms when needed, we may be required to take actions that harm our business and our ability to achieve cash flow in the future, including possibly the surrender of our rights to some technologies or product opportunities, delaying our clinical trials, or curtailing or ceasing operations.

To the extent we raise additional capital through the sale of equity securities, the ownership position of our existing stockholders could be substantially diluted. If additional funds are raised through the issuance of preferred stock or debt securities, these securities are likely to have rights, preferences and privileges senior to our common stock. Fluctuating interest rates could also increase the costs of any debt financing we may obtain. To the extent we raise additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to our products, or grant licenses on unfavorable terms.

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

On March 1, 2013, we issued a total of 20,000 shares of Series E Convertible Preferred Stock to seven institutional investors in consideration for the termination and discharge of our 14% Senior Notes that they held. We relied upon the exemptions from registration provided by Sections 3(a)(9) and 4(2) of the Securities Act of 1933. See Note 12 of the Notes to Financial Statements.

During 43the nine months ended September 30, 2013, we issued a total of 41,469 shares of Series D Convertible Preferred Stock to VOMF in consideration of the $1,843,000 drawn on our line of credit during the first nine months of the year. We relied upon the exemptions from registration provided by Sections 4(2) of the Securities Act of 1933. See Notes 9 and 12 of the Notes to Financial Statements.

~~During~~There ~~the~~were ~~six~~no ~~months~~purchases ~~ended June 30, 2013, we issued a total~~ of ~~27,969 shares of Series D Convertible Preferred Stock to VOMF in consideration of the $1,243,000 drawn on~~ our ~~line~~own ofstock ~~credit~~ during ~~the first half of the year~~2013. ~~We relied upon the exemptions from registration provided by Sections 4(2) of the Securities Act of 1933. See Notes 9 and 12 of the Notes to Financial Statements.~~

There were no purchases of our own stock during the first half of 2013.

Item 3. Default Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits and Financial Statement Schedules

	3.1		Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on January 4, 2008).
	3.2		Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K filed on January 4, 2008).
	3.3		Bylaw amendment dated August 10, 2009 (incorporated herein by reference to Form 8-K filed on August 17, 2008).
	4.1		Certificate of Designations, Series A Convertible Preferred Stock Turner (incorporated by reference to Exhibit 4.1 to Amendment No. 1 on Form S-1/A (Reg. No. 333-149163) filed on July 3, 2008).
	4.2		Series A Convertible Stock Purchase Agreement dated as of September 5, 2007 (incorporated by reference to Exhibit 4.6 to Form 10-K filed on April 18, 2008).
	4.3		Amendment to Certificate of Designations, Series A Convertible Preferred Stock (incorporated by reference to Exhibit 4.6 to Form 10-K filed on March 30, 2009)
	4.4		Form of Common Stock Purchase Warrant held by Vision Opportunity Master Fund, Ltd. (incorporated by reference to Exhibit 4.9 to Form 10-K filed on March 30, 2010).
	4.5		Certificate of Designations, Series E Convertible Preferred Stock (incorporated herein by reference to Exhibit 3.1 to Form 8-K filed January 7, 2013).
	4.6		Amendment to Certificate of Designations, Series A Convertible Preferred Stock dated September 24, 2012.
	4.7		Certificate of Designations, Series D Convertible Preferred Stock (incorporated herein by reference to Exhibit 3.1 to Form 8-K filed September 18, 2012).
	10.1		Technology Development and Option Agreement, between SGPF, LLC and MedPro Safety Products, Inc. (incorporated by reference to Exhibit 10.2 to Form 10-K filed on April 18, 2008).
	10.2		Amendment to Technology Development and Option Agreement, between SGPF, LLC and MedPro Safety Products, Inc. (incorporated by reference to Exhibit 10.1 to Form 8-K filed on October 6, 2008).
	10.3		Second Amendment to Technology Development and Option Agreement, between SGPF, LLC and MedPro Safety Products, Inc. (incorporated by reference to Exhibit 10.4 to Form 10-Q filed on November 15, 2010).

Exhibits and Financial Statement Schedules



	3.1		Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on January 4, 2008).
	3.2		Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K filed on January 4, 2008).
	3.3		Bylaw amendment dated August 10, 2009 (incorporated herein by reference to Form 8-K filed on August 17, 2008).
	4.1		Certificate of Designations, Series A Convertible Preferred Stock Turner (incorporated by reference to Exhibit 4.1 to Amendment No. 1 on Form S-1/A (Reg. No. 333-149163) filed on July 3, 2008).
	4.2		Series A Convertible Stock Purchase Agreement dated as of September 5, 2007 (incorporated by reference to Exhibit 4.6 to Form 10-K filed on April 18, 2008).
	4.3		Amendment to Certificate of Designations, Series A Convertible Preferred Stock (incorporated by reference to Exhibit 4.6 to Form 10-K filed on March 30, 2009)
	4.4		Form of Common Stock Purchase Warrant held by Vision Opportunity Master Fund, Ltd. (incorporated by reference to Exhibit 4.9 to Form 10-K filed on March 30, 2010).
	4.5		Certificate of Designations, Series E Convertible Preferred Stock (incorporated herein by reference to Exhibit 3.1 to Form 8-K filed January 7, 2013).
	4.6		Amendment to Certificate of Designations, Series A Convertible Preferred Stock dated September 24, 2012.
	4.7		Certificate of Designations, Series D Convertible Preferred Stock (incorporated herein by reference to Exhibit 3.1 to Form 8-K filed September 18, 2012).
	10.1		Technology Development and Option Agreement, between SGPF, LLC and MedPro Safety Products, Inc. (incorporated by reference to Exhibit 10.2 to Form 10-K filed on April 18, 2008).
	10.2		Amendment to Technology Development and Option Agreement, between SGPF, LLC and MedPro Safety Products, Inc. (incorporated by reference to Exhibit 10.1 to Form 8-K filed on October 6, 2008).
	10.3		Second Amendment to Technology Development and Option Agreement, between SGPF, LLC and MedPro Safety Products, Inc. (incorporated by reference to Exhibit 10.4 to Form 10-Q filed on November 15, 2010).



	10.4	MedPro Safety Products, Inc. 2008 Stock and Incentive Compensation Plan (incorporated by reference to Exhibit 10.9 to Form 8-K filed on August 22, 2008).
	10.5	Form of Nonqualified Stock Option Award Agreement (incorporated by reference to Exhibit 10.10 to Form 8-K filed on August 22, 2008).
	10.6	Form of Incentive Stock Option Award Agreement (incorporated by reference to Exhibit 10.13 to Form 10-K filed on March 30, 2010).
	10.7	Employment Agreement with Marc T. Ray (incorporated by reference to Exhibit 10.1 to Form 8-K filed on April 7, 2009).
	10.8	Employment Agreement with W. Craig Turner (incorporated by reference to Exhibit 10.1 to Form 8-K filed on July 22, 2009).
	10.9	Employment Agreement with Gregory C. Schupp. (incorporated by reference to Exhibit 10.17 to Form 10-K filed on March 31, 2011).
	10.10	Employment Agreement with C. Garyen Denning. (incorporated by reference to Exhibit 10.18 to Form 10-K filed on March 31, 2011).
	10.11	Non-Employee Director Stock Option Plan. (incorporated by reference to Exhibit 10.19 to Form 10-K filed on March 28,2012).
	10.12	Series D Senior Secured Promissory Note dated September 12, 2012 (incorporated herein by reference to Exhibit 10.0 to Form 8-K filed September 18, 2012).
	10.13	Asset Purchase Agreement, Settlement of 14% Senior Debt, Release of 2010 Manufacturing Agreement and Royalty Settlement with Visual Connections, Inc. dated December 31, 2012 (incorporated herein by reference to Exhibit 10.1 to Form 8-K filed January 7, 2013).
*	31.1	Certification of Chief Executive Officer pursuant to SEC Rule 13(a)-14(a)
*	31.2	Certification of Chief Financial Officer pursuant to SEC Rule 13(a)-14(a)
*	32.1	Certification of Chief Executive Officer pursuant to Section 1350 of Chapter 63 of Title 18 of the U.S. Code
*	32.2	Certifications of Chief Financial Officer, pursuant to Section 1350 of Chapter 63 of Title 18 of the U.S. Code
*	EX-101.INS	XBRL Instance Document
*	EX-101.SCH	XBRL Taxonomy Extension Schema Document
*	EX-101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
*	EX-101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
*	EX-101.LAB	XBRL Taxonomy Extension Label Linkbase Document
*	EX-101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

_________________________

* Filed herewith

4546

SIGNATURES

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

	MEDPRO SAFETY PRODUCTS, INC.
		(Registrant)
August 9, 2013	By:	/s/ W. Craig Turner
November 13, 2013	By:	/s/ W. Craig Turner
		W. Craig Turner
		Chief Executive Officer, Chairman of the Board of Directors
		(Principal Executive Officer)

August 9, 2013	By:	/s/ Marc T. Ray
November 13, 2013	By:	/s/ Marc T. Ray
		Marc T. Ray
		Vice President Finance and Chief Financial Officer
		(Principal Financial and Accounting Officer)

4647

INDEX TO EXHIBITS

The following exhibits are filed with this report.



	Exhibit No.		Description



	31.1		Certification of Chief Executive Officer pursuant to SEC Rule 13(a)-14(a)
	31.2		Certification of Chief Financial Officer pursuant to SEC Rule 13(a)-14(a)
	32.1		Certification of Chief Executive Officer pursuant to Section 1350 of Chapter 63 of Title 18 of the U.S. Code
	32.2		Certifications of Chief Financial Officer, pursuant to Section 1350 of Chapter 63 of Title 18 of the U.S. Code
	EX-101.INS		XBRL Instance Document
	EX-101.SCH		XBRL Taxonomy Extension Schema Document
	EX-101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
	EX-101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
	EX-101.LAB		XBRL Taxonomy Extension Label Linkbase Document
	EX-101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

_________________________

4748

Filing Compare · MedPro Safety Products, Inc.