<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
[_] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number 0-24053
CPC of America, Inc.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 11-3320709
- ------------------------------------ --------------------------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1133 Fourth Street, Suite 200, Sarasota, Florida 34236
- --------------------------------------------------------------------------------
(Address of principal executive offices)
941-906-9546
-----------------------------
(Issuer's telephone number)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [_]
As of August 6, 1999, the Company had 3,905,561 shares of its $.0005 par
value common stock issued and outstanding.
<PAGE>
PART 1 - FINANCIAL INFORMATION
PAGE
----
ITEM 1. Financial Statements
Unaudited Condensed Consolidated Balance Sheet at June 30, 1999......... 2
Unaudited Condensed Consolidated Statements of Operations for the
three month period ended June 30, 1999 and 1998
and for the period from inception (April 11, 1996) to June 30, 1999.... 3
Unaudited Condensed Consolidated Statements of Operations for the
six month period ended June 30, 1999 and 1998
and for the period from inception (April 11, 1996) to June 30, 1999.... 4
Unaudited Condensed Consolidated Statements of Cash Flows for the
three month period ended June 30, 1999 and 1998
and for the period from inception (April 11, 1996) to June 30, 1999.... 5
Unaudited Condensed Consolidated Statements of Cash Flows for the
six month period ended June 30, 1999 and 1998
and for the period from inception (April 11, 1996) to June 30, 1999.... 6
Notes to the Condensed Consolidated Financial Statements................ 7
<PAGE>
CPC OF AMERICA, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
June 30, 1999
<S> <C>
Current assets:
Cash and equivalents $ 162,000
Prepaid and other 194,696
-------------
Total current assets 356,696
Equipment, net of accumulated depreciation $5,723 9,697
Trademarks, net of accumulated amortization of $935 5,297
-------------
TOTAL ASSETS $ 371,690
=============
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 53,191
-------------
Total current liabilities 53,191
Shareholders' Equity:
Preferred stock, 5,000,000 shares authorized, $.001 par value,
68,706 shares issued and outstanding 68
Common stock, 20,000,000 shares authorized, $.0005 par value
3,894,457 shares issued and outstanding 1,947
Additional Paid in capital - Common 1,448,588
Additional Paid in capital - Preferred 778,589
Deficit accumulated during the development stage (1,910,693)
-------------
Net shareholders' equity 318,499
-------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 371,690
=============
</TABLE>
2
<PAGE>
CPC OF AMERICA, INC.
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
from inception
Three Months Ended June 30 (April 11, 1996)
-------------------------- to June 30,
1999 1998 1999
-------------------------------------------
<S> <C> <C> <C>
Costs and expenses:
Research and development $ 298,367 $ 48,953 $ 1,470,842
General and administrative 19,220 15,987 246,610
Depreciation and amortization 927 2,127 20,298
-------------------------------------------
Operating loss (318,514) (67,067) (1,737,750)
Interest income (expense):
Interest expense (1) (7,001)
Embedded interest expense (84,657) (194,657)
Interest income 1,867 4,287 27,595
-------------------------------------------
(82,791) 4,287 (174,063)
Loss before minority interest (401,305) (62,780) (1,911,813)
Minority interest 1,120
-------------------------------------------
Net Loss ($401,305) (62,780) ($1,910,693)
===========================================
Basic and diluted net loss per share (0.10) (0.01)
========================
Basic and diluted weighted average number
of common shares outstanding 4,165,491 4,261,605
========================
</TABLE>
3
<PAGE>
CPC OF AMERICA, INC.
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
from inception
Six Months Ended June 30 (April 11, 1996)
------------------------ to June 30,
1999 1998 1999
-------------------------------------------
<S> <C> <C> <C>
Costs and expenses:
Research and development $ 489,782 $ 142,008 $ 1,470,842
General and administrative 70,355 22,511 246,611
Depreciation and amortization 1,854 4,254 20,298
-------------------------------------------
Operating loss (561,991) (168,773) (1,737,751)
Interest income (expense):
Interest expense (1) (7,001)
Embedded interest expense (169,657) (194,657)
Interest income 3,444 9,206 27,596
-------------------------------------------
(166,214) 9,206 (174,062)
Loss before minority interest (728,205) (159,567) (1,911,813)
Minority interest 480 1,120
-------------------------------------------
Net Loss ($728,205) (159,087) ($1,910,693)
===========================================
Basic and diluted net loss per share (0.17) (0.04)
=========================
Basic and diluted weighted average number
of common shares outstanding 4,255,299 4,261,605
=========================
</TABLE>
4
<PAGE>
CPC OF AMERICA, INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
from inception
Three Months Ended June 30 (April 11, 1996)
---------------------------------- to June 30,
1999 1998 1999
------------------------------------------------------
<S> <C> <C> <C>
Cash flows from Operating activities:
Net loss ($401,305) ($159,087) ($1,910,693)
Adjustments to reconcile net income to net cash
used by operating activities:
Minority interest (480) (1,120)
Depreciation and amortization 927 4,254 20,298
Embedded interest expense 84,657 194,657
Contribution of officer's salary 80,000
Gain on disposition of Tercero (15,679)
Issuance of common stock for services 38,200
Sale of Tercero-assignment of payables 55,678
Increase in other assets (14,801) (18,500) (140,927)
Increase in trademarks
Increase (decrease) in accounts payable (17,713) 41,000
Increase (decrease) in accrued expenses 12,671 (10,000) 28,671
Increase in accrued interest 7,000
------------------------------------------------------
Net cash used by operating activities (335,564) (183,813) (1,602,915)
Cash flows from investing activities:
Tercero acquisition 0 0 (49,999)
DSDS acquisition 0 0 (79,000)
Capital expenditures 0 0 (15,420)
------------------------------------------------------
Net cash used by investing activities 0 0 (144,419)
------------------------------------------------------
Cash flows from financing activities:
Proceeds from notes to shareholders 73,000
Proceeds from note receivable from shareholder 150
Payments on note payable to shareholder (3,000)
Exercise of options 44,133 212,148
Exercise of warrants 49,336 128,086
Issuance of common stock 58,000 915,200
Issuance of preferred stock 254,000 584,000
------------------------------------------------------
Net cash provided by financing activities 347,469 58,000 1,909,584
------------------------------------------------------
Net (decrease)increase in cash 11,905 (125,813) 162,250
Cash, beginning of period 150,345 420,065
------------------------------------------------------
Cash, end of period $ 162,250 294,252 $ 162,250
======================================================
</TABLE>
5
<PAGE>
CPC OF AMERICA, INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
Six Months Ended from inception
---------------------------------------- (April 11, 1996)
June 30, June 30, to June 30,
1999 1998 1999
------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from Operating activities:
Net loss ($728,205) (159,087) ($1,910,693)
Adjustments to reconcile net income to net cash
used by operating activities:
Minority interest (480) (1,120)
Depreciation and amortization 1,854 4,254 20,298
Embedded interest expense 169,657 194,657
Contribution of officer's salary 80,000
Gain on disposition of Tercero (15,679)
Issuance of common stock for services 38,200
Sale of Tercero-assignment of payables 55,678
Increase in other assets (47,601) (18,500) (140,927)
Increase in trademarks
Increase (decrease) in accounts payable (224) 41,000
Increase (decrease) in accrued expenses 12,671 (10,000) 28,671
Increase in accrued interest 7,000
------------------------------------------------------------
Net cash used by operating activities (591,848) (183,813) (1,602,915)
Cash flows from investing activities:
Tercero acquisition 0 0 (49,999)
DSDS acquisition 0 0 (79,000)
Capital expenditures 0 0 (15,420)
------------------------------------------------------------
Net cash used by investing activities 0 0 (144,419)
------------------------------------------------------------
Cash flows from financing activities:
Proceeds from notes to shareholders 73,000
Proceeds from note receivable from shareholder 150
Payments on note payable to shareholder (3,000)
Exercise of options 67,137 212,137
Exercise of warrants 128,064 128,064
Issuance of common stock 58,000 915,200
Issuance of preferred stock 509,000 584,000
------------------------------------------------------------
Net cash provided by financing activities 704,201 58,000 1,909,551
------------------------------------------------------------
Net (decrease)increase in cash 112,353 (125,813) 162,217
Cash, beginning of period 49,864 420,065
------------------------------------------------------------
Cash, end of period $162,217 294,252 $ 162,217
</TABLE>
6
<PAGE>
CPC OF AMERICA, INC.
(A Development Stage Company)
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
1. Organization and summary of significant accounting policies
- --------------------------------------------------------------
Organization
------------
CPC of America, Inc., a Nevada corporation ("CPC" or the "Company"), was
formed on April 11, 1996 to manufacture and distribute external
counterpulsation medical devices and own controlling interests in various
management service organizations ("MSO"s) and medical services companies.
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.
Principles of consolidation
---------------------------
The accompanying consolidated financial statements include the amounts of the
Company and its wholly owned subsidiary CPCA 2000. All significant
intercompany transactions and balances have been eliminated in consolidation.
Interim periods
---------------
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-QSB and do not
include all of the information required by generally accepted accounting
principles for complete 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 three months and six months ended June 30, 1999 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-KSB for the
year ended December 31, 1998.
2. Shareholders' equity
- -----------------------
Series A Preferred stock
------------------------
In April and June 1999, the Company issued 29,882 shares of Series A
Preferred Stock for net proceeds of $254,000. The Company has recorded
$84,657 as additional paid in capital for the discount related to the
embedded interest in the preferred stock and fully amortized the expense in
the second quarter, when the stock was issued. This interest expense is
included in the caption "Embedded interest expense" in the accompanying June
30,1999 consolidated statement of operations.
Common stock
------------
In May and June 1999, warrants were exercised to purchase 28,200 shares of
the Company's $.005 par value at $1.75 per share of the Company's common
stock for net proceeds of $49,350. In May and June 1999, 5,000 options were
exercised at $2.50 per share for the net
7
<PAGE>
proceeds of $12,500. In June 1999, 28,133 options were exercised at $1.125
per share for the net proceeds of $31,649.
In late May 1999, the Company entered into an agreement with Leslie Kessler,
one of the founders of the Company, regarding the issuance of the Company's
securities to Ms. Kessler for prepaid services. In May and October 1996, the
Company had issued to Ms. Kessler, a total of 1,000,000 shares of Common
Stock and options to purchase up to 1,000,000 shares of Common Stock at an
exercise price of $1.125 per share. The shares and the options that had been
issued to Ms. Kessler and to the other founders or insiders of the Company at
its inception were issued for prepaid services in accordance with Nevada
General Corporate Law. Pursuant to her agreement with the Company, Ms.
Kessler agreed to return to the Company for cancellation 560,000 shares of
Common Stock and cancel options to purchase 490,000 shares of Common Stock.
Stock Options
-------------
The Company has granted options to purchase its common stock to its founders.
The Option prices at the time of grant were at or above the fair market value
of the Company's common stock. A summary of stock options activity follows:
<TABLE>
<CAPTION>
Exercise
Number of Price
Options Per Share Expiration
---------- ------------ -----------
<S> <C> <C> <C>
Outstanding at December 31, 1998 7,115,000 $1.125-9.00 2003 - 2008
Exercised in Q1 (20,458) $1.125 2006
--------- ----------- -----------
Outstanding at March 31, 1999 7,094,542 $1.125-9.00 2003 - 2008
Exercised in Q2 1999 33,133 $1.125-2.50 2006
Canceled in Q2, 1999 (490,000) $1.125 2006
--------- ----------- -----------
Outstanding at June 30, 1999 6,571,409 $1.125-9.00 2003 - 2008
Exercisable at June 30, 1999 3,323,409 $1.125-9.00 2003 - 2008
</TABLE>
8
<PAGE>
ITEM 2. Management's Discussion and Analysis or Plan of Operation
General
- -------
To date, the Company's activities have included the market analysis and
development of its counterpulsation units and the raising of initial working
capital. The Company has developed and prepared for market both the CPCA 2000
and the CPCA 2000M, a mobile version of the Company's stand-alone
counterpulsation unit. Both units have been submitted for FDA 510(k) approval.
The Company has financed its activities to date through the sale of its
securities. The Company intends to commence commercial operations as soon it
obtains FDA approval of its counterpulsation units. The Company is unable to
provide an estimate at this time of when FDA approval of the counterpulsation
units may be obtained.
Following FDA approval of its counterpulsation units, the Company intends to
make the counterpulsation technology available through a delivery system of
company-owned and joint-ventured facilities. In addition, the Company intends to
market is counterpulsation units to existing facilities through national and
international distributors. Each company-owned and joint-ventured facility will
provide two or more counterpulsation units to provide patients with easy access
to treatment. Potential joint-venture partners include community and university
hospitals, private practice groups, managed care organizations, including HMOs,
diagnostic imaging centers and preventive cardiology centers. Staffing would
include a cardiologist who will review the patient's history from the referring
physician, examine the patient and formulate the counterpulsation treatment
plan. In addition, specially trained nurses will be present in the center to
monitor each patient's treatment. The Company intends to attract patients from
referrals from physicians, insurance carriers, HMOs and hospitals, as well as
self-referred patients. The facilities will not offer full service long-term
cardiology management in an attempt to avoid competition with cardiologists,
surgeons and hospitals.
In addition to its working capital on hand as of the date of this report, the
Company believes that it will require an additional $1,000,000 of capital in
order to fund its plan of operations over the next 12 months. To fund its
working capital requirements, in November 1998, the Company commenced a private
placement of shares of its Series A Preferred Stock, $.001 par value per share
("Series A Preferred Stock"). In the private placement, the Company is offering
a total of 235,294 shares of Series A Preferred Stock at a price of $8.50 per
share, pursuant to Rule 506 under the Securities Act of 1933 as amended. The
Series A Preferred Stock has no voting rights. Each Series A Preferred Share is
convertible into Common Stock at a conversion price of $8.50 per share, however,
on December 31, 1999, the conversion price shall be adjusted to the lower of (i)
seventy-five percent (75%) of the average last sale price of the Common Stock
for the thirty (30) trading days immediately preceding such date as reported on
any stock exchange or (ii) $6.38 per share. As of June 30, 1999, the Company
had sold 68,706 shares of Series A Preferred Stock for the gross proceeds of
$584,000.
The Company expects to obtain the working capital it needs from both the
present private placements of Series A Preferred Stock as well as from the
exercise of currently outstanding warrants.
There can be no assurance, however, that the Company will be able to obtain
sufficient additional capital, either through the present private placement, the
exercise of warrants or otherwise, in order
9
<PAGE>
to fund the Company's working capital requirements in a timely manner. The
report of the Company's independent accountants for the fiscal year ended
December 31, 1998 states that due to the absence of operating revenues and the
Company's limited capital resources, there is doubt about the Company's ability
to continue as a going concern.
Changes in Equity
- -----------------
In late May 1999, the Company entered into an agreement with Leslie Kessler,
one of the founders of the Company, regarding the issuance of the Company's
securities to Ms. Kessler for prepaid services. In May and October 1996, the
Company had issued to Ms. Kessler, a total of 1,000,000 shares of Common Stock
and options to purchase up to 1,000,000 shares of Common Stock at an exercise
price of $1.125 per share. The shares and the options that had been issued to
Ms. Kessler and to the other founders or insiders of the Company at its
inception were issued for prepaid services in accordance with Nevada General
Corporate Law. Pursuant to her agreement with the Company, Ms. Kessler agreed
to return to the Company for cancellation 560,000 shares of Common Stock and
cancel options to purchase 490,000 shares of Common Stock.
Year 2000
- ---------
The Company utilizes computer software programs and operating systems,
including applications used in operating the CPCA 2000 and various
administrative and billing functions. To the extent the Company's software
applications contain source codes that are unable to appropriately interpret the
upcoming calendar year 2000, some level of modification, or even replacement of
such applications, may be necessary. The Company has performed an audit of its
computer systems to assess the scope of the Company's risks and bring its
applications into compliance. Following the completion of that audit,
management of the Company believes that all of the Company's and its third party
systems are Year 2000 compliant. Management estimates that the cost to the
Company of performing its Year 2000 audit is $5,000 and that the costs of
bringing all of its software programs into compliance with the Year 2000 is
$25,000.
Forward Looking Statements
- --------------------------
This report contains forward-looking statements that are based on the
Company's beliefs as well as assumptions made by and information currently
available to the Company. When used in this report, the words "believe,"
"expect," "anticipate," "estimate" and similar expressions are intended to
identify forward-looking statements. Such statements are subject to certain
risks, uncertainties and assumptions, including, without limitation, the
Company's recent commencement of commercial operations and the risks and
uncertainties concerning the acceptance of its services and products by its
potential customers; the Company's present financial condition and the risks and
uncertainties concerning the availability of additional capital as and when
required; technological changes; increased competition; and general economic
conditions. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated, or projected. The Company cautions
potential investors not to place undue reliance on any such forward-looking
statements, all of which speak only as of the date made.
10
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
-----------------
In April 1999, the Company was named as a defendant in a lawsuit brought by
Carepoint Network, Inc. in the Third Judicial District Court of Salt Lake
County, State of Utah. Carepoint alleges that the Company entered into a
contract with Carepoint to purchase all of the issued and outstanding capital
stock of Carepoint and that the Company breached this contract by failing to
consummate the transaction. Carepoint seeks damages in excess of $3,000,000.
The Company and Carepoint have entered into a stipulation to submit this
action to binding arbitration in Las Vegas, Nevada. The Company believes that
the allegations of Carepoint are without merit and, accordingly, the Company
intends to vigorously defend this case. The Company believes that a
determination of the lawsuit adverse to the Company will not have a material
adverse effect on the financial condition or operations of the Company.
Item 2. Changes in Securities and Use of Proceeds.
-----------------------------------------
In April and June 1998, the Company sold a total of 29,882 shares of its
Series A Preferred Stock at a price of $8.50. The Series A Preferred Stock is
convertible at any time into shares of the Company's $0.0005 par value common
stock ("Common Stock") at a conversion price of $8.50 per share, however, on
December 31, 1999, the conversion price shall be adjusted to the lower of (i)
75% of the average last sale price of the Common Stock for the 30 day trading
days immediately preceding such date as reported on any stock exchange or (ii)
$6.38 per share. There was no underwriter involved in the issuance. The Shares
were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended
("1933 Act").
In May and June 1999, the Company issued 28,200 shares of Common Stock to two
shareholders upon the exercise of warrants with an exercise price of $1.75 per
share. There was no underwriter involved in this issuance. The shares were
issued pursuant to Section 4(2) of the 1933 Act.
Item 3. Defaults Upon Senior Securities.
-------------------------------
Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
Inapplicable.
Item 5. Other Information.
-----------------
Inapplicable.
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits
--------
10.10 Letter Agreement between the Company and Leslie J.
Kessler dated May 18, 1999.
11
<PAGE>
27.1 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
None.
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)
Dated: August 6, 1999 By: /s/ ROD A. SHIPMAN
-------------------------
Rod A. Shipman,
Chief Financial Officer
12
<PAGE>
EXHIBIT 10.10
FILE NO.
224550.01
May 18, 1999
VIA FEDERAL EXPRESS VIA FEDERAL EXPRESS
- ------------------- -------------------
Ms. Leslie Kessler Rod A. Shipman, President
11 Hedgerow Lane CPC of America, Inc.
Jericho, New York 11753 1133 Fourth Street, Suite 200
Sarasota, Florida 34236
Re: CPC of America, Inc. (the "Company")
------------------------------------
Dear Ms. Kessler and Mr. Shipman:
This letter shall confirm our understanding of the agreement between the
Company and Leslie Kessler ("Ms. Kessler") regarding the issuance of securities
to Ms. Kessler for prepaid services on behalf of the Company. The Company and
Ms. Kessler have agreed that Ms. Kessler will return to the Company for
cancellation all of the shares of the Company's $.0005 par value common stock
("Common Stock") and all of the options to purchase shares of Common Stock
currently outstanding and registered in Ms. Kessler's name except for the
following: (i) 400,000 shares ("Shares") of Common Stock; and (ii) options to
purchase a total of 500,000 shares ("Option Shares") of Common Stock at an
exercise price of $1.125 per share. Any shares of Common Stock previously
transferred by Ms. Kessler to her sons will not be effected by this agreement.
As consideration for the shares of Common Stock and options Ms. Kessler has
agreed to return for cancellation, the Company shall pay Ms. Kessler the sum of
$2,000.
If this letter reflects your agreement, please indicate your assent to this
arrangement by signing this letter on the appropriate space set forth below.
This letter shall be considered a formal written amendment to the Non-Qualified
Stock Option Agreement dated May 2, 1996 between the Company and Ms. Kessler
("Option Agreement"). By signing this letter, Ms. Kessler and the Company will
effectively amend the Option Agreement to reflect the changes set forth above.
If this letter reflects your agreement, please sign and return to us an
executed copy of this letter. In addition, Ms. Kessler should include with the
executed copy of this letter certificate(s) representing 570,000 shares of
Common Stock to be returned for cancellation along with an executed copy of the
enclosed Stock Assignment Separate from Certificate, with appropriate signature
guarantees.
<PAGE>
Ms. Leslie Kessler
Rod A. Shipman, President
May 18, 1999
Page 2
Finally, this will confirm that upon the execution of this letter by both
parties and the Company's cancellation of all of the shares of Common Stock and
all options to purchase shares of Common Stock currently outstanding and
registered in Ms. Kessler's name, except for the Shares and the Option Shares,
that Ms. Kessler, on the one hand, and the Company, the directors and officers
of the Company, Rod A. Shipman and Paul Shabty, on the other hand, will release
each other from any claims that either party may have against the other with
regard to (i) Ms. Kessler's agreement to provide services to the Company as
originally agreed or (ii) Ms. Kessler's rights to the retention of any shares of
Common Stock or options to purchase shares of Common Stock except for the Shares
and the Option Shares.
This letter contains the entire agreement of the parties on the matters
discussed herein and may not be modified, altered or changed in any manner
whatsoever, except by a written agreement signed by both parties.
Should you have any questions, please contact the undersigned. Otherwise,
please sign this letter in the space indicated and return a copy to me via
facsimile, with the original signature following by overnight mail.
Very truly yours,
OPPENHEIMER WOLFF & DONNELLY LLP
/s/ Daniel K. Donahue
Daniel K. Donahue
DKD/daf
Enclosures
cc: CPC of America, Inc.
Mr. Rafe Cohen
Mr. William Lievense
Mr. Paul Shabty
THE UNDERSIGNED DO HEREBY CONSENT TO THE MATTERS SET FORTH HEREIN
CPC OF AMERICA, INC.,
a Nevada corporation
/s/ Leslie Kessler By: /s/ Rod A. Shipman
- ------------------ ------------------
LESLIE KESSLER Rod A. Shipman, President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 162,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 356,696
<PP&E> 15,420
<DEPRECIATION> 5,723
<TOTAL-ASSETS> 371,690
<CURRENT-LIABILITIES> 53,191
<BONDS> 0
0
68
<COMMON> 1,947
<OTHER-SE> 2,227,177
<TOTAL-LIABILITY-AND-EQUITY> 371,690
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 318,514
<OTHER-EXPENSES> 82,791
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (401,305)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (401,305)
<EPS-BASIC> (0.10)
<EPS-DILUTED> (0.10)
</TABLE>
