U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

~~[X]~~x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2010~~2011

~~[_]~~o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File Number 0-24053

CPC of America, Inc.

(Exact name of registrant as specified in its charter)

Nevada

(State or other jurisdiction

of incorporation or organization)

11-3320709

(IRS Employer

Identification No.)

5348 Vegas Drive, #89, Las Vegas, Nevada 89108

(Address of principal executive offices)

(702) 952-9650

(Registrant’s telephone number)

(Not applicable)

(Former name, former address and former fiscal year, if changed since last report)

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 (“Exchange Act”) during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ~~[X]~~ x No ~~[_]~~ o

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~~ ~~[_]~~ Yes o No ~~[_]~~ o

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

Large accelerated filer ~~[_]~~ o Accelerated filer ~~[_]~~ o Non-accelerated filer ~~[_]~~ o Smaller reporting company ~~[X]~~x

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

~~As of November 15, 2010, the registrant had 10,028,216 shares of its $.0005 par value common stock issued and outstanding.~~Yes o No x

As of May 17, 2011, the registrant had 10,149,838 shares of its $.0005 par value common stock issued and outstanding.

CPC OF AMERICA, INC.

Quarterly Report on Form 10-Q

For the Period Ended ~~September~~March 3031, ~~2010~~2011

PART I - FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION
	Page No.
Item 1. Financial Statements.

Unaudited Condensed Consolidated Balance Sheets at
March 31, 2011 and December 31, 2010 (audited)	F-1

Unaudited Condensed Consolidated Statements of Operations for the
three month periods ended March 31, 2011 and 2010 and
for the period from inception (April 11, 1996) to March 31, 2011	F-2

Unaudited Condensed Consolidated Statements of Shareholders’ Equity
(Deficit) from inception (April 11, 1996) to March 31, 2011	F-3

Unaudited Condensed Consolidated Statements of Cash Flows for the
three month periods ended March 31, 2011 and 2010 and for the period
from inception (April 11, 1996) to March 31, 2011	F-7

Notes to Unaudited Condensed Consolidated Financial Statements	F-9

Page No.

Item 1. Financial Statements.

Unaudited Condensed Consolidated Balance Sheets at September 30, 2010 and December 31, 2009	F-1
Unaudited Condensed Consolidated Statements of Operations for the three month and nine month periods ended September 30, 2010 and 2009 and for the period from inception (April 11, 1996) to September 30, 2010	F-2
Unaudited Condensed Consolidated Statements of Shareholders’ Equity (Deficit) from inception (April 11, 1996) to September 30, 2010	F-3
Unaudited Condensed Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2010 and 2009 and for the period from inception (April 11, 1996) to September 30, 2010	F-7
Notes to Unaudited Condensed Consolidated Financial Statements	F-9

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Condensed Consolidated Balance Sheets

(Unaudited)

				December 31,
	September 30,			2009
	March 31,			2010
	2010			(Audited)
	2011			(Audited)
ASSETS
Current assets
Cash and equivalents	$	28101,~~326~~351		$	557,~~583~~755
Prepaid expenses		5643,~~046~~706			9351,~~933~~703
Total current assets		84145,~~372~~057			99109,~~516~~458
Patents, net of accumulated amortization		~~196~~173,~~507~~747			~~230~~185,~~647~~127
Trademarks, net of accumulated amortization		~~376~~169			~~688~~273
TOTAL ASSETS	$	~~281~~318,~~255~~973		$	~~330~~294,~~851~~858
LIABILITIES & SHAREHOLDERS' DEFICIT
Current liabilities
Loan from officer	$	-		$	47,717
Current portion of convertible notes, net of discount and premium	$	294,138		$	-
Accounts payable		~~248~~316,~~880~~901			~~343~~276,~~977~~352
Accrued payroll and related taxes		~~506~~657,~~517~~356			~~291~~582,~~808~~569
Accrued directors' compensation		25,000			-25,000
Interest payable		60,150			-
Accrued interest		150,013			103,296
Accrued dividends payable		3,~~631~~946,~~763~~946			3,~~326~~789,~~077~~350
Total current liabilities		45,~~472~~390,~~310~~354			4,~~009~~776,~~579~~567
Long term debt - convertible notes, net of $27,365 discount and $138,694 premium		561,546			-
Long term debt - convertible notes, net of discount and premium		476,363			677,447
Total liabilities		5,~~033~~866,~~856~~717			45,~~009~~454,~~579~~014
Shareholders' deficit
Convertible preferred stock, 5,000,000 shares authorized, $.001 par value,
Series C - 271,721 shares issued and outstanding at September 30, 2010
Series C - 271,721 shares issued and outstanding at March 31, 2011 and December 31, 2010 (Aggregate liquidation preference of $2,418,317 at March 31, 2011 and December 31, 2010)		272			272
and December 31, 2009		272			272
Series D - 594,342 shares issued and outstanding at March 31, 2011 and December 31, 2010 (Aggregate liquidation preference of $5,438,229 at March 31, 2011 and December 31, 2010)		594			594
Series D - 594,342 shares issued and outstanding at September 30, 2010
Series E - 399,037 shares issued and outstanding at March 31, 2011 and December 31, 2010 (Aggregate liquidation preference of $2,394,222 at March 31, 2011 and December 31, 2010)		399			399
and December 31, 2009		594			594
Common stock, 20,000,000 shares authorized, $.0005 par value, 10,149,838 shares issued and outstanding at March 31, 2011 and December 31, 2010		5,076			5,076
Series E - 399,037 and 590,537 shares issued and outstanding at September 30, 2010
Additional paid in capital - preferred		14,650,988			14,808,584
and December 31, 2009		399			590
Additional paid in capital - common		32,102,293			32,077,877
Common stock, 20,000,000 shares authorized, $.0005 par value, 10,028,216 and
Deficit accumulated during the development stage		(52,307,366	)		(52,051,958	)
9,537,051 shares issued and outstanding at September 30, 2010 and December 31, 2009		5,015			4,769
Total shareholders' deficit		(5,547,744	)		(5,159,156	)
Additional paid in capital - preferred		14,966,171			16,622,353
TOTAL LIABILITIES & SHAREHOLDERS' DEFICIT	$	318,973		$	294,858
Additional paid in capital - common		31,979,726			30,578,607
Deficit accumulated during the development stage		(51,704,778	)		(50,885,913	)
Total shareholders' deficit		(4,752,601	)		(3,678,728	)
TOTAL LIABILITIES & SHAREHOLDERS' DEFICIT	$	281,255		$	330,851

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

F-1

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Condensed Consolidated Statements of Operations

(Unaudited)

							Cumulative						~~Cumulative~~
							from inception						~~from inception~~
	Three Months Ended						~~Nine~~(April ~~Months~~11, ~~Ended~~1996)						~~(April 11, 1996)~~
	September 30,						September 30,						to Sept. 30,
	March 31,						to March 31,
	2010			2009			2010			2009			2010
	2011			2010			2011
Costs and expenses
Research and development - related party	$	-		$	-		$	-10,016,111		$	~~173,247~~		$	~~10,016,111~~
Research and development - other		4635,~~888~~560			~~193~~35,~~265~~735			~~140~~13,~~771~~523,229			~~1,450,106~~			~~13,487,121~~
		46,888			193,265			140,771			1,623,353			23,503,232
		35,560			35,735			23,539,340
General and administrative - related party		-			~~3,933~~-			-1,781,577			~~55,111~~			~~1,781,577~~
General and administrative - other		85165,~~573~~661			~~139~~216,~~885~~106			~~455~~18,~~938~~520,503			~~905,505~~			~~18,057,537~~
		85,573			143,818			455,938			960,616			19,839,114
		165,661			216,106			20,302,080
Operating Loss		(~~132~~201,~~461~~221	)		(~~337~~251,~~083~~841	)		(~~596~~43,~~709~~841,420	)		~~(2,583,969~~	)		~~(43,342,346~~	)
Other income (expense)
Interest expense		(2854,~~041~~187	)		-(6,470	)		(64177,~~743~~211	)		-			~~(73,697~~	)
Interest income		-			-			-332,588			~~2,496~~			~~332,588~~
Loss on extinguishment of debt		~~(157,413~~-	)		-			(157,413	)		-			~~(157,413~~	)
Increase in cash surrender value of insurance		-			-			-790,910			-			~~790,910~~
		(185,454	)		-			(222,156	)		2,496			892,388
		(54,187	)		(6,470	)		788,874
Net Loss	$	(~~317~~255,~~915~~408	)	$	(~~337~~258,~~083~~311	)	$	(~~818~~43,~~865~~052,546	)	$	~~(2,581,473~~	)	$	~~(42,449,958~~	)
Loss Per share calculation:
Net Loss	$	(~~317~~255,~~915~~408	)	$	(~~337~~258,~~083~~311	)	$	~~(818,865~~	)	$	~~(2,581,473~~	)
Beneficial conversion feature		~~(31,959~~-	)		-			~~(31,959~~	)		~~(2,464,167~~	)
Preferred dividend		(157,~~587~~596	)		(~~185~~187,~~795~~441	)		~~(507,373~~	)		~~(559,253~~	)
Numerator	$	(507,461	)	$	(522,878	)	$	(1,358,197	)	$	(5,604,893	)
Net loss applicable to common shares - Numerator	$	(413,004	)	$	(445,752	)
Basic and diluted net loss per share	$	(0.0504	)	$	(0.0605	)	$	~~(0.14~~	)	$	~~(0.59~~	)
Basic and diluted weighted average number
Basic and diluted weighted average number of common shares outstanding - denominator		10,149,838			9,537,051
of common shares outstanding - denominator		10,028,216			9,487,820			9,814,617			9,466,923
Maximum number of common shares (not included in denominator of diluted loss per share calculation due to their anti-dilutive nature) attributable to exercise/conversion of:
Maximum number of common shares (not included in denominator of diluted loss per share calculation due to their
Outstanding options		1,853,907			1,853,907
anti-dilutive nature) attributable to exercise/conversion of:
Preferred stock		2,340,771			2,758,589
Outstanding options								1,853,907			3,748,101
Convertible notes		1,665,682			350,354
Preferred stock								2,340,771			2,752,981

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

F-2

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

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

From inception (April 11, 1996) to ~~September~~March 3031, ~~2010~~2011

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

F-3

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

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

From inception (April 11, 1996) to ~~September~~March 3031, ~~2010~~2011

																																						Deficit
	Preferred Stock																						Common Stock									Additional			Additional			Accumulated			Total
	Series A						Series B						Series C						Series D										Stock			Paid-in			Paid-in			During the			Shareholders'
	Number						Number						Number						Number				Number						Option			Capital-			Capital-			Development			Equity
	of Shares			Total			of Shares			Total			of Shares			Total			of Shares		Total		of Shares			Total			Costs			Common			Preferred			Stage			(Deficit)
Balance, December 31, 1999		79,293		$	79			-		$	-			-		$	-			-	$	-		4,124,060		$	2,062		$	-		$	1,797,178		$	872,682		$	(2,711,302	)	$	(39,301	)
Exercise of warrants		-			-			-			-			-			-			-		-		365,500			183			-			639,442			-			-			639,625
Exercise of options		-			-			-			-			-			-			-		-		223,832			113			-			258,528			-			-			258,641
Issuance of preferred stock for cash		-			-			71,429			71			-			-			-		-		-			-			-			-			624,929			-			625,000
Valuation of beneficial conversion
Valuation of beneficial conversion feature on Series B Preferred		-			-			-			-			-			-			-		-		-			-			-			-			208,125			(208,125	)		-
feature on Series B Preferred		-			-			-			-			-			-			-		-		-			-			-			-			208,125			(208,125	)		-
Conversion of Series A Preferred into common shares		(70,469	)		(70	)		-			-			-			-			-		-		131,996			66			-			624,659			(598,930	)		-			25,725
Conversion of Series A Preferred		-			-			-			-			-			-			-		-		-			-			-			-			-			-			-
into common shares		(70,469	)		(70	)		-			-			-			-			-		-		131,996			66			-			624,659			(598,930	)		-			25,725
Beneficial conversion feature on
Series A Preferred shares		-			-			-			-			-			-			-		-		-			-			-			199,486			(199,486	)		-			-
Settlement of lawsuit		-			-			-			-			-			-			-		-		33,333			17			-			199,983			-			-			200,000
Purchase of patent		-			-			-			-			-			-			-		-		47,042			24			-			235,184			-			-			235,208
Stock option costs		-			-			-			-			-			-			-		-		-			-			(280,000	)		280,000			-			-			-
Amortization of stock option costs		-			-			-			-			-			-			-		-		-			-			105,000			-			-			-			105,000
Cancellation of common shares		-			-			-			-			-			-			-		-		(89,000	)		(45	)		-			-			-			-			(45	)
Net loss for 2000		-			-			-			-			-			-			-		-		-			-			-			-			-			(1,749,444	)		(1,749,444	)
Balance, December 31, 2000		8,824			9			71,429			71			-			-			-		-		4,836,763			2,420			(175,000	)		4,234,460			907,320			(4,668,871	)		300,409
Exercise of options		-			-			-			-			-			-			-		-		360,394			180			-			413,483			-			-			413,663
Issuance of common stock for services		-			-			-			-			-			-			-		-		100,000			50			-			255,450			-			-			255,500
Issuance of preferred stock for cash		-			-			113,715			114			95,123			95			-		-		-			-			-			-			1,841,392			-			1,841,601
Valuation of beneficial conversion																				-		-
feature on Series B Preferred		-			-			-			-			-			-			-		-		-			-			-			-			331,636			(331,636	)		-
Valuation of beneficial conversion																				-		-
feature on Series C Preferred		-			-			-			-			-			-			-		-		-			-			-			-			282,233			(282,233	)		-
Conversion of preferred stock and
accrued dividends into common shares		(8,824	)		(9	)		(113,715	)		(114	)		-			-			-		-		330,327			165			-			1,081,316			(1,069,887	)		-			11,471
Preferred stock dividend		-			-			-			-			-			-			-		-		-			-			-			-			(63,397	)		-			(63,397	)
Issuance of common stock
options for services		-			-			-			-			-			-			-		-		-			-			-			20,000			-			-			20,000
Amortization of stock option costs		-			-			-			-			-			-			-		-		-			-			140,000			-			-			-			140,000
Net loss for 2001		-			-			-			-			-			-			-		-		-			-			-			-			-			(1,968,471	)		(1,968,471	)
Balance, December 31, 2001		-			-			71,429			71			95,123			95			-		-		5,627,484			2,815			(35,000	)		6,004,709			2,229,297			(7,251,211	)		950,776
Exercise of options		-			-			-			-			-			-			-		-		282,480			140			-			317,650			-			-			317,790
Conversion of preferred stock and
accrued dividends into common shares		-			-			(71,429	)		(71	)		(18,576	)		(19	)		-		-		241,627			120			-			790,205			(783,495	)		-			6,740
Valuation of beneficial conversion
feature on Series C & D Preferred		-			-			-			-			-			-			-		-		-			-			-			-			1,122,521			(1,122,521	)		-
Cancellations of shares		-			-			-			-									-		-		(535,933	)		(268	)		-			(199,732	)		-			-			(200,000	)
Issuance of preferred stock for cash		-			-			-			-			264,657			265			110,627		111		-			-			-						3,367,233			-			3,367,609
Amortization of stock option costs		-			-			-			-			-			-			-		-		-			-			35,000			-			-			-			35,000
Preferred stock dividend		-			-			-			-			-			-			-		-		-			-			-			-			(122,861	)		-			(122,861	)
Purchase of Med Enclosure Stock		-			-			-			-			-			-			-		-		10,000			5			-			53,495			-			-			53,500
Net loss for 2002		-			-			-			-			-			-			-		-		-			-			-			-			-			(3,460,574	)		(3,460,574	)
Balance December 31, 2002		-		$	-			-		$	-			341,204		$	341			110,627	$	111		5,625,658		$	2,812		$	-		$	6,966,327		$	5,812,695		$	(11,834,306	)	$	947,980

F-4

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

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

From inception (April 11, 1996) to ~~September~~March 3031, ~~2010~~2011


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


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

F-5

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Condensed Consolidated Statements of Shareholders' Equity (Deficit)

From inception (April 11, 1996) to ~~September~~March 3031, ~~2010~~2011

																														Deficit
	Preferred Stock																		Common Stock						Additional		Additional			Accumulated			Total
	Series C						Series D						Series E										Stock		Paid-in		Paid-in			During the			Shareholders'
	Number						Number						Number						Number				Option		Capital-		Capital-			Development			Equity
	of Shares			Total			of Shares			Total			of Shares			Total			of Shares		Total		Costs		Common		Preferred			Stage			(Deficit)
Balance, December 31, 2007		288,575		$	288			629,224		$	629			-		$	-			9,124,499	$	4,562	$	-	$	20,438,782	$	10,008,612		$	(31,942,866	)	$	(1,489,993	)
Exercise of options		-			-			-			-			-			-			154,150		77		-		592,502		-			-			592,579
Conversion of preferred stock and
accrued dividends into common shares		-			-			(4,826	)		(5	)		-			-			8,045		4		-		55,159		(44,145	)		-			11,013
Valuation of beneficial conversion
on Series E Preferred		-			-			-			-			-			-			-		-		-		-		2,459,959			(2,459,959	)		-
Issuance of preferred stock		-			-			-			-			551,703			552			-		-		-		-		3,309,668			-			3,310,220
Preferred stock dividend		-			-			-			-			-			-			-		-		-		-		(637,465	)					(637,465	)
Stock option costs		-			-			-			-			-			-			-		-		-		7,712,616		-			-			7,712,616
Contribution of officer's salary		-			-			-			-			-			-			-		-		-		344,966		-			-			344,966
Net loss		-			-			-			-			-			-			-		-		-		-		-			(11,131,691	)		(11,131,691	)
Balance, December 31, 2008		288,575			288			624,398			624			551,703			552			9,286,694		4,643		-		29,144,025		15,096,629			(45,534,516	)		(1,287,755	)
Exercise of options		-			-			-			-			-			-			29,404		15		-		232,276		-			-			232,291
Conversion of preferred stock and
accrued dividends into common shares		(16,854	)		(16	)		(30,056	)		(30	)		-			-			109,048		55		-		560,900		(424,954	)		-			135,955
Issuance of preferred stock		-			-			-			-			38,834			38			-		-		-		-		232,961			-			232,999
Issuance of common stock		-			-			-			-			-			-			111,905		56		-		288,944		-			-			289,000
Valuation of beneficial conversion
feature on Series E Preferred		-			-			-			-			-			-			-		-		-		-		2,464,166			(2,464,166	)		-
Preferred stock dividend		-			-			-			-			-			-			-		-		-		-		(746,449	)		-			(746,449	)
Contribution of officer's salary		-			-			-			-			-			-			-		-		-		352,462		-			-			352,462
Net loss		-			-			-			-			-			-			-		-		-		-		-			(2,887,231	)		(2,887,231	)
Balance, December 31, 2009		271,721			272			594,342			594			590,537			590			9,537,051		4,769		-		30,578,607		16,622,353			(50,885,913	)		(3,678,728	)
Conversion of preferred stock and
accrued dividends into common shares		-			-			-			-			(191,500	)		(191	)		491,165		246		-		1,350,443		(1,148,809	)		-			201,689
Valuation of beneficial conversion
feature on convertible debt		-			-			-			-			-			-			-		-		-		3157,~~959~~378		-			-			3157,~~959~~378
Preferred stock dividend		-			-			-			-			-			-			-		-		-		-		(~~507~~664,~~373~~960	)		-			(~~507~~664,~~373~~960	)
Amortization of convertible note premium		-			-			-			-			-			-			-		-		-		18,717		-			-			18,717
Shares issued for commitment fee																				121,622		61				47,372								47,433
Net loss		-			-			-			-			-			-			-		-		-		-		-			(818,865	)		(818,865	)
Amortization of convertible note premium		-			-			-			-			-			-			-		-		-		44,077		-			-			44,077
Balance, September 30, 2010, unaudited		271,721		$	272			594,342		$	594			399,037		$	399			10,028,216	$	5,015		-	$	31,979,726	$	14,966,171		$	(51,704,778	)	$	(4,752,601	)
Net loss		-			-			-			-			-			-			-		-		-		-		-			(1,166,045	)		(1,166,045	)
Balance, December 31, 2010		271,721			272			594,342			594			399,037			399			10,149,838		5,076		-		32,077,877		14,808,584			(52,051,958	)		(5,159,156	)
Preferred stock dividend		-			-			-			-			-			-			-		-		-		-		(157,596	)		-			(157,596	)
Amortization of onvertible note premium		-			-			-			-			-			-			-		-		-		24,416		-			-			24,416
Net loss		-			-			-			-			-			-			-		-		-		-		-			(255,408	)		(255,408	)
Balance, March 31, 2011 (unaudited)		271,721		$	272			594,342		$	594			399,037		$	399			10,149,838	$	5,076		-	$	32,102,293	$	14,650,988		$	(52,307,366	)	$	(5,547,744)

F-6

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Condensed Consolidated Statements of Cash Flows

(Unaudited)

							Cumulative
							from inception
	Nine Months Ended						(April 11, 1996)
	Three Months Ended						(April 11, 1996)
	September 30,						to Sept. 30,
	March 31,						to March 31,
	2010			2009			2010
	2011			2010			2011
Cash flows from operating activities
Net loss	$	(~~818~~255,~~865~~408	)	$	(2258,~~581,473~~311	)	$	(4243,~~449~~052,~~958~~546	)
Adjustments to reconcile net income to net cash
Adjustments to reconcile net income to net cash used by operating activities:
used by operating activities:
Depreciation and amortization		11,484			11,484			422,469
Depreciation and amortization		34,452			34,452			399,501
Amortization of loan discount		7,469			-			18,243
Amortization of loan discount		4,594			-			4,594
Loss on extinguishment of debt		-			-			157,413
Loss on extinguishment of debt		157,413			-			157,413
Contribution of officer's salary/expenses paid by officer		-			-			838,680
Issuance of common stock and options for services		-			~~457,291~~-			17,~~348~~396,~~575~~008
Issuance of preferred stock for services		-			~~100,998~~-			145,999
Issuance of debt for services		~~137~~10,~~500~~000			-106,500			~~137~~163,~~500~~000
Changes in operating assets and liabilities
Decrease (increase) in other assets		377,~~887~~997			3621,~~730~~033			(210,~~273~~067	)
Increase (decrease) in accounts and other payable		~~(95~~40,~~097~~549	)		~~163~~(36,~~249~~696	)		~~250~~318,~~056~~077
Increase (decrease) in accrued expenses		~~299~~121,~~859~~505			~~153~~73,~~721~~678			~~779~~1,~~393~~020,095
Net cash used by operating activities		(242,257	)		(1,635,032	)		(22,390,520	)
Net cash used in operating activities		(56,404	)		(82,312	)		(22,562,495	)
Cash flows from investing activities
Purchase of patent		-			-			(114,795	)
Capital expenditures		-			-			(148,016	)
Redemption of cash surrender value of life insurance		-			-			790,910
Increase in cash surrender value of life insurance		-			-			(790,910	)
Net cash used by investing activities		-			-			(262,811	)
Net cash used in investing activities		-			-			(262,811	)
Cash flows from financing activities
Proceeds from shareholder notes		-			~~47,717~~-			564,917
Proceeds from convertible debt		~~265~~100,000			-90,000			~~265~~510,000
Payments on note payable to shareholder		-			-			(102,017	)
Exercise of options and warrants		-			-			4,853,421
Issuance of preferred stock		-			~~117,000~~-			16,390,512
Issuance of common stock		-			-			915,200
Dividends		-			-			(5,051	)
Cancellation of common stock		-			-			(200,325	)
Net cash provided by financing activities		~~265~~100,000			~~164~~90,~~717~~000			22,~~681~~926,657
Net (decrease) increase in cash		22,743			(1,470,315	)		28,326
Net increase in cash		43,596			7,688			101,351
Cash, beginning of period		557,~~583~~755			15,~~480,506~~583			-
Cash, end of period	$	28101,~~326~~351		$	1013,~~191~~271		$	28101,~~326~~351

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

F-7

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Condensed Consolidated Statements of Cash Flows (Continued)

(Unaudited)

					Cumulative
					from inception
	Nine Months Ended				(April 11, 1996)
	Three Months Ended				(April 11, 1996)
	September 30,				to Sept. 30,
	March 31,				to March 31,
	2010		2009		2010
	2011		2010		2011
Non-cash investing and financing activities:
Issuance of common stock for note receivable	$	-	$	-	$	150
Debt to equity conversion	$	-	$	-	$	422,033
Acquisition of minority interest	$	-	$	-	$	33,250
Sale of Tercero - elimination of goodwill	$	-	$	-	$	(40,000	)
Preferred dividends accrued	$	~~507~~157,~~373~~596	$	~~559~~187,~~253~~441	$	34,~~734~~049,~~749~~932
Preferred dividends paid through common stock issuance	$	~~201,689~~-	$	~~135,955~~-	$	1,290,759
Acquisition of Med Enclosures for note payable	$	-	$	-	$	250,000
Acquisition of patent through issuance of common stock	$	-	$	-	$	288,708
Settlement of lawsuit through common stock issuance	$	-	$	-	$	200,000
Valuation of beneficial conversion features	$	~~31,959~~-	$	~~2,464,167~~-	$	9,~~286~~312,~~779~~198
Conversion of loan to convertible debt	$	~~47,717~~-	$	-47,717	$	47,717
Amortization of loan premium	$	1824,~~717~~416	$	-	$	1868,~~717~~493

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

F-8

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Unaudited Condensed Consolidated Financial Statements

~~September~~March 3031, ~~2010~~2011

1. Organization and summary of significant accounting policies

Organization

CPC of America, Inc., a Nevada corporation (“CPC” or the “Company”), was formed on April 11, 1996 to design, develop and commercialize innovative medical devices that deliver improved therapeutic options for vascular closure and enhance the quality of patient care in endovascular procedures. Current efforts focus on developing MedCloseTM, an investigational-stage vascular closure system (VCS) that is intended to rapidly seal the femoral arterial puncture site following diagnostic or interventional catheterization procedures. The Company is classified as a development stage company because its principal activities involve obtaining capital and rights to certain technology, and conducting research and development activities.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Interim periods

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 108 of Regulation S-X. Accordingly, they do not include all of the information required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011 are not necessarily indicative of results for any future period. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, ~~2009~~2010.

Liquidity and management’s plans

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has not generated any revenues from operations and there is no assurance that the Company will generate revenues in the future. The Company’s ability to generate revenue primarily depends on its success in completing development and obtaining regulatory approvals for the commercialization of its MedClose vascular closure system. The Company incurred a net loss of $~~818~~255,~~865~~408 during the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011. Also, the Company had a cash balance of $28101,~~326~~351, a working capital deficit of $45,~~387~~245,~~938~~297 and a stockholders’ deficit of $45,~~752~~547,~~601~~744 at ~~September~~March 3031, ~~2010~~2011.

F-9

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2011

1. Organization and summary of significant accounting policies (continued)

Liquidity and management’s plans (continued)

The Company will require a minimum of $3 million of additional working capital in order to fund its proposed operations over the next 12 months, assuming that Series C and D shareholders do not make requests for a substantial amount of dividend payments in cash. In the event the Company receives substantial requests for dividend payments in cash or encounter a material amount of unexpected expenses, additional working capital in excess of $3 million may be required.

Management plans to continue to seek ~~other~~ sources of financing on favorable terms; however, there are no assurances that any such financing can be obtained on favorable terms, if at all. On December 17, 2010, the Company entered into an equity line of credit agreement with Ascendiant Capital Group, LLC (“Ascendiant”) in order to establish a possible source of funding for CPC. The equity line of credit agreement establishes what is sometimes also referred to as an equity drawdown facility. Ascendiant will provide up to $3,000,000 of funding over a 24 month period. No drawdowns, however, can be made until the Company files a registration statement on Form S-1 with the Securities and Exchange Commission (“SEC”). The Company filed such a registration statement on February 14, 2011 and it is still in the approval process with the SEC at this time. Management expects to monitor and control the Company’s operating costs until cash is available through financing or operating activities. There are no assurances that the Company will be successful in achieving these plans. The Company anticipates that losses will continue until such time, if ever, as the Company is able to generate sufficient revenues to support its operations.

Fair value of financial instruments

The accounting standards regarding fair value of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of financial instruments held by the Company. The Company considers the carrying amount of cash, prepaid expenses, accounts payable and accrued liabilities, to approximate their fair values because of the short period of time between the origination of such instruments and their expected realization.

The Company has also adopted ASC 820-10 (formerly SFAS 157, “Fair Value Measurements”) which defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follow:

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

· Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

F-10

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2011

1. Organization and summary of significant accounting policies (continued)

Fair value of financial instruments (continued)

~~During~~· ~~the~~Level ~~nine~~3 ~~months~~inputs ended September 30, 2010, the Company issued convertible notes totaling $450,217. As of September 30, 2010, the carrying value of these convertible notes was $621,696, which included accrued interest of $60,150, a $138,693 premium (net of amortization) resulting from fair value calculations due to ~~significant modification of terms, less a discount (net of amortization) of $27,365 from~~ the ~~beneficial conversion feature associated with the notes. The Company used level 3 inputs for its~~ valuation methodology ~~and~~are ~~the~~unobservable ~~fair~~and ~~value~~significant ~~was determined~~ to ~~be approximately $561,500 using cash flows discounted at relevant market interest rates in effect at~~ the ~~period~~fair ~~close and Black-Scholes Pricing Model since there is no observable market price~~value.

Since January 2010, the Company has issued convertible notes totaling $720,717. As of ~~September~~March 3031, ~~2010~~2011, the ~~Company~~carrying ~~did~~value ~~not~~of ~~identify~~these ~~any~~convertible ~~other~~notes ~~assets~~was or$920,514, ~~liabilities~~which ~~that~~included ~~are~~accrued ~~required~~interest of $150,013, a $88,918 premium (net of amortization) resulting from fair value calculations due to besignificant ~~presented~~modification onof terms, less a discount (net of amortization) of $39,134 from the ~~balance~~beneficial ~~sheet~~conversion atfeature associated with the notes. The Company used level 3 inputs for its valuation methodology and the fair value was determined to be approximately $1,106,637 using cash flows discounted at relevant market interest rates in ~~accordance~~effect ~~with~~at ~~ASC~~the ~~820~~period close and Black-10Scholes Pricing Model since there is no observable market price.

As of March 31, 2011, the Company did not identify any assets or liabilities that are required to be presented on the balance sheet at fair value in accordance with ASC 820-10.

Recent pronouncements

In April 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2010-12 (ASU 2010-12), “Income Taxes (Topic 740): Accounting for Certain Tax Effects of the 2010 Health Care Reform Acts”. After consultation with the FASB, the SEC stated that it “would not object to a registrant incorporating the effects of the Health Care and Education Reconciliation Act of 2010 when accounting for the Patient Protection and Affordable Care Act.” The Company does not expect the provisions of ASU 2010-12 to have a material impact on the Company’s consolidated financial statements.

In April 2010, the FASB issued ASU 2010-13, “Compensation-Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades – a consensus of the FASB Emerging Issues Task Force”. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. Earlier application is permitted. The Company does not expect the provisions of ASU 2010-13 to have a material impact on the Company’s consolidated financial statements.

In January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-06, an update that improves the requirements related to Fair Value Measurements and Disclosures Subtopic 820-10 of the FASB ASC originally issued as FASB 157. This update requires disclosures about transfers between Level 1, Level 2 and Level 3 assets and the disaggregated activity in the roll forward for Level 3 Fair Value measurements. The Company adopted the measurement requirements of this guidance for the nine months ended September 2010 with no impact to the consolidated financial statements.

F-11

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2011

2. Share-based payments

Share-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. AsThere was no estimated share-based compensation expense recognized ~~in the consolidated statement of operations~~ for the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011 and ~~2009 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures~~2010. ~~Professional standards require forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.~~

~~There~~A ~~was~~summary noof ~~estimated~~option ~~share-based~~activity ~~compensation expense recognized~~ for the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011 ~~and~~is ~~2009.~~as follows:

A summary of option activity for the nine months ended September 30, 2010 is as follows:

	Number of		Exercise Price
	Options		Per Share		Expiration

Outstanding at December 31, 2010		1,853,907	$	4.45 - 7.90		2013
Activity for the three months ended March 31, 2011		-
Outstanding at March 31, 2011		1,853,907	$	4.45 - 7.90		2013

Exercisable at March 31, 2011		1,853,907

	Number of	Exercise Price
	Options	Per Share	Expiration
Outstanding at December 31, 2009	1,853,907	$4.45 - 7.90	2013
Activity for the nine months ended Sept. 30, 2010	-
Outstanding at September 30, 2010	1,853,907	$4.45 - 7.90	2013
Exercisable at September 30, 2010	1,853,907

If all options outstanding at March 31, 2011 were exercised, the Company would receive $14,015,865 in capital.

If all options outstanding at September 30, 2010 were exercised, the Company would receive $14,015,865 in capital.

3. Accrued salary and related taxes

The Company is in breach of contract with its CEO and CFO regarding timely payment of salary. The CEO’s salary breach originally occurred in 2006, and the breach of contract with the CFO extends back to April 1, 2009. Salary currently due the CEO and CFO are as follows:

	CEO		CFO		Total
2009 Salary	$	218,206	$	45,000	$	263,206
2010 Salary (through September 30, 2010)		131,250		90,000		221,250
2010 Salary		175,000		120,000		295,000
	$	349,456	$	135,000		484,456
2011 Salary (through March 31, 2011)		43,750		30,000		73,750
Estimated employer taxes						22,061
	$	436,956	$	195,000		631,956
Total accrued salary and related taxes					$	506,517
Estimated employer taxes						25,400
Total accrued salary and related taxes					$	657,356

F-12

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2011

4. Long-term debt - convertible notes

~~During~~Since ~~the~~January ~~nine months ended September 30,~~ 2010, the Company has issued $~~450~~720,~~217~~717 in convertible notes. The debt bears interest at rates from 20% to 30% per annum, compounded monthly, and is due two years from the date the cash is received. Due dates range from January 2012 to February 13, 2013. In addition, the debt and related accrued interest is convertible into the Company’s common stock at a rate equal to the closing price of the Company’s stock on the day the cash is received, which is the date of the note. Conversion rates range from $0.33 - $0.74. Cash proceeds of $~~265~~510,000 were received from ~~seven individuals who are~~ existing shareholders, the Company’s CEO converted amounts owed to him totaling $47,717, and the Company issued notes totaling $~~137~~163,~~500~~000 in exchange for consulting expenses ~~to two shareholders~~.

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

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

The Company has recorded a beneficial conversion feature in accordance with FASB ASC 470-20. The Company measures the embedded beneficial conversion feature by allocating a portion of the proceeds equal to the intrinsic value of the embedded beneficial conversion feature to additional paid-in capital. Intrinsic value is calculated as the difference between the effective conversion price and the fair value of the common stock into which the debt is convertible, multiplied by the number of shares into which the debt is convertible. A beneficial conversion feature totaling $3157,~~959~~378 was recorded as loan discount induring the ~~nine~~year ~~months~~ ended ~~September~~December 3031, 2010. The loan discount will be amortized over the life of the convertible note. For the ~~nine~~three months ended ~~September~~March 3031, 2011 and 2010, $47,~~594~~469 and $0 of amortization of loan discount was recorded as interest expense, respectively.

F-13

CPC OF AMERICA, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2011

4. Long-term debt - convertible notes (continued)

A premium of $157,411 on the convertible notes was also recorded as part of the modification of terms. This premium is the present value of the principal (using a 1% risk-free interest rate) plus the fair value of the conversion option (calculated using the Black-Scholes Method) and will be amortized over the life of the loans. For the ~~nine~~three months ended ~~September~~March 3031, 2011 and 2010, $1824,~~717~~216 and $0 of amortization of premium was recorded to additional paid in capital, respectively.

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

~~Some~~Another feature of the ~~adjustments~~convertible ~~described~~notes ~~should~~is ~~have~~that ~~been~~interest ~~made~~is inguaranteed for the ~~quarter~~two ~~ended~~year ~~June~~period ~~30,~~contingent ~~2010. Had~~on ~~the~~early ~~adjustments~~repayment ~~been~~or ~~made~~conversion inof the ~~proper~~debt. Total ~~quarter,~~interest for the ~~following~~notes ~~accounts~~outstanding ~~would~~at ~~have~~March ~~been~~31, ~~affected: additional~~2011 ~~paid~~is in$525,732 ~~capital~~of ~~would~~which ~~have~~$150,013 ~~decreased~~has bybeen ~~$42,233,~~included ~~carrying~~as ~~value~~interest ofpayable ~~debt~~on ~~would~~the ~~have~~accompanying ~~increased~~March by31, 2011 balance sheet. The difference of $~~130~~375,~~902~~719 ~~and~~represents ~~the~~a ~~loss~~contingent ~~would~~liability ~~have~~at ~~increased~~March ~~by $88~~31,~~669~~ 2011. ~~Loss~~Management ~~per~~has ~~share~~determined ~~for~~that ~~the~~early ~~quarter~~repayment ~~and~~or ~~six~~conversion ~~months~~of ~~ended~~the ~~June~~convertible ~~30,~~notes ~~2010~~is ~~would~~remote ~~have~~at ~~increased~~this bytime, ~~$0.01~~so tothe ~~$(0.06)~~contingency ~~and~~has ~~$(0.10),~~not ~~respectively~~been recorded.

Another feature of the convertible notes is that interest is guaranteed for the two year period contingent on early repayment or conversion of the debt. Total interest for the notes outstanding at September 30, 2010 is $345,528 of which $60,150 has been included as interest payable on the accompanying September 30, 2010 balance sheet. The ~~difference~~following ofcash ~~$285,378~~outlays ~~represents~~would abe ~~contingent~~required ~~liability~~in at2012 ~~September~~and ~~30,~~2013 ~~2010. Management~~should ~~has determined that early~~ repayment ~~or conversion~~ of the convertible ~~notes~~debt isand ~~remote~~related atinterest ~~this~~be ~~time,~~in ~~so the contingency has not been recorded.~~cash:

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

Quarter ending March 31, 2012:	$	423,148
Quarter ending June 30, 2012:	$	255,030
Quarter ending September 30, 2012	$	314,843
Quarter ending December 31, 2012	$	91,341
Quarter ending March 31, 2013	$	162,087
Total potential cash outlay:	$	1,246,449

Quarter ending March 31, 2012:	$	423,148
Quarter ending June 30, 2012:	$	255,030
Quarter ending September 30, 2012	$	117,567
Total potential cash outlay:	$	795,745

5. Shareholders’ equity (deficit)

~~During~~There ~~the~~have ~~nine~~been ~~months~~no ~~ended~~preferred ~~September~~stock ~~30,~~sales ~~2010,~~or ~~191,500~~conversions ~~Series~~or Ecommon ~~preferred~~share ~~shares~~issuances ~~and~~during ~~related~~the ~~accrued~~three ~~dividends~~months ofended ~~$201,689~~March ~~were converted to 491~~31,~~165~~ ~~shares of common stock~~2011.

If all preferred stock, related accrued dividends, options, convertible debt and related accrued interest outstanding at ~~September~~March 3031, ~~2010~~2011 were converted to common stock, the total number of shares outstanding would be approximately 1617,~~261~~274,~~000~~794.

6. Subsequent events

Events subsequent to ~~September~~March 3031, ~~2010~~2011 have been evaluated through the date these financial statements were issued, to determine whether they should be disclosed to keep the financial statements from being misleading. During this period, the Company issued an additional $115,000 in convertible debt on terms similar to those described in note 4. Management found no other subsequent events that should be disclosed.

F-14

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

General

To date, our activities have included the market analysis and development of our MedClose device and the raising of development and working capital. Our operations are currently focused on the business of developing a patented internal puncture closure device known as “MedClose.” We have not commenced revenue producing operations. Our operations to date have predominately consisted of the design and development of our MedClose device and our counterpulsation units, and the raising of capital.

The MedClose is a ~~vascular closure system~~ medical device that is designed to seal arterial puncture sites in patients who have undergone diagnostic or interventional ~~surgical~~catheterization procedures ~~utilizing access via an arterial puncture site~~. ~~The~~It ~~MedClose~~utilizes ~~consists of~~ a proprietary catheter system that is ~~our proprietary product and utilizes any approved biologic or synthetic sealants. The MedClose is~~ designed to enhance manual compression by delivering ~~the~~a ~~biological~~biologic or synthetic sealant ~~through~~which ~~our~~forms ~~proprietary catheter delivery system, resulting in~~ an elastic coagulum that is fully absorbed ~~into the body~~ within 10 to 14 days. The MedClose is designed to significantly reduce the time to hemostasis (the stoppage of bleeding), thereby accelerating the patient's post-operative recovery and reducing the amount of time spent by post-operative professionals. The MedClose applications and usage capabilities are intended for ~~angiographic and interventional procedures, six to nine french in size, in the coronary, peripheral, cerebral and carotid applications, including~~ cardiac diagnostic and interventional cardiology procedures as well as interventional ~~radiology~~radiological and proposed carotid stenting procedures. As of the date of this report, MedClose is not available for commercial distribution. We hold three patents for both the instrument and the technique used in connection with MedClose, and ~~have~~ two additional patents pending.

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

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

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

Upon receipt of additional capital, we expect to commence clinical trial testing of the MedClose device utilizing the synthetic sealant formula in multiple European locations. We will also commence with completing the necessary requirements to amend the investigational device exemption, or IDE, application with the FDA, by substituting our proprietary synthetic sealant for the original biologic sealant obtained from a third party vendor. With that substitution, we anticipate a transfer back to the Center for Devices and Radiological Health (“CDRH”) branch of the FDA from the Center for Biologics Evaluation and Research (“CBER”) branch since synthetic sealants are determined to be medical devices and not biological. We also intend to pursue an ISO 13485 certification of our records and procedures relating to our development and the proposed manufacturing of our MedClose device and proprietary sealant.

We do not expect to purchase or sell significant plant or equipment during ~~2010~~2011, nor do we expect a significant change in the number of our employees during the year.

InCurrently ~~order~~our focus is to ~~meet~~acquire ~~our~~the ~~general~~necessary working capital ~~requirements~~from ~~and~~the toissuance ~~fund~~of ~~the~~debt ~~commercial~~instruments ~~exploitation~~or the sale of ~~the~~our ~~MedClose~~securities. However, inthere ~~September~~can ~~2007,~~be no assurance we ~~commenced~~will abe ~~private~~able ~~placement~~to ofobtain ~~our~~the ~~Series~~required Eadditional ~~Preferred~~working ~~Stock.~~capital Weon ~~are~~commercially ~~offering~~reasonable 1terms or at all. On December 17,~~666~~ 2010,~~667~~ ~~shares~~the Company entered into an equity line of ~~our~~credit ~~Series E~~agreement ~~Preferred~~with ~~Stock~~Ascendiant Capital Group, atLLC $6(“Ascendiant”) in order to establish a possible source of funding.00 The ~~per~~equity ~~share~~line of credit agreement establishes what is sometimes also referred to as an equity drawdown facility. Ascendiant Aswill provide up to $3,000,000 of ~~November~~funding 15over a 24 month period. No drawdowns, ~~2010~~however, wecan ~~have~~be ~~issued~~made ~~590,537~~until ~~shares~~the ofCompany ~~Series~~files Ea ~~Preferred~~registration ~~shares~~statement ~~for~~on ~~cash~~Form S-1 with the Securities and inExchange ~~payment~~Commission of(“SEC”). The ~~expenses~~Company ~~totaling~~filed ofsuch $3a registration statement on February 14,~~543,220~~ 2011 and it is still in the approval process with the SEC at this time.

The Series E Preferred stock has no voting rights and has a 10% annual dividend payable in cash or common stock at our option, subject to the holder’s right to take dividends in common shares. Dividends on preferred stock are only payable at the time the preferred shares are converted into shares of common stock. Each Series E Preferred share was convertible into our common shares at a conversion price of $6.00 per share until August 31, 2008, when the conversion price was adjusted to the lower of 75% of the average last sale price of the common stock for the 30 trading days immediately preceding such date on any stock exchange or $4.50 per share; provided that the conversion price could not be adjusted to an amount below $3.92 per share. At August 31, 2008, the conversion price was deemed to be $4.50 per share. In November 2008, our board of directors approved an amendment to the Series E Preferred Stock to set the conversion price at $3.92 per share, and in June 2009 our board approved a further amendment to reduce the conversion price to $2.75 per share. Each outstanding share of our Series E Preferred Stock is convertible into a number of shares of our common stock equal to the private placement sale price of such preferred share ($6.00 per share) divided by the conversion price of such preferred share in effect at the time of conversion (currently $2.75 per share).

The shares of Series E Preferred Stock have not been, and will not be, registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. The Series E preferred shares are being sold by our executive officers, and the proceeds of the offering are expected to be used for clinical trials, regulatory compliance, manufacturing and marketing relating to the MedClose device, and working capital.

Results of Operations

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

Research and Development. Our expenses related to research and development during the ~~nine~~three month period ended ~~September~~March 3031, ~~2010~~2011 ~~decreased~~is bynearly ~~$1,482,582~~the ~~over~~same as in the prior year three month period: $35,560 and $35,735, respectively. Research and development ~~expenses~~related ~~relate~~ to ~~our~~the ~~ongoing~~ development and testing of our internal puncture closure device and technique known as “Medclose” and our proprietary sealant~~. The~~ ~~decrease~~have invirtually ~~research~~ceased ~~and development expenses during 2010 is primarily~~ due to capital constraints, though consulting fees decreased by approximately $173,200 as a result of the expiration of our consulting agreement with CTM Group in April 2009, and officer salaries decreased by approximately $309,000 as a result of a reduction in our CEO’s salary. Subject to our receipt of additional capital, we expect our research and development costs to increase as we get further into human trials and proceed towards the submission of applications for CE Mark/European commercial approval and eventually a FDA pre-market approval thereafter.

General and Administrative. During the three month period ended March 31, 2011, general and administrative expenses decreased by $50,445 over the prior year three month period. The decrease was primarily due to a decrease of $11,200 in auditing fees, and a decrease in other professional fees of $116,200, offset by increases in insurance of $29,400, continuing education of $5,000, estimated payroll taxes of $7,500 and legal fees of $31,300. The increase in legal fees is a result of filing a registration statement on Form S-1 with the SEC. Upon receipt of additional capital, we would expect general and administrative expenses to increase somewhat, though we do not anticipate an increase in officer salaries.

Interest expense. During the three month period ended March 31, 2011, we incurred $54,187 in interest expense due to the issuance of the convertible notes described below. This represents an increase of $47,717 over the prior year due to an increase in the amount of notes outstanding.

Net Loss. Our ~~expenses~~net ~~related~~loss tois ~~research~~approximately ~~and~~the ~~development~~same ~~during~~for the three month ~~period~~periods ~~ended~~of ~~September~~March 3031, ~~2010~~2011 ~~decreased~~and by2010: $~~146~~255,~~377~~408 ~~over~~and ~~the~~$258,311, ~~prior year period~~respectively. ~~The~~Any decrease isin ~~primarily~~general ~~due~~and toadministrative aexpenses ~~reduction~~was inoffset ~~our~~by ~~CEO’s~~an ~~salary~~increase ofin ~~$103,000,~~interest ~~but~~expense. We ~~capital~~have ~~constraints~~had ~~affected~~inadequate ~~the~~capital ~~quarter~~to ~~ended~~fund ~~September~~our ~~30,~~plan ~~2010~~of ~~as well~~operation.

General and Administrative. During the nine month period ended September 30, 2010, general and administrative expenses decreased by $504,678 over the prior year period. The decrease was primarily due to a decrease of $43,300 in consulting fees as a result of the expiration of our consulting agreement with CTM Group in April 2009, and a decrease in officer salaries of $77,200 due to the reduction in our CEO’s salary. Other material decreases include legal fees of $230,200, accounting fees of $36,300, payroll taxes of $21,400, directors’ compensation of $31,000 and professional fees of $47,900. We also recognized a gain on settlement of accounts payable with one of our vendors of approximately $31,800. Upon receipt of additional capital, we would expect general and administrative expenses to increase somewhat, though we do not anticipate additional related party consulting fees or an increase in officer salaries.

During the three month period ended September 30, 2010, general and administrative expenses decreased by $58,245 over the prior year period. The decrease was primarily due to the gain of settlement of accounts payable of $31,000 mentioned above, plus a decrease in officer salaries of $25,700 due to a reduction in our CEO’s salary, and a decrease in legal fees of $21,300, offset by an increase in insurance of $13,000.

Interest expense. During the three month and nine month periods ended September 30, 2010, we incurred $28,041 and $64,743, respectively, in interest expense due to the issuance of the convertible notes described below.

Loss on extinguishment of debt. During the three month and nine month periods ended September 30, 2010, we incurred a loss on extinguishment of debt of $157,413, due to modification of terms of convertible debt.

Net Loss. Our net loss decreased by $1,762,608 for the nine months ended September 30, 2010 over the prior year period. In addition, our net loss decreased by $19,168 for the three months ended September 30, 2010. These decreases in net loss were due mainly to capital constraints offset by the loss on extinguishment of debt. We have had inadequate capital to fund our plan of operation.

Financial Condition

As of ~~September~~March 3031, ~~2010~~2011, we had $28101,~~326~~351 of cash and a working capital deficit of $45,~~387~~245,~~938~~297, which includes accrued dividends of $3,~~631~~946,~~763~~946 payable on our outstanding shares of Series C, Series D and Series E preferred stock as of such date. Our Series C and Series D preferred stock both have a 5% annual dividend payable in cash or shares of our common stock, at the option of the holder. Those dividends are convertible into our common shares at the rate of $3.57 per share in the case of the Series C preferred stock and $6.86 per share in the case of the Series D preferred stock. Our Series E preferred stock has a 10% annual dividend payable in cash or shares of our common stock, at the option of our company, subject to the holder’s right to take dividends in common shares. The dividends on Series E preferred stock are convertible into our common shares at the rate of $2.75 per share. Dividends on our outstanding shares of preferred stock are only payable at the time those shares are converted into shares of our common stock. To date, all dividends to the holders of our Series C and D preferred shares have been paid in common shares. However, there can be no assurance that our Series C and D preferred shareholders will continue to elect to receive dividends in common shares instead of cash.

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

~~During~~Since ~~the~~January ~~nine months ended September 30,~~ 2010, the Company has issued $~~450~~720,~~217~~717 in convertible notes. The debt bears interest at rates from 20% to 30% per annum, compounded monthly, and is due two years from the date the cash is received. In addition, the debt and related accrued interest is convertible into the Company’s common stock at a rate equal to the closing price of the Company’s stock on the day the cash is received, which is the date of the note. Cash proceeds of $~~265~~510,000 were received from ~~seven individuals who are~~ existing shareholders, the Company’s CEO converted amounts owed to him totaling $47,717, and the Company issued notes totaling $~~137~~163,~~500~~000 in exchange for consulting expenses ~~to two shareholders~~.

~~The~~According ~~Company~~to ~~has~~ASC ~~recorded~~470-50, athe ~~beneficial~~difference ~~conversion~~between ~~feature~~the innet ~~accordance~~carrying ~~with~~value ~~FASB~~and ~~ASC~~the ~~470-20.~~price ~~The~~paid ~~Company~~to ~~measures~~acquire the ~~embedded~~debt ~~beneficial~~instruments ~~conversion~~is ~~feature~~recorded byas ~~allocating~~ a ~~portion~~gain ofor ~~the~~loss. In ~~proceeds equal to~~ the ~~intrinsic~~Company’s ~~value~~situation, of the ~~embedded~~acquisition ~~beneficial~~price ~~conversion~~was ~~feature~~calculated toas ~~additional~~the ~~paid-in~~present ~~capital. Intrinsic~~ value isof ~~calculated as~~ the ~~difference~~principal ~~between~~(using ~~the~~a ~~effective~~1% ~~conversion~~risk-free ~~price~~interest ~~and~~rate) plus the fair value of the ~~common~~conversion ~~stock~~option ~~into~~(calculated ~~which~~using the ~~debt~~Black-Scholes ~~is convertible~~Method), ~~multiplied~~less by the ~~number~~embedded ~~of shares into which the debt is convertible. A~~ beneficial conversion feature. Since ~~totaling~~this ~~$31,959~~acquisition price was ~~recorded~~greater asthan ~~loan discount in~~ the ~~nine~~notes’ ~~months~~carrying ~~ended September 30~~value, ~~2010. The~~a ~~loan~~loss ~~discount~~on ~~will~~extinguishment beof ~~amortized~~$157,413 ~~over~~was ~~the~~recorded ~~life~~for of the ~~convertible~~quarter ~~note. For the nine months~~ ended September 30, 2010~~, $4,594 of amortization of loan discount was recorded as interest expense~~.

6The Company has recorded a beneficial conversion feature in accordance with FASB ASC 470-20. The Company measures the embedded beneficial conversion feature by allocating a portion of the proceeds equal to the intrinsic value of the embedded beneficial conversion feature to additional paid-in capital. Intrinsic value is calculated as the difference between the effective conversion price and the fair value of the common stock into which the debt is convertible, multiplied by the number of shares into which the debt is convertible. A beneficial conversion feature totaling $57,378 was recorded as loan discount during the year ended December 31, 2010. The loan discount will be amortized over the life of the convertible note. For the three months ended March 31, 2011 and 2010, $7,469 and $0 of amortization of loan discount was recorded as interest expense, respectively.

A premium of $157,411 on the convertible notes was also recorded as part of the modification of terms. This premium is the present value of the principal (using a 1% risk-free interest rate) plus the fair value of the conversion option (calculated using the Black-Scholes Method) and will be amortized over the life of the loans. For the ~~nine~~three months ended ~~September~~March 3031, 2011 and 2010, $1824,~~717~~416 and $0 of amortization of premium was recorded to additional paid in capital, respectively.

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

Quarter ending March 31, 2012:	$	423,148
Quarter ending June 30, 2012:	$	255,030
Quarter ending September 30, 2012	$	314,843
Quarter ending December 31, 2012	$	91,341
Quarter ending March 31, 2013	$	162,087
Total potential cash outlay:	$	1,246,449

Quarter ending March 31, 2012:	$	423,148
Quarter ending June 30, 2012:	$	255,030
Quarter ending September 30, 2012	$	117,567
Total potential cash outlay:	$	795,745

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

~~The~~As ~~report~~noted ofabove, ~~our~~we ~~independent~~are ~~registered~~currently ~~public~~analyzing ~~accounting~~our ~~firm~~options for moving forward with the ~~fiscal~~commercial ~~year~~exploitation ~~ended~~of ~~December~~the 31MedClose, ~~2009~~including ~~states~~licensing ~~that~~or ~~due~~sale toof the product and our ~~working~~manufacturing, marketing and sale of the product directly. If we pursue the direct manufacturing and marketing of the MedClose product, we will require significant additional capital ~~deficiency~~in atorder ~~December~~to 31(i) complete clinical trials and regulatory approvals in Europe, ~~2009~~North ~~there~~America isand aother ~~substantial~~designated ~~doubt~~foreign ~~about~~markets; ~~our~~(ii) ~~ability~~commence tomanufacturing ~~continue~~of asthe adevice; ~~going~~and ~~concern~~(iii) commence marketing and sales of the device, including the development of an internal infrastructure necessary to support manufacturing and marketing.

As noted above, we are currently analyzing our options for moving forward with the commercial exploitation of the MedClose, including licensing or sale of the product and our manufacturing, marketing and sale of the product directly. If we pursue the direct manufacturing and marketing of the MedClose product, we will require significant additional capital in order to (i) complete clinical trials and regulatory approvals in Europe, North America and other designated foreign markets; (ii) commence manufacturing of the device; and (iii) commence marketing and sales of the device, including the development of a internal infrastructure necessary to support manufacturing and marketing.6

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

7Equity Line of Credit

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

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

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

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

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

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

Off-Balance Sheet Arrangements

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

Forward Looking Statements

This report contains forward-looking statements that are based on our beliefs as well as assumptions and information currently available to us. When used in this report, the words “believe,” “expect,” “anticipate,” “estimate” and similar expressions are intended to identify forward-looking statements. These statements are subject to risks, uncertainties and assumptions, including, without limitation, the risks and uncertainties concerning FDA approval of our products; the risks and uncertainties concerning the acceptance of our services and products by our potential customers; our present financial condition and the risks and uncertainties concerning the availability of additional capital as and when required; the risks and uncertainties concerning technological changes and the competition for our services and products; and the risks and uncertainties concerning general economic conditions. These and other factors that may affect our results are discussed more fully in “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 15, ~~2010~~2011. Forward-looking statements speak only as of the date they are made. Readers are warned that we undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur, and are urged to review and consider disclosures we make in this and other reports that discuss factors germane to our business. See particularly our reports on Forms 10-K, 10-Q and 8-K filed from time to time with the Securities and Exchange Commission.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market risk is the risk of loss to future earnings, to fair values or to future cash flows that may result from changes in the price of a financial instrument. The value of a financial instrument may change as a result of changes in interest rates, exchange rates, commodity prices, equity prices and other market changes. Market risk is attributed to all market sensitive financial instruments, including long-term debt.

We do not utilize derivative financial instruments or investments in available-for-sale securities. All cash is held in both interest and non-interest bearing accounts. However, we do not believe that our cash accounts would have significant impact as a result of changes in interest rate since we do not rely on earnings from our cash accounts for cash flow.

Item 4. Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The term “disclosure controls and procedures” refers to the controls and procedures of our company that are designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures.

Management, including our chief executive officer (principal executive officer) and chief financial officer (principal financial officer), evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

There were no changes in our internal control over financial reporting during the three months ended ~~September~~March 3031, ~~2010~~2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

There have been no material developments during the quarter ended ~~September~~March 3031, ~~2010~~2011 in any material pending legal proceedings to which the Company is a party or of which any of our property is the subject.

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

None

Item 3. Defaults Upon Senior Securities

None

Item 5. Other Information

(a)

None

(b)

There were no changes to the procedures by which security holders may recommend nominees to our board of directors.

3.1 Articles of Incorporation of the Company (1)

3.2 Certificate of Amendment of Articles of Incorporation (3)

3.3 Bylaws of the Company (1)

Item 6. Exhibits.

Exhibit No.	Description	Method of Filing
3.1	Articles of Incorporation, as amended	Filed electronically herewith
3.2	Bylaws	Previously filed as part of the Company's registration statement on Form 10-SB filed on April 20, 1998, and incorporated herein by reference.
31.1	Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed electronically herewith
31.2	Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed electronically herewith
32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).	Filed electronically herewith

SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CPC of America, Inc. (Registrant)
	CPC of America, Inc.
Dated: November 15, 2010	By:	/s/ Rod A. Shipman
	(Registrant)
		Rod A. Shipman,
Dated: May 18, 2011	By: /s/ Rod A. Shipman
		President and Chief Executive Officer
	Rod A. Shipman,
	By:	/s/ Marcia J. Hein
	President and Chief Executive Officer
		Marcia J. Hein,
	By: /s/ Marcia J. Hein
		Chief Financial Officer
	Marcia J. Hein,
	Chief Financial Officer

Filing Compare · CPC OF AMERICA INC