UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

T	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Fiscal Year Ended December 31, 2012

Or

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

Commission file number: 000 – 52077

MEDPRO SAFETY PRODUCTS, INC.

(Exact name of registrant as specified in its charter)

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

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

(859) 225-5375

(Registrant’s telephone number, including area code)

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

None.

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

Common Stock, par value $0.001 per share

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

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

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

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

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

Large accelerated filer  £                                                              Accelerated filer  £

Non-accelerated filer  £                                                                Smaller reporting company  T

(Do not check if a smaller reporting company.)

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

As of June 30, 2012, the aggregate market value of the registrant’s outstanding common stock held by non-affiliates of the registrant was approximately $12,203,214.

As of March 29, 2013, 34,540,878 shares of the registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

INDEX

PART I –		4
ITEM 1.	BUSINESS	4
ITEM 1 A.	RISK FACTORS	12
ITEM 1B.	UNRESOLVED STAFF COMMENTS	21
ITEM 2.	PROPERTIES	21
ITEM 3.	LEGAL PROCEEDINGS	21
ITEM 4.	MINE SAFETY DISCLOSURES	22
PART II –		22
ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	22
ITEM 6.	SELECTED FINANCIAL DATA	23
ITEM 7.	MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION	23
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	31
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	31
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	31
ITEM 9A.	CONTROLS AND PROCEDURES	31
ITEM 9B.	OTHER INFORMATION	32
PART III -		32
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	32
ITEM 11.	EXECUTIVE COMPENSATION	35
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	43

2

ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	44
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	47
PART IV -		47
ITEM 15.	INDEX TO EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	47
	SIGNATURES	50
	REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	51
	FINANCIAL STATEMENTS	52
	NOTES TO FINANCIAL STATEMENTS	57
	INDEX TO EXHIBITS FILED HEREWITH	87

3

PART I

Item 1.    Business.

Overview

MedPro Safety Products, Inc. has developed and acquired a portfolio of medical device safety products incorporating proprietary needlestick prevention technologies that deploy with minimal or no user activation. In addition to needlestick prevention, the technologies acquired and developed internally create a safer environment for drug delivery that is time saving and reduces the chance of a medication error in administration to the patient. Our objective for each of our products is to enter into a strategic agreement with one or more major pharmaceutical companies or medical product distributor, manufacturer, or supplier. We plan to continue to outsource the production of many of our products to established medical safety device manufacturers while we pursue a strategy of either developing or acquiring our own manufacturing capabilities.

Our offices are located at 145 Rose Street, Lexington, KY 40507 and our telephone number is (859)225-5375. Our website is http://www.medprosafety.com.

History

Our company was originally incorporated in Kentucky in 1995 and changed its domicile to Delaware in 1999. On December 28, 2007, as a condition to a financing in which we sold securities to institutional investors for $13 million, we became a public reporting company through a reverse merger with a public shell company incorporated in Nevada. The combined company, a Nevada corporation, changed its name to "MedPro Safety Products, Inc." The combined company continues our historical business, which is developing and marketing medical safety devices incorporating proprietary needlestick prevention technology and more efficient drug delivery, as described in this section.

Since December 28, 2007, our principal investor has been Vision Opportunity Master Fund, Ltd. (“VOMF”), a Cayman Island investment fund. On that date, VOMF and three other accredited investors purchased $13 million of our newly designated Series A convertible preferred stock and warrants to purchase our common stock. In 2008, we received $13,025,000 in cash when VOMF and its affiliate Vision Capital Advantage Fund, LP ("VCAF", to whom VOMF transferred a portion of its holdings) exercised a portion of their warrants for shares of our newly designated Series B convertible preferred stock. In 2009, VOMF and VCAF exercised warrants for $3,000,000 in cash and exchanged all of their remaining warrants for shares of our newly designated Series C convertible preferred stock. On December 31, 2012, VOMF and VCAF converted all of their shares of Series B and Series C convertible preferred stock into common stock. As of February 28, 2013, VOMF and VCAF together beneficially owned shares of common stock and Series A convertible preferred stock representing approximately 81.7% of our voting shares.

Needlestick Safety and Prevention

One of the most potentially deadly risks to healthcare workers is the transfer of blood-borne pathogens such as hepatitis and human immunodeficiency virus (HIV) because of accidental needlesticks. A needlestick injury occurs when a sharp that has been in contact with a patient's bodily fluid subsequently is introduced into a healthcare worker's blood or mucous system. The transfer of bloodborne pathogens through a needlestick injury is potentially one of the most deadly risks to healthcare workers. Common pathogens contracted include hepatitis B, hepatitis C, and HIV. In a 2008 study by the American Nurses Association (ANA), 47% of the 706 nurses surveyed reported being accidentally injured by a contaminated needle.

The majority of needlestick injuries have occurred during routine activities that are performed in the healthcare industry. These injuries occur while administering injections, drawing blood, needle disposal, and handling trash and dirty linens. Anyone who comes in contact with a non-sterile, unprotected needle can suffer a needlestick injury. In fact, disposable syringes cause more needlestick injuries than any other type of device.

Although nurses sustain the highest rate of needlestick injuries, all healthcare workers-from physicians to cleaning staff as well as other individuals-are at risk for harm. Consequently, fear of contracting a bloodborne disease from a needlestick injury is one of the greatest workplace concerns for healthcare employees. Other concerns include potential anxiety about disease exposure, the social stigma associated with contracting an infectious pathogen, lost work productivity, and litigation expenses. In addition to the risks faced by healthcare workers, a needlestick injury can also be a costly event for the organizations and businesses that employ healthcare workers. According to the U.S. Centers for Disease Control and Prevention (CDC), direct costs for initial testing and follow-up treatment of a needlestick injury, even if an infection does not occur, can range from $500 to $3,000 or more per injury.

4

There are 385,000 needlestick injuries per year among U.S. hospitals (Source: CDC, 2004; Panlilio A, et al “Estimate of the annual number of percutaneous injuries among hospital-based healthcare workers in the United Sattes, 1997-1998.” Inject Control Hosp Epidemiol, 2004, 25(7), pp 556-562). Worldwide, roughly one million needlestick injuries occur annually, according to the European Agency of Occupational Safety and Health (Source: The Royal College of Nursing's Needlestick Injuries: The Point of Prevention, January 2009). Notably, according to the ANA, roughly half of all sharps injuries go unreported by employees.

To help protect healthcare workers from needlestick injuries, many healthcare markets worldwide are transitioning to the mandatory use of safety syringes. In 2000, with the passage of the Federal Needlestick Safety and Prevention Act, the U.S. became the first country to adopt and actively enforce legislation requiring healthcare facilities to use safety syringes. In the European Union, a directive has been adopted that requires all members to take specific preventative measures by May 11th, 2013 that are necessary to protect healthcare workers from injuries caused by needlesticks. Likewise, Canadian and Australian healthcare markets are also working toward the mandatory protection of healthcare workers from needlestick injuries. In countries such as the U.S., where the use of safety syringes is mandated, healthcare facilities are required to conduct annual evaluations of new sharps safety products to assess which devices provide the safest working environment.

Safer Injection Practices

The most common method of drug delivery is through oral administration of a medicine, followed by injection of a drug into the patient. MedPro's drug delivery technology focuses on the injectable market segment. The most common form of container used to hold the injectable is a drug vial, and a hypodermic syringe is used to draw up the medicine from the vial and inject into the patient.

This method of drug delivery poses risks to the patient receiving the medication. The required number of steps of drawing the medicine up into a needle and delivering the medicine increases the risk of contamination that could cause additional harm to the patient. Likewise, this method does not insure that each patient would receive a new, sterile needle, as the same hypodermic could be used for multiple patients. When multi-dose vials are used, if not properly cleaned, cross-contamination between the patient population could also occur.

In response to this, the healthcare industry has seen a large effort to put more injectable products in a prefilled drug container that would be used for a single patient. The Centers for Disease Control created a “One and Only Campaign” (www.oneandonlycampaign.org) to better educate the healthcare workforce on the dangers of multi-use devices. The CDC has stated:

“Whenever possible, use of single-dose vials is preferred over multiple-dose vials, especially when medications will be administered to multiple patients. Outbreaks related to unsafe injection practices indicate that some healthcare personnel are unaware of, do not understand, or do not adhere to basic principles of infection control and aseptic technique. A survey of U.S. healthcare workers who provide medication through injection found that 1% to 3% reused the same needle and/or syringe on multiple patients. Among the deficiencies identified in recent outbreaks were a lack of oversight of personnel and failure to follow up on reported breaches in infection control practices in ambulatory settings.”

The prefilled syringe offers benefits over a standard vial by eliminating the risks stated above. Prefilled syringes are filled with the injectable medicine by the pharmaceutical company and delivered to the point of use. When the patient needs to receive the medication, the nurse can deliver the medicine directly to the patient without having to draw up medicine from a vial with a standard hypodermic. By using the primary container (prefilled syringe) as part of the delivery system, the risks to the patient for contamination or being stuck with a used needle drastically decrease.

Besides the benefits of contamination reduction and single needle use, prefilled syringes for fixed dose administration also eliminate the opportunity for a healthcare worker to draw up the incorrect amount of medicine, a common medication error. A fixed dose, delivered in a prefilled syringe, can be delivered to the patient without relying on additional process steps to deliver the correct amount of medicine.

Market for Needlestick Prevention and Safer Injection Practices

According to Greystone Associates ('Pre-filled Syringes February 2008'), there were a total of 19.3 billion injections worldwide in 2006. Of these 27% were from safety syringes, 56% from the traditional syringe, 14% are from pen injectors (the predominant insulin delivery system in most of the world), and 3% from other devices. The injectable drug market represents an increasingly significant percentage of the pharmaceutical market, valued in excess of $100 billion annually. It is one of the

5

fastest-growing sectors of the market, which pharmaceutical companies expect to generate an increasingly larger percentage of revenues over the coming decade. Traditionally, injectable drugs are supplied in vials that are administered via an IV or a standard syringe and hypodermic needle. There has been a strong trend over the past two decades towards the use of pre-filled syringes as a drug delivery device for therapeutic drugs and vaccines.

The US market for needle-based medical devices has been undergoing a widespread transition to safety syringes over the past two decades. Currently 87% of the acute care market for hypodermic syringes, 92% of specimen collection sets, and 94% of IV catheters include a safety feature. In the alternate care market, safety syringes account for two-thirds of the syringe market with even higher penetration rates among the other devices.

Several factors have driven increased usage of safety syringes in the U.S. The transmission of blood-borne diseases such as HIV-AIDS and Hepatitis C to healthcare workers precipitated federal regulation that spurred the development of more effective needlestick prevention technology. Center for Disease Control (“CDC”) guidelines led to Occupational Safety and Health Administration (“OSHA”) regulations during the 1990's. The Federal Needlestick Safety and Prevention Act (of 2001) further modified the OSHA blood-borne pathogen (“BBP”) standards. The BBP standard required that occupational exposure control plans identify, evaluate and make use of needle devices with built-in safety features and/or needleless systems for withdrawing body fluids, accessing a vein or artery and administering medications. Prior needle-based devices at the time often included no safety feature or required active safety activation by the healthcare worker. Together with the American Nursing Association (ANA) and other organizations, MedPro lobbied for the introduction of the legislation which also required healthcare providers to engage front line healthcare workers in the device evaluation process in order to better protect nurses from harm. OSHA is now enforcing these standards with random inspections and the threat of fines for non-compliance.

Although there has been widespread adoption of safety products, the technologies utilized have not significantly eliminated sharp object injuries to healthcare workers. The International Healthcare Worker Safety Center at the University of Virginia has collected data on occupational exposures to blood borne pathogens from a cumulative total of 84 hospitals in the U.S. since September 1992. Exposure data from these healthcare facilities was collected on an annual basis, merged into an aggregate database, and analyzed using Exposure Prevention Information Network (“EPINet™”) reporting software. Although participating hospitals vary in size, geographic location, and teaching status, the exposure patterns are similar, suggesting a high degree of standardization among medical devices and procedures. The number of injuries attributable to a specific type of device and the aggregate census of the reporting facilities is published annually. The 2007 EPINet data shows 289 needlestick injuries from disposable syringes in survey hospitals totaling a census of 3,400 (30+% of the incidents). Grossing up the reported incident rates for the national census of about 700,000 (a 60-80% occupancy rate on 1MM licensed beds) equates to 51,000 to 68,000 injuries from syringe use in hospitals. At an average cost of $3,000, that equates to $153 to $204 million of post-exposure testing and treatment expense, not to mention the personal and emotional ramifications. Markets and Markets, Global Injectable Drug Delivery Market (2010-2015) estimates there are between 600,000 and 1,000,000 needlestick injuries reported in the U.S. every year.

For drug delivery and blood collection, the needlestick injury can occur at various points during the procedure. A 2006 study from EPINET data categorized the point of use from reported sharps injuries as follows:

Point of Use	Percentage
During use of item	43	%
Between steps of a multi-step procedure	15	%
After use, before disposal	11	%
While putting into the disposal container	5	%
Other	26	%

Safer injection practices are largely driven by the drug delivery device that is being used to deliver the injectable medicine to the patient. When these devices contain innovative safety solutions for needlestick protection, they decrease the risk of a contaminated needlestick for the healthcare worker. Likewise, innovative prefilled drug containers can also increase the level of safety for the patient receiving the injection. The growing use of prefilled syringes is largely due to the increase in safety benefits it brings to the patient, along with the time savings component for the healthcare worker.

Due to the benefits of the prefilled syringe for the patient, the prefilled syringe global market is expected to reach $4.8 billion by 2015 (Source: Markets and Markets, Global Injectable Drug Delivery 2010). The U.S. Market will be the fastest growing segment, expected to reach $2.2 billion by 2015, at a Combined Annual Growth Rate of 18.3%. The European market

6

for prefilled syringes is more matured as compared to the US market and was worth $1 billion in 2009. This market is expected to reach $1.7 billion in 2015 at a compound annual growth rate of 9.2%. Of the 250 drugs currently under development by pharmaceutical companies, 70% are expected be injectable, making them prospects for a pre-filled delivery device. In addition, development of vaccines, which are well suited for pre-filled delivery, is forecast to grow over the next decade.

Demand for needlestick protection and prefilled drug delivery are expected to show rapid growth over the next decade, with continued emphasis on both healthcare worker and patient safety requirements. MedPro is positioning its product portfolio to take advantage of these market trends.

The Company is also working on an add-on safety device to be applied by glass syringe manufacturers for use in prefilled syringes. We are soliciting contracts with prospective customers for use of this device. This device works as a sheathing device to protect the healthcare worker from an unintended needlestick after the injection is given to the patient by sheathing the needle as it is withdrawn from the patient.

The Company is investigating two additional infusion devices in one or more configurations as possible products for acquisition. We have a letter of intent and standstill agreement to acquire one such device for use in chemotherapy and nuclear medicine infusion applications. We are investigating two other safety infusion devices, one active and one passive, for possible purchase. One of the devices has FDA 510(k) clearance and the other would have to be approved by the FDA.

Targeted Markets

MedPro has assembled a portfolio of medical safety devices in both the drug delivery arena and is gathering options for infusion products suitable for acquisition in the next three to six months. Our plan over the next two to three years is to commercialize our drug delivery platform and develop the infusion products we are investigating for acquisition. We estimate the targeted market for our products to have annual revenue potential of $15.8 billion by 2015.

Global Injectable Drug Delivery Devices Market, By Products, 2008 - 2015 ($Million)
Product	2008	2009	2010	2015	CAGR% (2010-2015)
Conventional Injection Devices	6,197	6,631	7,101	9,757	6.6
Prefilled syringes	2,028	2,270	2,550	4,806	13.5
Self-injection devices	501	570	648	1,276	14.5
Others	22	24	25	36	7.6
Total	8,748	9,495	10,324	15,875	9.0

Source: Markets and Markets Global Injectable Drug Delivery Market (2010-2015)

MedPro's drug delivery platform focuses on the two major types of devices in the injectable market - conventional injection and prefilled syringe. The Company is also developing a safety sheathing device for existing prefilled syringes and an IV shuttle device for use in delivery of prefilled dosages of various drugs. In addition, the primary drug cartridge for our prefilled syringe can be coupled with a hand held carrier to allow the cartridge to act as a vial for fillable syringe use.

MedPro Products

Hypodermic Safety Syringe

The safety syringe product is designed to offer the highest level of safety in the conventional injectable marketplace. The patented technology is similar to other MedPro technology by having an inner safety shield that deploys automatically during the injection of medicine. This allows the user to be protected without having to activate any additional safety features. The product line also includes anti-blunting technology that could be used by the medical device industry to protect the injection needle from damage upon insertion into a vial. The syringe can be offered with multiple needle gauges and lengths for different types of injections, sub-cutaneous or intramuscular. It allows for needle visibility during the draw from a vial and injection, while covering the contaminated sharp after use.

Prefilled Safety Syringe

Our line of safety syringes includes a model that can accept prefilled cartridges commonly used today as a primary container of injectable medicine. The system is designed to utilize the standard cartridge as the activation mechanism of the

7

safety feature, whereas a safety shield deploys automatically to cover the needle during the injection of the medicine. The primary container, in this case a standard cartridge, is a major risk factor for pharmaceutical companies. Today, many prefilled syringes with needlestick protection features introduce new risks for the pharmaceutical company by incorporating the primary drug container with the needle. These risks include tungsten interaction of the drug with staked needle syringes, possible capital expenditure and additional cost of secondary packaging, and the requirement of the user to use a certain needle gauge and length with a certain type of medicine.

The MedPro Prefilled Safety syringe separates the primary container, the standard cartridge, from the safety system. This allows a pharmaceutical company to focus its efforts on value added work (injectable medicine and primary container stability) that can then be combined with an innovative safety solution. Inserting the cartridge into the syringe component activates the safety mechanism before completion of the injection, which renders the product safe. We are not aware of any product on the market today in the prefilled drug injection space that offers the same level of protection for the healthcare worker from a needlestick. The current market offering has safety features that activate at the completion of the injection, and often times it requires additional force by the operator to accomplish the act of safety activation.

IV Shuttle Device2010 2015

During 2011, the Company developed an IV drug delivery device which operates using a luer lock access to an IV system. The IV Shuttle device was designed to work with the same standard cartridge that pairs with the prefilled safety syringe. This allows the pharmaceutical company to increase the number of drugs that would be available for the platform, by offering IV access to compliment the safety skin injection. Being a non-sharp device for IV Delivery, the IV Shuttle uses an internal cannula to penetrate the cartridge and deliver the medicine to the patient. The system is designed to allow the pharmaceutical company to use a glass cartridge, the most widely accepted container choice for decades, while also offering the healthcare worker a luer tip made of plastic. Today there are issues with glass luer syringes that the IV Shuttle device eliminates by offering the luer in plastic. These issues include glass tolerancing that is higher and does not allow for a reliable fit at all times to the IV connection, as well as the risk of breakage of the IV connection within the IV line.

Ready To Fill Cartridge

To address the needs of certain pharmaceutical customers, MedPro has designed a ready to fill cartridge to work with the drug delivery platform. Cartridges today are commonly filled with standard cartridge filling equipment. With the growing use of prefilled syringes, many pharmaceutical companies have purchased prefilled syringe lines that allow them to place the injectable product in the prefilled syringe line in an automated system. To meet the needs of those systems, MedPro has designed a ready-to-fill cartridge that will work with prefilled syringe lines being used today. This would give the pharmaceutical company multiple filling options for the primary container. The ready-to-fill cartridge and standardized cartridge will work with the drug delivery platform for skin injection and IV shuttle delivery systems.

Insulin Guard

In 2011 a patent was issued for the Insulin Guard. The product consists of a detachable safety needle that is made to work with autoinjectors. Typically, a non safety needle is used with a pen system that is self-administered, which creates a hazard after use for the patient, family members around the device, and downstream waste management activities. By using a safety needle on the injector, it virtually eliminates that someone could come into contact with the needle after it has been used.

The MedPro Insulin Guard is fully passive. Once the cap is removed, the user can see the needle for injection. During the act of injection, upon contact with the skin, the safety guard deploys and covers the needle upon removal from the skin. It is then locked in place and needle contact is eliminated.

Contracts

We developed our first line of passive safety products for phlebotomy, blood collection and infusion uses. In July 2010, we entered into a contract with Greiner Bio-One GmbH (“GBO”), an international manufacturer and distributor of medical products with locations in Europe, the United States and Brazil, which granted GBO exclusive rights to manufacture, market and distribute our three blood collection and infusion products. The six-year term of the GBO agreement began with the fourth quarter of 2010, during which we were to receive quarterly royalty payments totaling not less than $43,750,000, and would pay quarterly contributions totaling approximately $6,650,000 to cover a portion of the anticipated marketing expenses.

Effective on March 1, 2013, we sold the patents and other intellectual property underlying our three blood collection and infusion products to GBO. GBO made an initial purchase payment of $22 million and has agreed to pay an additional $7.4 million

8

on February 1, 2014, with payment being made directly to the holders of our Senior Secured 14% Notes due 2016 (the “14% Senior Notes”). As a result of the sale, both our GBO agreement and our 14% Senior Notes were canceled effective March 1, 2013, and all of our obligations under both were discharged. GBO also granted back to us an exclusive, worldwide, royalty-free, fully paid up license to use certain of the transferred intellectual property in specific fields of use other than blood collection and phlebotomy.

Product Development

Since the passage of the 2001 Needlestick Safety and Prevention Act, we have focused on developing safety solutions employing inherent passive safety needles or needleless replacements that require minimal or no user activation of the safety mechanism. Our approach to research and development has been to identify and acquire leading edge technology with a view to developing medical device safety products with significant commercial potential. Prior to 2011 we had obtained all of our proprietary intellectual property, research and development through either acquisitions or technology agreements with third party inventors.

In 2011, we designed, developed and manufactured a new IV Shuttle device that will utilize a lure lock connector to couple with an IV access line. The IV Shuttle will utilize the same cartridges that we are developing for our prefilled safety syringe. The Shuttle device has no exposed sharp or cannula and no moving parts. We engaged a consulting engineering firm to assist with the project. The Shuttle is being evaluated by a few potential customers.

We engaged a US firm to create small cavity molds for the prefilled safety syringe and our newly developed IV Shuttle device. We will continue to solicit participation in the development and distribution of the prefilled syringe device and the related fillable safety syringes within our drug delivery platform.

In 2012, we began development of an add-on safety device to be applied by glass syringe manufacturers. The product development activity includes initial engineering, a patent landscape due diligence survey and device prototyping. The development activity will continue through 2013.

We began investigating two additional products for possible purchase in 2013 during December of 2012. Due diligence is continuing at the date of this report on these two products.

Intellectual Property and Licenses

We own or hold rights to acquire intellectual property, including patents, patent applications, technology, trade secrets, know-how, copyrights and trademarks in the United States and other countries. MedPro has a royalty free license to use the patent portfolio it contracted to sell to GBO on December 31, 2012. The license includes six issued U.S. patents directed to the three products subject to MedPro's former 2010 agreement with GBO an Austrian manufacturer of blood collection and phlebotomy products. MedPro's license excludes these two fields of use.. With respect to products currently under development, MedPro's patent portfolio also includes two issued U.S. patents, 18 pending U.S. non-provisional patent applications, an issued patent in Canada and pending applications in China, Canada, Japan, Europe, and Hong Kong.

In the aggregate, MedPro's intellectual property assets are of material importance to our business. However, we believe that no single patent, technology, trademark, or intellectual property asset is material in relation to our business as a whole. The following narrative describes each family of patents or rights to acquire patents we currently hold, as well as those products for which we have filed a non-provisional patent application.

Safety System for a Blood Collection Device:

MedPro's license to use the patent portfolio which includes two issued U.S. patent directed to a safety system for a blood collection device is restricted to a field of use other than blood collection or phlebotomy. The safety system for a blood collection device family also includes an issued European patent, which has been validated in Austria, Germany, France, Great Britain, and a European divisional application. The family also includes issued patents in Japan and China.

Winged Safety Needle System:

MedPro's license to use the patent portfolio which includes two issued U.S. patents directed to a butterfly system having a passive guard is limited to a field of uses other than blood collection or phlebotomy. The family also includes issued patents in Canada, Japan, and Korea, and pending applications in Europe, Brazil, and Hong Kong.

9

Protective Device for Injection Needle:

MedPro's patent portfolio includes one issued U.S. patent directed to a protective device for an injection needle. The family also includes an issued European patent that has been validated in France, Germany, and Great Britain, and issued patents in Canada and Japan.

Automatic Non-Reusable Needle Guard:

MedPro's patent portfolio includes one issued U.S. patent directed to an automatic non-reusable needle guard.

Pre-Filled Safety System:

MedPro's patent portfolio includes eight pending U.S. non-provisional patent applications directed to the pre-filled safety system, where one of the pending patent applications has recently received a notice of allowance. The pre-filled safety system family also includes an issued patent in Canada and pending applications in Europe and Japan.

Automatic Needle Guard for an Insulation Pen:

MedPro's patent portfolio includes one issued U.S. patent and one U.S. pending non-provisional patent application directed to an automatic needle guard for an insulation pen.

Fillable Injection Syringe:

MedPro's patent portfolio includes two issued U.S patents and one pending U.S. non-provisional patent application directed to a fillable injection syringe. The fillable injection syringe family also includes pending applications in China, Canada, Japan, Europe, and Hong Kong.

IV Shuttle and Delivery System:

MedPro has six provisional patent applications directed to an IV shuttle and delivery system.

Filling Systems and Methods:

MedPro's patent portfolio includes two U.S. provisional applications directed to pre-filled cartridge filling systems and methods.

Competition

We operate in the increasingly complex and challenging medical device marketplace. Technological advances, federal regulations in the United States and some foreign markets, and scientific discoveries have accelerated the pace of change in medical technology, and the regulation of increasingly more sophisticated and complex medical products is increasing. Companies of varying sizes compete in the global medical technology field. Some are more specialized than us with respect to particular markets, and some have greater financial resources than us. New companies have entered the field; particularly in the areas of safety-engineered devices and in life sciences, and established companies have diversified their business activities into the medical technology area. Other firms engaged in the distribution of medical technology products have become manufacturers of medical devices and instruments as well. Acquisitions and collaborations by and among other companies seeking a competitive advantage also affect the competitive environment.

Becton Dickinson the leader the hypodermic safety syringe market and particularly in the pre-filled syringe market that sells to pharmaceutical customers. Becton Dickinson is the market leader with an estimated $1 billion in pharmaceutical system sales in 2010. With pharmaceutical companies now seeking to specialize in the commercialization of drugs, it is expected that contract manufacturers will be increasingly engaged to develop and fill these pre-filled syringes. Currently, major pharmaceutical companies such as Sanofi-Aventis operate their own filling lines. Small to medium sized pharmaceutical companies typically enter into contracts with contract pharmaceutical fillers such as Baxter Healthcare or Hospira that have extensive contract manufacturing facilities across the U.S. and Europe. The trend toward combining functionality and packaging in drug delivery systems will continue as new therapeutic substances are introduced at an increasingly rapid rate.

A company's ability to compete in the medical device market depends on many factors, including price, quality, innovation, service, reputation, distribution, and promotion. To increase revenue growth by focusing on products that deliver greater benefits to patients and medical professionals, and to maintain an advantage in the competitive environment in which

10

we operate, we must continue to invest in research and development, quality management, quality improvement, product innovation and productivity improvement. We will compete against companies with substantially more financial resources to invest for these purposes.

Suppliers

MedPro has received a Certificate of Registration from BSI Management Systems to ISO 13485:2003. The scope of the certificate is the design and manufacture of single use, sterilized and non-sterile blood collection and fluid delivery devices, accessories, and fluid channeling devices. This is an expansion from our prior certification, which was limited to to blood collection devices.

We have also obtained CE Marking certification under the European Medical Device Directive 93/42/EEC, which is required to distribute products in Europe.

Our production strategy is to outsource the manufacturing of all our products to reputable medical device manufacturers with well-established reputations in the industry. We require that each of our current and prospective suppliers comply with Good Manufacturing Practice (“GMP”) requirements under the U.S. Food, Drug and Cosmetic Act and be ISO certified or meet equivalent applicable standards. We believe that if the manufacturers with whom we currently contract were no longer able to produce our products for any reason, there are sufficient other manufacturers to allow use to make alternative production arrangements.

We utilize various biomedical contractors to assist us with product development. We have engaged GW Plastics, Inc. to mold various components for our wing device and Precision Medical Products, Inc. to assemble this device. We have also employed Gilero Biomedical to build small cavitational molds to manufacture limited quantities of our prefilled syringe for testing and marketing purposes. We have received delivery of the first production from these new molds and have working prototypes of this device. We expect to engage Gilero to do the same for our hypodermic safety syringe.

Government Regulation

FDA and Other Regulators

Medical devices are subject to regulation by the FDA, state agencies and, in varying degrees, by agencies that perform similar regulatory oversight functions in other countries. These regulations, as well as various federal and state laws, govern the manufacturing, labeling, record keeping, clinical testing and marketing of these products. The majority of our medical device product candidates must undergo rigorous testing and an extensive government regulatory approval process prior to sale in the United States and other countries. The lengthy process of seeking required approvals and the continuing need for compliance with applicable laws and regulations require the expenditure of financial resources. Regulatory approval, when and if obtained, may be limited in scope, which may significantly limit the indicated uses for which a product may be marketed. Approved products and their manufacturers are subject to ongoing review, and discovery of previously unknown problems with products may result in restriction on their manufacture, sale or use, or their withdrawal from the market.

Regulation of Medical Devices

All of our current products are medical devices intended for human use and are subject to FDA regulation. Unless an exemption applies, each medical device we market in the United States must have a 510(k) clearance or a Pre -Market Approval (“PMA”) in accordance with the Federal Food, Drug, and Cosmetic Act. The FDA regulations generally:

set standards for medical devices;

require proof of safety and effectiveness prior to marketing;

require safety data and clinical protocol approval prior to evaluation in humans;

establish FDA-mandated current good manufacturing practices, or GMPs; and

permit detailed inspection of manufacturing facilities.

These regulations also require reporting of product defects to the FDA and prohibit export of devices that do not comply with FDA regulations, unless the devices comply with established foreign regulations and the FDA and the health agency of the importing country determine export is not contrary to public health. FDA regulation divides medical devices into

11

three classes. Class I devices are subject to general controls to preclude mislabeling or adulteration and require compliance with labeling and other general requirements. Class II devices are subject to special controls and must also comply with general controls. Class III devices are subject to the most extensive regulation and in most cases require submission to the FDA of a PMA application that includes information on the safety and effectiveness of the device.

Products marketed in the European Community must comply with the requirements of the European Medical Device Directive (“MDD”) and be CE-marked. The CE Mark is the European equivalent of FDA approval to market. Medical device laws and regulations similar to those described above are also in effect in some of the other countries to which we intend to export our products. These range from comprehensive device approval requirements for some or all of our medical device products to requests for product data or certifications. Failure to comply with these domestic and international regulatory standards and requirements could affect our ability to market and sell our products in these markets.

Other Regulations

We are subject to various federal and state laws pertaining to health care fraud and abuse, including anti-kickback laws and false claims laws. Anti-kickback laws make it illegal to solicit, offer, receive or pay any remuneration in exchange for, or to induce, the referral of business, including the purchase or prescription of a particular product. The United States has published regulations that identify “safe harbors” or exemptions for certain payment arrangements that do not violate the anti-kickback statutes. We seek to comply with the safe harbors where possible. Due to the breadth of the statutory provisions and the absence of guidance in the form of regulations or court decisions addressing some of our practices, it is possible that our practices might be challenged under anti-kickback or similar laws. False claims laws prohibit anyone from knowingly and willingly presenting, or causing to be presented for payment to third party payers (including Medicare and Medicaid) claims for reimbursed products or services that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services. Our activities relating to the sale and marketing of our products may be subject to scrutiny under these laws. Violations of fraud and abuse laws may be punishable by criminal and/or civil sanctions, including fines and civil monetary penalties, as well as the possibility of exclusion from federal health care programs (including Medicare and Medicaid).

Our business has been and will continue to be subject to various other laws and regulations.

Dependence on One or a Few Major Customers

We currently do not depend on any individual source of raw materials or suppliers.

The royalties we receive under our agreement with Greiner Bio-One currently are our principal source of revenue.

Employees

As of December 31, 2012, we had fifteen full time employees. As of the filing date of this report we had seven employees. None of our employees are subject to a collective bargaining agreement.

Reports to Security Holders

We file reports with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current event reports on Form 8-K and proxy statements, as well as any amendments to those reports. Our reports are available on the SEC's internet site at http://www.sec.gov, which contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The public also may read and copy any materials the Registrant files with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. Investors also may access our periodic reports and ownership reports of our directors and executive officers on our website www.medprosafety.com. Shareholders may also request a copy of our SEC reports at no cost by telephoning us at (859) 225-5375 or by writing us at the following address: MedPro Safety Products, Inc., 145 Rose Street, Lexington, KY 40507, Attention: Corporate Secretary.

****************

Item 1A.  Risk Factors.

12

An investment in our common stock involves a number of risks. You should carefully read and consider the following risks as well as the other information contained in this report, including the financial statements and the notes to those financial statements, before making an investment decision. The realization of any of the risks described below could have a material adverse affect on our business, financial condition, results of operations, cash flows and/or future prospects. The trading price of our common stock could decline due to any of these risks, and you could lose part or all of your investment. The order of these risk factors does not reflect their relative importance or likelihood of occurrence.

Risks Relating to Our Business

MedPro has incurred substantial losses since inception.  We may incur net losses in the foreseeable future and may never become profitable.

Since MedPro’s inception in 1995, the Company has incurred significant losses and negative cash flows from operations. We incurred net losses from operations of $(6,186,259) in 2012 and $(7,222,221) in 2011.  In 2012 we had a net loss of $(10,881,754). In 2011 we had a net loss of $(12,032,604).  As of December 31, 2012, we had an accumulated deficit of $(95,380,438). The deficit as of December 31, 2011 was $(84,498,684).

With the exception of an anticipated gain from the sale of several patents that will be recorded in the first quarter of 2013, we anticipate incurring additional losses for at least several more fiscal quarters through mid 2014. We expect to spend significant resources over the next few years to fund the continued development of our pipeline of potential products.  In 2010, we began to realize royalty revenue from the first of three blood collection devices being manufactured and distributed by a customer under a six-year agreement.  These revenues had been committed to debt service on our 14% Senior Notes through 2016. Payments of royalty revenues for the fourth quarter of 2012 and thereafter were suspended as of December 31, 2012 and ultimately terminated when we sold the patents associated with this contract to the customer that was producing these products effective March 1, 2013.

Our ability to generate revenues and become profitable will depend on our ability to timely, efficiently and successfully develop and commercialize more products. We may not ever become profitable. If we sustain losses over an extended period of time, we may be unable to continue our business.

We will need substantial additional funding to develop our products and for our future operations. If we cannot obtain the funds necessary to do so, we may be required to delay, scale back or eliminate our product development or may be unable to continue our business.

The development of our products will require substantial funds to obtain regulatory approvals and bring our products to market.  Our cash has declined by $5,766,666 during 2012 to $406,961 from $6,173,627 at December 31, 2011. We will need additional cash in periods after 2012.

Since September 2012, we have been funding our operations from a line of credit extended by our principal investor, Vision Opportunity Master Fund Ltd. The credit agreement allows us to draw up to $4,285,000 over twelve months ending August 2013. It also includes covenants that restrict our ability to incur additional debt without VOMF's consents. The outstanding principal balance bears interest at an annual rate of 10% and matures on December 31, 2013. As of December 31, 2012, the amount available for future draws under the credit agreement totaled $1,843,000. We will need financing in addition to our current cash on hand to maintain our present operations in 2013 and beyond. Our future capital requirements will depend on many factors, including:

• the progress and costs of our research and development programs, including our ability to develop our current portfolio of medical safety products, or to identify, acquire and develop new ones;

• the time and cost involved in obtaining regulatory approvals;

• the cost of manufacturing our products;

• competing technological and market developments;

• our ability to establish and maintain arrangements with third parties to assist in bringing our products to market and the cost of such arrangements;

• costs associated with the integration of any new operation, including costs relating to future mergers and acquisitions with companies that have complementary capabilities;

• expenses related to the establishment of sales and marketing capabilities;

• the level of our sales and marketing expenses; and

• our ability to introduce and sell new products.

13

We anticipate we will need to raise additional funds to support our current operations and future expansion and growth plans. Our funding requirements may change as a result of many factors, including underestimates of budget items, unanticipated cash requirements, delays in bringing our products to market, future product and service opportunities, and future business combinations.

We cannot be certain that additional financing will be available on acceptable terms, or at all. To the extent we raise additional capital through the sale of equity securities; the ownership position of our existing stockholders could be substantially diluted. If additional funds are raised through the issuance of preferred stock or debt securities, these securities are likely to have rights, preferences and privileges senior to our common stock. Fluctuating interest rates could also increase the costs of any debt financing we may obtain. To the extent we raise additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to our products, or grant licenses on unfavorable terms.

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

Our future growth depends upon our ability to develop new products.

A significant element of our strategy is to increase revenue by focusing on products that deliver greater benefits to patients, healthcare workers and researchers. The development of these products requires significant research and development, significant financial resources, clinical trials and regulatory approvals. The results of our product development efforts may be affected by a number of factors, including our ability to innovate, develop, acquire and manufacture new products, complete clinical trials, obtain regulatory approvals and reimbursement in the United States and abroad, or gain and maintain market approval of our products. In addition, patents obtained by others could preclude or delay our commercialization of a product. None of our products now in development or that we may seek to develop in the future may achieve technological feasibility, obtain regulatory approval, or gain market acceptance.

Even if we receive regulatory approval for our products, those products may never be commercially successful.

Even if we develop medical safety products that obtain the necessary regulatory approval, and we have access to the necessary manufacturing, sales, marketing and distribution capabilities that we need, our success depends to a significant degree upon the commercial success of those products. If our products fail to achieve or subsequently maintain market acceptance or commercial viability, our business would be significantly harmed because our future royalty revenue or other revenue would depend upon sales of these products. Many factors may affect the market acceptance and commercial success of our products, including:

• the timing of market entry as compared to competitive products;

• the rate of adoption of new medical safety products by hospital, clinics and medical practitioners;

• convenience and ease of administration;

• pricing;

• marketing;

• availability of alternative products; and

• activities by our competitors.

We will rely on third parties to manufacture our medical safety products.

Our business strategy relies on third parties to manufacture and produce our medical safety devices in accordance with good manufacturing practices established by the FDA, or similar regulations in other countries. Our products may compete with other products or companies for access to these facilities and may be subject to delays in manufacture if third parties give other products greater priority than our products. These third parties may not deliver sufficient quantities of our products, manufacture our products in accordance with specifications, or comply with applicable government regulations. In addition, if the manufactured products fail to perform as specified, our business and reputation could be significantly harmed.

The manufacturers on whom we will depend may not be able to successfully produce our products on acceptable terms, or on a timely or cost-effective basis. They may not be able to manufacture our products in accordance with our product specifications or will meet FDA or other requirements. We must have sufficient and acceptable quantities of our products to

14

conduct our clinical trials and to market, if and when the products have been approved by the FDA for marketing.  If we are unable to obtain sufficient and acceptable quantities of our products, we may be required to delay the marketing and distribution of our products, which would further delay our receipt of revenue.  If our contract manufacturers are not satisfying our needs, it could be difficult and very expensive to change suppliers or to establish our own manufacturing capabilities. Any change in the location of manufacturing would require FDA inspection and approval, which could interrupt the supply of products and may be time-consuming and expensive to obtain. If we are unable to identify alternative contract manufacturers that are qualified to produce our products, we may have to temporarily suspend the production of products, and would be unable to generate revenue from the sale of products.

If we do not comply with applicable regulatory requirements in the manufacture and distribution of our products, we may incur penalties that may inhibit our ability to commercialize our products and adversely affect our revenue.

Our failure or the failure of our potential third party manufacturers to comply with applicable FDA or other regulatory requirements including manufacturing, quality control, labeling, safety surveillance, promoting and reporting may result in criminal prosecution, civil penalties, recall or seizure of our products, total or partial suspension of production or an injunction, as well as other regulatory action against us.  Discovery of previously unknown problems with a product, supplier, manufacturer or facility may result in restrictions on the sale of our products, including a withdrawal of such products from the market. The occurrence of any of these events would negatively impact our business, results of operations and financial condition.

Product defects could adversely affect the results of our operations.

The design, manufacture and marketing of medical devices involve certain inherent risks.  Manufacturing or design defects, unanticipated use of our products, or inadequate disclosure of risks relating to the use of the product can lead to injury or other adverse events. These events could lead to recalls or safety alerts relating to our products (either voluntary or required by the FDA or similar governmental authorities in other countries), and could result, in certain cases, in the removal of a product from the market. Any recall could result in significant costs, as well as negative publicity that could reduce demand for our products. Personal injuries relating to the use of our products can also result in product liability claims being brought against us. In some circumstances, such adverse events could also cause delays in new product approvals. Any of the foregoing circumstances could have a material adverse effect on our, financial condition or cash flows.

The medical device industry is very competitive.

The medical device industry is subject to rapid technological changes, and we face significant competition across our product lines and in each market in which our products are sold. We face this competition from a wide range of companies. These include large medical device companies, which have greater financial and marketing resources than MedPro. We also face competition from firms that are more specialized than we are with respect to particular markets. Non-medical device companies, including pharmaceutical companies, also offer alternative therapies for disease states that may be delivered without a medical device. In addition, some competitors have established manufacturing sites or have contracted with suppliers located in China and other low-cost manufacturing locations as a means to lower their costs. New entrants may also appear, particularly in these low-cost countries.

The development of new or improved products, processes or technologies by other companies may make our products or proposed products obsolete or less competitive and may materially adversely affect our earnings, financial condition or cash flows.

Many potential competitors, including those who have greater resources and experience than we do, may develop products or technologies that make ours obsolete or noncompetitive.

Many companies are engaged in developing medical safety devices. Our future success will depend on our ability to maintain a competitive position with respect to technological advances. Technological developments by others may result in our products and technologies becoming obsolete.  Significant competitors include Baxter International and Becton Dickinson. Most of our current and potential competitors have substantially greater research and development capabilities and financial, regulatory, manufacturing, marketing, sales, human resources, and experience than we do. Many of our competitors have several products that have already been developed, approved and successfully commercialized, or are in the process of obtaining regulatory approval for their products in the United States and internationally. Many of these companies have substantially greater capital resources, research and development resources and experience, manufacturing capabilities,

15

regulatory expertise, sales and marketing resources, and production facilities. Our competitors may succeed in developing technologies or products that are more effective, safer, more affordable or more easily commercialized than ours, and our competitors may obtain intellectual property protection or commercialize products sooner than we do. Developments by others may render our product candidates or our technologies obsolete. Our failure to compete effectively would have a significant adverse effect on our business, financial condition and results of operations.

Our operations are subject to governmental regulation associated with the medical safety device industry, the operation and enforcement of which may restrict our ability to carry on our business.

The development, manufacture, and marketing of products sold by us will be subject to extensive regulation by various government agencies, including the U.S. Food and Drug Administration and the U.S. Federal Trade Commission, as well as various state and local agencies. These agencies regulate production processes, product attributes, packaging, labeling, advertising, storage, and distribution. These agencies establish and enforce standards for safety, purity, and labeling. In addition, other governmental agencies (including the U.S. Occupational Safety and Health Administration), establish and enforce health and safety standards and regulations in the workplace. We will seek to comply at all times with all such laws and regulations. We will also seek to obtain and maintain all permits and licenses relating to our operations that are necessary so that our facilities and practices comply with applicable governmental laws and regulations. Nevertheless, there is no guarantee that we will be able to comply with any future laws and regulations. Our failure to comply with applicable laws and regulations could subject us to civil remedies including fines, injunctions, recalls or seizures as well as potential criminal sanctions. As a result of such regulations, we may encounter a variety of difficulties or extensive costs, which could delay or preclude us from marketing our products or continuing or expanding our operations. We cannot predict if all necessary approvals will be granted or that if granted, any approval will be received on a timely basis. If we do not obtain required approvals, or if those approvals are delayed, it may also preclude us from marketing our products, or continuing or expanding our operations.

We cannot guarantee that any of our strategic acquisitions, investments or alliances will be successful.

While our strategy to increase revenue growth is driven primarily by development of products based on technology we own or control, we will seek to supplement our growth through strategic acquisitions, investments and alliances when feasible. Such transactions are inherently risky. Any number of factors may affect the success of any acquisition, investment or alliance including our ability to properly assess and value the potential business opportunity or to successfully integrate it into our existing business. There can be no assurance that any past or future transaction will be successful or that the transaction will not materially adversely affect our earnings, financial condition or cash flows.

Our operations depend in part on patents and other intellectual property rights.

Our business relies on patent, trademark and other intellectual property rights. While we do not believe that the loss of any one patent or other intellectual property asset would materially affect our operations, these intellectual property assets, in the aggregate, are of material importance to our business. We can lose the protection afforded by these intellectual property assets through patent expirations, legal challenges or governmental action. Patents attained by competitors, particularly as patents on our products expire, may also adversely affect our competitive position. The loss of a significant portion of our portfolio of intellectual property assets may have a material adverse effect on our earnings, financial condition, or cash flows.

Our ability to compete in the medical device market may decline if we do not adequately protect our proprietary technologies.

Our success depends in part on our ability to obtain and maintain intellectual property that protects our technologies and our products, including rights we have licensed. Patent positions may be highly uncertain and may involve complex legal and factual questions, and we cannot predict the extent to which we may enforce these claims against our competitors. It may be necessary or useful for us to participate in opposition proceedings to determine the validity of our competitors’ patents or to defend the validity of any of our or our licensor’s future patents, which could result in substantial costs and would divert our efforts and attention from other aspects of our business. In addition, patent law outside the United States is uncertain and in many countries intellectual property laws are undergoing review and revision. The laws of some countries do not protect intellectual property rights to the same extent as domestic laws. Therefore, the degree of future protection for our proprietary rights is not certain, which could have a significant adverse effect on our business, financial condition and results of operations.

Technologies we license from others, or in-licensed technologies, are important to our business. The scope of our rights under our licenses may be subject to dispute by our licensors or third parties. Our rights to use these technologies and to practice the inventions claimed in the licensed patents are subject to our licensors abiding by the terms of those licenses and not

16

terminating them. In particular, we have agreed to use commercially reasonable efforts to develop and commercialize some of our significant licensed technology. If we fail to comply with those obligations, we may lose some of the rights that enable us to utilize this technology, and our ability to develop products could be seriously hampered.

In addition, we may in the future acquire rights to additional technologies by licensing rights from existing licensors or from third parties. Such in-licenses may be costly. Also, we generally do not control the patent prosecution, maintenance or enforcement of in-licensed technologies. Accordingly, we may not be able to exercise the same degree of control over this intellectual property as we could over internally developed technologies.

Disputes concerning the infringement or misappropriation of our proprietary rights or the proprietary rights of others could be time consuming and extremely costly and could delay our research and development efforts.

Our commercial success, if any, will be significantly harmed if we infringe the patent rights of third parties or if we breach any license or other agreements that we have entered into with regard to our technology or business.  We are not currently a party to any litigation or any potentially adverse proceeding with regard to our patent or trademark positions.

If we become involved in litigation, interference proceedings, oppositions, reexamination, protest or other potentially adverse intellectual property proceedings as a result of alleged infringement by us of the rights of others or as a result of priority of invention disputes with third parties, we might have to spend significant amounts of money, time and effort defending our position and we may not be successful. In addition, any claims relating to the infringement of third-party proprietary rights or proprietary determinations, even if not meritorious, could result in costly litigation, lengthy governmental proceedings, divert management’s attention and resources, or require us to enter into royalty or license agreements that are not advantageous to us. If we do not have the financial resources to support such litigation or appeals, we may forfeit or lose certain commercial rights. Even if we have the financial resources to continue such litigation or appeals, we may lose. If we lose, we may be forced to pay very substantial damages; we may have to obtain costly license rights, which may not be available to us on acceptable terms, if at all; or we may be prohibited from selling products that are found to infringe the patent rights of others.

Uncertainties resulting from initiation and continuation of any patent proceeding or related litigation could harm our ability to compete and could have a significant adverse effect on our business, financial condition and results of operations. An adverse ruling arising out of any intellectual property dispute could undercut or invalidate our intellectual property position. An adverse ruling could also subject us to significant liability for damages, including possible treble damages, prevent us from using technologies or developing products, or require us to negotiate licenses to disputed rights from third parties. Although patent and intellectual property disputes in the technology area are often settled through licensing or similar arrangements, costs associated with these arrangements may be substantial and could include license fees and ongoing royalties. Furthermore, necessary licenses may not be available to us on satisfactory terms, if at all. Failure to obtain a license in such a case could have a significant adverse effect on our business, financial condition and results of operations.

If we acquire products, technologies or other businesses, we will incur a variety of costs, may have

integration difficulties and may experience numerous other risks that could adversely affect our

business.

To remain competitive, we may decide to acquire additional businesses, products and technologies. We have limited experience in identifying acquisition targets, successfully acquiring them and integrating them into our current infrastructure. We may not be able to successfully integrate any businesses, products, technologies or personnel that we might acquire in the future without a significant expenditure of operating, financial and management resources, if at all. In addition, future acquisitions could require significant capital infusions and could involve many risks, including, but not limited to:

• we may have to issue convertible debt or equity securities to complete an acquisition, which would dilute our stockholders and could adversely affect the market price of our common stock;

• an acquisition may adversely affect our results of operations because it may require us to incur large one-time charges to earnings, amortize or write down amounts related to goodwill and other intangible assets, or incur or assume substantial debt or liabilities, or it may cause adverse tax consequences, substantial depreciation or deferred compensation charges;

• we may encounter difficulties in assimilating and integrating the business, technologies, products, personnel or operations of companies that we acquire;

• certain acquisitions may disrupt our relationship with existing customers, distributors or suppliers who compete with the acquired business;

17

• acquisitions may require significant capital infusions and the acquired businesses, products or technologies may not generate sufficient revenue to offset acquisition costs;

• an acquisition may disrupt our ongoing business, divert resources, increase our expenses and distract our management;

• acquisitions may involve the entry into a geographic or business market in which we have little or no prior experience; and

• key personnel of an acquired company may decide not to work for us.

Any of the foregoing risks could have a significant adverse effect on our business, financial condition and

results of operations.

To the extent we enter markets outside of the United States; our business will be subject to political,

economic, legal and social risks in those markets, which could adversely affect our business.

There are significant regulatory and legal barriers in markets outside the United States that we must overcome to the extent we enter or attempt to enter markets in countries other than the United States. We will be subject to the burden of complying with a wide variety of national and local laws, including multiple and possibly overlapping and conflicting laws. We also may experience difficulties adapting to new cultures, business customs and legal systems. Any sales and operations outside the United States would be subject to political, economic and social uncertainties including, among others:

• changes and limits in import and export controls;

• increases in custom duties and tariffs;

• changes in currency exchange rates;

• economic and political instability;

• changes in government regulations and laws;

• absence in some jurisdictions of effective laws to protect our intellectual property rights; and

• currency transfer and other restrictions and regulations that may limit our ability to sell certain products or repatriate profits to the United States.

Any changes related to these and other factors could adversely affect our business to the extent we enter

markets outside the United States.

We may encounter difficulties managing our growth, which could adversely affect our business.

Our success will depend on the ability of our officers and key employees to continue to improve our operational capabilities and our management information and financial control systems, and to expand, train and manage our work force.  We have conducted an assessment of internal control over financial reporting  as of December 31, 2012 as required by Section 404(a) of the Sarbanes-Oxley Act and have included management’s assessment report in this Form 10-K.   If we are unable to successfully implement improvements to our management information and financial control systems in an efficient and timely manner, or if we encounter deficiencies in existing systems and controls, our management may not have adequate information to manage our day-to-day operations and our inability to manage our growth effectively could increase our losses.  Future compliance with the Sarbanes-Oxley Act and auditing of our system of compliance may not be possible without the addition of accounting and compliance personnel.

We depend on our key personnel, and the loss of their services may adversely affect our business.

We are highly dependent upon the efforts of our senior management team. The death or departure of any of our key personnel could have a material adverse effect on our business. In particular, the loss of W. Craig Turner, our Chairman and Chief Executive Officer, could significantly impact our ability to operate and grow the business and could cause performance to differ materially from projected results.

We could face labor shortages which could slow our growth.

Our success depends in part upon our ability to attract, motivate and retain a sufficient number of qualified employees necessary to keep pace with our expansion plans. Qualified individuals of the requisite caliber needed to fill these positions are in short supply in some areas. Any material increases in employee turnover rates could have a material adverse effect on our business, financial condition, operating results or cash flows. Additionally, competition for qualified employees could require us to pay higher wages to attract sufficient employees, which could result in higher labor costs.

18

We may be sued for product liability, which could adversely affect our business.

Because our business strategy involves the development of commercial products and sale of those products by us or our distribution partners, we may be sued for product liability. We may be held liable if any product we develop and commercialize causes injury or is found otherwise unsuitable during product testing, manufacturing, marketing, sale or consumer use. In addition, the safety studies we must perform and the regulatory approvals required to commercialize our medical safety products, will not protect us from any such liability.  We carry product liability insurance. Currently, our coverage limits are $1 million per event, and $1 million annual aggregate coverage for products liability.  We also intend to seek product liability insurance for any approved products that we may develop or acquire.  However, if there are product liability claims against us, our insurance may be insufficient to cover the expense of defending against such claims, or may be insufficient to pay or settle such claims. Furthermore, we may be unable to obtain adequate product liability insurance coverage for commercial sales of any of our approved products. If our insurance coverage is insufficient to protect us, our results of operations will suffer.  If any product liability claim is made against us, our reputation and future sales will be damaged, even if we have adequate insurance coverage.

Risks Relating to Ownership of Our Common Stock

Our future operating results may fluctuate and cause the price of our common stock to decline.

Our sales and operating results could fluctuate significantly from quarter to quarter due to various factors, many of which are beyond our control. The factors that could cause our operating results to fluctuate include, but are not limited to:

• Our ability to identify and acquire medical safety device safety technologies with commercialization potential;

• Our ability to successfully develop and bring products to market, including our success in obtaining regulatory approvals, outsourcing production to reputable and capable manufacturers, and entering into profitable distribution arrangements;

• Our ability to generate and successfully increase sales of our products and expand into new markets;

• Marketplace acceptance of our products and the impact of competition;

• Our ability to obtain additional financing on satisfactory terms;

• Our ability to attract and retain qualified employees;

• Changes in the costs we pay; and

• Governmental regulation associated with the medical safety products industry.

If our sales or operating results fall below the expectations of investors or securities analysts, the price of our common stock could significantly decline.

The price of our common stock is expected to be volatile and an investment in our common stock could

decline in value.

We expect the market price of our common stock to be highly volatile. The following factors, in addition to other risk factors described in this report, and the potentially low volume of trades in our common stock, may have a significant impact on the market price of our common stock, some of which are beyond our control:

• the announcement of new products or services by us or our competitors;

• quarterly variations in our and our competitors’ results of operations;

• changes in earnings estimates or recommendations by securities analysts;

• developments in our industry;

• general market conditions; and

• other factors, including factors unrelated to our own operating performance or the condition or prospects of our industry.

Further, the stock market in general, and securities of small-cap companies in particular, can experience extreme price and volume fluctuations. Continued market fluctuations could result in extreme volatility in the price of our common stock, which could cause a decline in the value of our common stock. You should also be aware that price volatility might be worse if the trading volume of our common stock is low.

We cannot assure you that an active trading market for our common stock will develop.

19

Since our common stock is eligible for trading on the OTCQB, our shareholders may find it difficult to obtain accurate quotations of our common stock and may experience a lack of buyers to purchase such stock or a lack of market makers to support the stock price. We cannot assure you that an active trading market for our common stock will develop.  Accordingly, trades may occur very infrequently, and holders of our common stock must assume they may have to bear the economic risk of an investment in our common stock for an indefinite period of time.

Our common stock may be considered a “penny stock” and may be difficult to sell.

The SEC has adopted regulations which generally define “penny stock” to be an equity security that has a market or exercise price of less than $5.00 per share, subject to specific exemptions.  Our common stock has been trading at a market price below $5.00 per share and therefore may be designated as a “penny stock” according to SEC rules. This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect the ability of our stockholders to sell their shares.

Our stockholders may experience additional dilution

On December 31, 2012, we issued 21,690,346 common shares when the holders of our Series B and Series C Convertible Preferred Stock converted all of those shares into common stock. Following that conversion, we had 34,540,878 shares of common stock issued and outstanding as of February 28, 2013.

The conversion of our remaining shares of convertible preferred stock could result in further dilution of our common shareholders. As of February 28, 2013, our outstanding Series A Convertible Preferred Stock was convertible into 6,668,229 shares of common stock. As of that date, we had also issued 84,946 shares of Series D Convertible Preferred Stock convertible into 1,415,767 common shares in connection with draws on our credit agreement. If we draw the full amount available under our credit agreement, we could issue an additional 42,930 shares of Series D Convertible Preferred Stock convertible into 715,500 more common shares.

On March 1, 2013, in connection with our sale of intellectual property and the cancellation of our 14% Senior Notes, we issued 20,000 shares of newly designated shares of Series E Convertible Preferred Stock to the former holders of our 14% Senior Notes. The Series E Convertible Preferred Stock is convertible into 333,333 common shares.

As of February 28, 2013, options to purchase 1,862,809 common shares and warrants to purchase 957,190 common shares were also issued and outstanding. The exercise of the options and warrants could decrease the net tangible book value of our common stock.

Our articles of incorporation permit our board of directors, without shareholder approval, to authorize shares of preferred stock, which may also be issued by the board of directors without shareholder approval. The board of directors may classify or reclassify any preferred stock to set the preferences, rights and other terms of the classified or reclassified shares, including the issuance of shares of preferred stock that have preference rights over the common stock with respect to dividends, liquidation, voting and other matters or shares of common stock having special voting rights. The issuance of additional shares of our capital stock could be substantially dilutive to your shares and may negatively affect the market price of our common stock.

We do not intend to pay dividends in the foreseeable future.

For the foreseeable future, we intend to retain any earnings to finance the development of our business, and we do not anticipate paying any cash dividends on our common stock. Any future determination to pay dividends will be at the discretion of our board of directors and will depend upon then-existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, business prospects and other factors that our board of directors considers relevant. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize their investment.

20

As a public company, we will be subject to extensive corporate governance and disclosure regulations that will result in additional operating expenses.

We have incurred and expect to continue to incur significant ongoing legal, accounting and other expenses as a result of becoming a public company in December 2007. Corporate governance requirements, requirements under the Sarbanes-Oxley Act of 2002, as well as new rules implemented by the SEC have significantly increased our legal and financial compliance costs and make some administrative functions more time-consuming and costly. Like many smaller public companies, compliance with Section 404 of the Sarbanes-Oxley Act of  2002 has had a significant impact on our operating costs. Section 404 requires the management of public companies to evaluate the effectiveness of internal control over financial reporting. As a smaller reporting company, we currently are exempt from compliance with Section 404(b) , which requires that a company’s independent auditors also attest to assessment conducted by its management.  However, should we become an accelerated filer due to the growth in our market capitalization, we may not be able to effectively meet all of the requirements of Section 404 as currently known to us in the then mandated time frame.  Any failure to implement effectively new or improved internal controls, or to resolve difficulties encountered in their implementation, could harm our operating results, cause it to fail to meet reporting obligations or result in management being required to give a qualified assessment of our internal controls over financial reporting or our independent auditors providing an adverse opinion regarding our internal controls over financial reporting. Any such result could cause investors to lose confidence in our reported financial information, which could have a material adverse effect on its stock price.

We also expect these new rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance.  We may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.  As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers.  We cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

Item 1B.    Unresolved Staff Comments.

Not applicable

Item 2.   Properties.

We lease our current office from Oakleaf Real Estate, LLC, an unrelated third party. Our lease for this space, which we began occupying on or about the last week of March 2011 provides for lease payments of $8,000 per month.  If we give timely notice of our intent to vacate the premises after three years, we can pay one year’s rent to avoid the rent for year five of the initial five year term.  The lease has three extensions of three years each.  This space should be adequate to accommodate approximately 25 employees.  As of the filing date of this report we had seven staff members. This will provide the capacity to increase our existing staff by more than two fold.

We leased our former office and storage facility, in Lexington, Kentucky, under an operating lease from a firm in which our Chairman and CEO is a partner. The lease ran out in August 2012. We did not renew the lease. Monthly lease payments were $6,975 though the end of the lease term.

The Company also leased an office in New York, New York during 2012. We have not renewed the lease.  

Item 3.  Legal Proceedings.

On November 1, 2011, Visual Connections, Inc. filed suit against MedPro in federal district court alleging breach of contract, unjust enrichment/constructive trust, and interest. Visual Connections claims that under the terms of the agreements pursuant to which MedPro acquired the intellectual property underlying three medical devices from Visual Connections, Visual Connections is entitled to receive royalty payments on the principal amount of the 14% Senior Notes due 2016 that a wholly owned subsidiary of MedPro issued to institutional investors in September and October 2010. (Visual Connections, Inc. v MedPro Safety Products, Inc., Case No. 11-1307 RGA.) MedPro believed the claim that it owed royalty payments on the proceeds of long-term debt was without merit, and contested the matter vigorously. Both parties filed motions seeking judgment on the pleadings. On May 9, 2012, the Company's motion was granted and Visual Connections' motion was denied. Visual Connections did not appeal the judgment and the matter was terminated.

21

Item 4.     Mine Safety Disclosures

Not applicable.

PART II

Item 5.   Market for Registrant’s Common Equity and Related Stockholder Matters.

Market Information

From December 31, 2007 through July 24, 2012, our common stock was traded on the OTC Bulletin Board under the symbol “MPSP.BB”.  On March 10, 2012 we were notified that our shares would be moved to the OTCQB platform. The migration occurred on July 24, 2012. There is no established trading market for our convertible preferred stock.

The following table sets forth, for the periods indicated, the reported high and low closing bid quotations for our common stock as reported on the OTC Bulletin Board. The bid prices reflect inter-dealer quotations, do not include retail markups, markdowns or commissions and do not necessarily reflect actual transactions.

Period		Bid Price
Year	Quarter	High	Low
2012
	Fourth	$2.41	$0.81
	Third	$2.35	$0.79
	Second	$2.60	$1.55
	First	$2.49	$2.00
2011
	Fourth	$2.75	$1.50
	Third	$3.00	$2.00
	Second	$3.00	$1.55
	First	$3.00	$1.60
2010
	Fourth	$3.00	$1.55
	Third	$3.10	$2.70
	Second	$3.10	$2.75
	First	$3.70	$3.01

Holders

As of December 31, 2012, we had approximately 325 holders of our common stock.

Dividends

We do not anticipate declaring or paying any dividends in the foreseeable future. We anticipate that for the foreseeable future we will follow a policy of retaining earnings, if any, in order to finance the expansion and development of our business. Payment of dividends is within the discretion of MedPro’s board of directors and will depend upon earnings, capital requirements, and operating and financial condition, among other factors.

Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of securities during the quarter or year ended December 31, 2012. The following table provides certain information with respect to our purchases of common stock during the year ended December 31, 2012.

22

			Total Number of	Maximum Number
			Shares Purchased as	of Shares That May
	Total Number		Part of Publicly	Yet Be Purchased
	of Shares	Average Price	Announced Plans or	Under the Plans
Period	Purchased	Paid Per Share	Programs	or Programs
1/1/12-1/31/2012	26,350	$2.25	514,589	485,411
2/1/2012-2/29/2012	12,700	$2.46	527,289	472,711
3/1/2012-3/31/2012	23,200	$2.68	550,489	449,511
Through March 31, 2012	62,250	$2.45
4/1/2012-4/30/2012	5,555	$2.48	556,044	443,956
5/1/2012-5/31/2012	43,882	$2.51	599,926	400,074
6/1/2012-6/30/2012	46,660	$2.35	646,586	353,414
Through June 30, 2012	158,347	$2.44
7/1/2012-7/31/2012	23,900	$2.35	670,486	329,514
8/1/2012-8/31/2012			670,486	329,514
9/1/2012-9/30/2012	1,500	$1.03	671,986	328,014
Through September 30, 2012	183,747	$2.42
10/1/2012-10/31/2012	7,500	$1.09	679,486	320,514
11/1/2012-11/30/2012	6,894	$1.49	686,380	313,620
12/1/201-12/31/2012	14,129	$2.24	700,509	299,491
Through December 31, 2012	212,270	$2.33

Item 6.       Selected Financial Data.

Not Applicable.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the financial condition and results of operations of MedPro Safety Products, Inc. as of December 31, 2012 and December 31, 2011 should be read in conjunction with our audited financial statements and the notes to those financial statements that are included elsewhere in this report or in our 2012 Annual Report on Form 10-K.  References in this Management’s Discussion and Analysis or Plan of Operations to “us,” “we,” “our,” and similar terms refers to MedPro Safety Products, Inc.

Preliminary Note Regarding Forward-Looking Statements

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

Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements. In addition to the other factors

23

discussed in “Item 1A Risk Factors” of this Annual Report on Form 10-K and our subsequent reports, factors that could contribute to those differences include, but are not limited to:

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

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

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

• The continued service of key management personnel.

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

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

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

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

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

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

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

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

Overview

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

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

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

On December 31, 2012, we entered into an asset purchase agreement with GBO and the holders of the 14% Senior Notes. As provided by that agreement, effective on March 1, 2013:

24

• MedPro sold the patents and other intellectual property underlying the three blood collection and infusion products to GBO, and the GBO agreement and the obligations of MedPro and GBO thereunder were terminated.

• GBO paid $22 million to the Noteholders and has agreed to pay an additional $7.4 million to the Noteholders on February 1, 2014.

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

• GBO granted back to us an exclusive, worldwide, royalty-free, fully paid up license to use certain of the transferred intellectual property in specific fields of use other than blood collection and phlebotomy.

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

Since September 2012, we have been funding our operations from a line of credit extended by our principal investor. The credit agreement allows us to draw up to $4,285,000 over twelve months ending August 2013, and matures on December 31, 2013. If fully funded, we will be obligated to issue 128,875 shares of newly created Series D Stock. The Series D Stock has a liquidation preference of $50.00 per share and is convertible into common stock at a conversion price of $3.00 per common share. The investor also has right to put the Series D Stock back to the Company at $50 per share beginning March 12, 2014. The terms of our financing arrangement with our principal investor are more fully discussed in Notes 6 and 9 of the notes to our financial statements included in this report.

For several months we have been actively seeking short-term and long-term funding from a number of potential financing sources, and have been working with an investment banking firm to assist us in those efforts. If we are unable to obtain additional funding on acceptable terms when needed, we may be required to take actions that constrain our business and our ability to achieve cash flow in the future, including possibly the surrender of our rights to some technologies or product opportunities, delaying product development and commercialization, or curtailing operations.

Critical Accounting Estimates and Judgments

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

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

Our intangible assets consist principally of intellectual properties such as regulatory product approvals and patents. We currently are amortizing certain of our intangible assets using the straight line method based on an estimated economic life, after the products are introduced into the market.  We began amortization of our blood collection patents in December 2009 when products were first introduced for human use.  Our Winged Safety Blood Collection Set was tested in 2011. Its introduction into the market is in the hands of the manufacturer under a license agreement.  Since no product was produced for human use in 2012, we have not begun amortization of the cost of our Winged Safety Blood Collection patents.

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

25

We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or indicate that impairment exists. Once our intellectual property has been placed into productive service and after an impairment determination, we utilize a net present value of future cash flows analysis to calculate carrying value.  Our forecasted revenue on our current portfolio of intellectual property over the next five years, discounted to the balance sheet date based on a 7.5% discount factor, exceeds our cost of our patents and expected development costs ($2.6 million) by approximately ten times.

We wrote down our Key-Lok technology to fifty percent of its original cost in the fourth quarter of 2010 and charged off the remaining $244,561 in the first quarter of 2012. Management has determined that the technology may require substantial modification before it can be commercially produced and has decided to pursue other technologies.    

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

Results of Operations for the Years Ended December 31, 2012 and 2011

A summary of operating results for 2012 and 2011 is reflected in the following table:

	2012			2011			Change
Revenue	$	2,671,875		$	2,313,125		$	358,750
Cost of Sales	(754,715		)	(628,579		)	(126,136		)
Gross Profit (Loss)	1,917,160			1,684,546			232,614
Operating Expenses	8,103,419			8,906,767			(803,347		)
Loss from Operations	(6,186,259		)	(7,222,221		)	1,035,961
Other Income/(Expense)	(4,571,926		)	(4,810,383		)	238,457
Net (Loss)	$	(10,758,185	)	$	(12,032,604	)	$	1,274,418
Preferred Stock
Debt Discount Accretion	(123,569		)	—			(123,569		)
Net (Loss) Available to Common Shareholders	$	(10,881,754	)	$	(12,032,604	)	$	(1,150,849	)

MedPro recorded a net loss available to shareholders of $(10,881,754) for the year ended December 31, 2012, as compared to a net loss of $(12,032,604) for year ended December 31, 2011.  Losses from operations were $(6,186,259) for 2012 and $(7,222,221) for 2011.  Debt discount accretion for 2012 was $(123,569).

Revenue for the year ended December 31, 2012 was $2,671,875 compared to2,313,125 for the same period in the prior year. Revenue for both periods was royalty income from the Company's minimum volume contract for its blood collection devices. Cost of revenue and amortization of intellectual property was $754,715 for 2012 and $628,579 for 2011.

A table of comparison of 2012 and 2011 compensation and related expenses follows:

26

	2012		2011		Change
Salaries	$	2,159,437	$	2,840,472	$	(681,035	)
Share-Based Compensation	646,477		427,771		218,706
Payroll Taxes	124,838		134,316		(9,478		)
Total Compensation Related	$	2,930,752	$	3,402,560	$	(471,807	)

Total employee compensation, including share-based compensation, for the year ended 2012 decreased by $471,807 compared to 2011. Salaries and payroll taxes decreased by $681,035 and $9,478, respectively, mostly due to accrual of severance of a former employee in 2011; there was a $200,000 bonus paid in 2012 for the CEO's 2011 performance and $146,984 in overall bonuses paid in 2011. There were only modest raises in 2012 and no bonuses based on 2012 performance. Share-based compensation increased by $218,706 due to the grant of 225,000 options to the CEO and the Board of Directors.

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

	2012		2011		Change
Company 401(k) Match	$	73,212	$	65,733	$	7,479
Profit Sharing Contribution	404		141,930		(141,526		)
Total Qualified Plan Expenses	$	73,616	$	207,663	$	(134,047	)

Costs associated with our profit sharing plan in 2012 and 2011 were $73,616 and $207,663, respectively. The company match increased by $7,479. There was no 2012 discretionary contribution compared to the 2011 contribution of $141,930. There was a required safe harbor minimum vested contribution made in 2012.

During 2011 the Company granted 225,000 options valued at $337,298. Amortization of these options in 2011 was $50,376 and $140,458 in 2012. Total amortization of options outstanding in 2011 was $427,771. In 2012 the Company granted 225,000 options valued at $335,432. Amortization on these options was $51,106 during 2012. Total amortization of all outstanding options in 2012 was $646,477. Remaining unearned compensation at December 31, 2012 was $1,901,412.

Details of the advertising and promotion expenses in 2012 and 2011 are as follows:

	2012	2011	Change
Investor Relation Expenses	$54,055	$60,569	$(6,514)
Marketing Assistance Payment	406,125	350,075	56,050
Promotional Expenses	77,202	55,010	22,192
Other	13,744	21,627	(7,883	)
Total Advertising and Promotion	$551,126	$487,281	$63,845

Advertising and promotion expense increased $63,845 over 2011.  Investor relations activity decreased by $6,514 in 2012. Marketing assistance payments were $56,050 higher in 2012. Promotional costs increased by $22,192 due to attending more trade shows in 2012. All other costs decreased by $7,883. A portion of this change related to a reclassification of Internet costs to general and administrative costs in 2012.

Product development costs for 2012 and 2011 are reflected below:

27

	2012	2011	Change
Completed Parts	$27,692	$66,175	$(38,483)
Engineering	777,163	728,049	49,114
Materials and Components	158,124	143,684	14,440
Research and Development	4,473	—	4,473
Simulated Use	—	17,056	(17,056	)
Sterilization	—	5,360	(5,360	)
Testing	19,063	36,745	(17,682	)
Total Product Development Costs	$986,515	$997,069	$(10,554)

Product development costs decreased by $10,554. These costs reflect the continued development of the prefilled syringe and IV shuttle tooling, manufacturing costs for samples, and continued improvements to the blood collection devices and the winged collection set. Prefilled syringe packaging design costs were incurred in 2011.

The following tables reflects the comparison of 2012 and 2011 professional fees:

	2012	2011	Change
Patent - Legal	$355,737	$710,522	$(354,785)
General - Legal	399,207	235,652	163,555
Accounting and Auditing	115,490	132,582	(17,092	)
Regulatory Audits	7,558	13,450	(5,892	)
Consulting Fees	750,667	678,285	72,382
Recruiting	—	53,299	(53,299	)
Quality Testing and Other	3,944	17,046	(13,102	)
Total Professional Fees	$1,632,603	$1,840,836	$(208,233)

The majority of the increase in general legal cost pertained to new debt and the sale of the intellectual property to GBO. Consulting fees were up by $72,382, primarily due to additional activity by our European marketing consultant and an outside analysis being completed by an investment banking consultant on our projected future operations.

Comparative travel and entertainment expenses between 2012 and 2011 are reflected in the table that follows:

	2012	2011	Change
Airfare, cars, ground, parking, mileage and travel insurance	$218,151	$351,816	$(133,665)
Hotels, conference rooms, entertainment, meals and gratuities	115,715	193,244	(77,529	)
Total Travel and Entertainment	$333,866	$545,060	$(211,194)

The decrease in total travel and entertainment expenses reflected a concerted effort to reduce travel costs in 2012.

The following table compares general and administrative expenses between 2012 and 2011:    

28

	2012	2011	Change
Office and Warehouse Lease	$181,904	$147,733	$34,171
Director Fees	62,500	62,500	—
Network Support	109,679	72,805	36,874
Software and Website Development	66,649	52,360	14,289
Contributions	2,350	16,950	(14,600	)
Moving Expense Reimbursement	—	29,828	(29,828	)
Office Expense	15,865	30,527	(14,662	)
Parking	18,679	14,940	3,739
Other General and Administration Expense	209,945	260,429	(50,484	)
Total G&A	$667,571	$688,072	$(20,501)

Rent expense was up by $34,171 due to a full year of rent at new office space in Lexington and opening a small New York office and continued rent at former facility through August 2012. Director fees remained unchanged for 2012. Network support and software and website development increased as we upgraded all machines to current Microsoft Office operating system and transitioned to a Cloud virtual private server environment. Office expense decreased by $14,662 as part of an effort to curb non essential expense. Parking at our new office increased by $3,739 for a full year rental for employees and guest parking. Other general and administration expense decreased by $50,484; major reduction in postage and delivery costs by $21,718, employee training by $12,718 and filing fees of $10,000. All other changes were less than $10,000.

The following table reflects the comparison of various insurance expense items for 2012 and 2011:

	2012	2011	Change
Health Insurance	$220,888	$204,894	$15,994
Product Liability Coverage	52,675	21,483	31,192
Property and Casualty Coverage	17,250	14,110	3,140
Disability Insurance	4,538	4,242	296
D&O and Other	95,337	77,507	17,830
Total Insurance Expense	$390,688	$322,236	$68,452

We had fifteen employees in 2012 which caused an increase in our health and benefits coverage costs by $16,290. We have increased our products liability coverage (up $31,192) to include the substantially increased sales of product in 2012. We also instituted an evacuation and medical coverage plan for employees expected to travel out of the country last year. Our property and casualty coverage has also increased since we now have property in several states and in two locations in Lexington. We had to rebid our director and officers' liability coverage and the premium is higher with increased deductibles.

Depreciation was up $26,383 to $292,031 for the the year ended December 31, 2012. Amortization charges on our intellectual property of $505,085 and amortization of 14% Senior Note issuance costs of $492,390, were both substantially the same as the prior year. The depreciation was reflected under cost of operations, and the amortization of our intellectual property was reflected in cost of revenues. Amortization of loan costs on our 14% Senior Notes was reflected in interest expense. All depreciation and amortization costs through the year ended December 31, 2012 totaled $1,289,506 versus $1,263,123 in 2011.

During 2011, the Company wrote off $144,114 in leasehold improvements and other fixed costs left behind at the old office and warehouse location. In 2012, the Company wrote off the remaining Key-Lok intellectual property andother minor assets at a loss of $244,561.

Interest expense for 2012 and 2011 was $4,692,433 and $4,692,406, respectively. The 2012 interest expense includes debt issuance cost amortization of $492,390, $4,200,000 of Senior 14% Note interest expense and $43 in penalties.

29

Interest income was $2,646 in 2012, compared to $17,954 in 2011, a decrease of $15,308. The change is due primarily to maturity of certificate of deposits and the decline in our cash balance.

The net gain from the change in fair value of the derivative liabilities associated with the outstanding warrants in the 2012 was $117,861 compared to a net loss of $135,931 for 2011. The difference is attributable to variations in the inputs utilized to value the underlying derivative liabilities on the respective measurement dates and the closer proximity of the current year valuation to the expiration of the warrant exercise period. Our share price has declined in 2012 and our volatility is up this year.

Liquidity and Capital Resources

Total assets were $10,764,676 as of December 31, 2012 and $19,399,630 as of December 31, 2011. The $8,634,954

decline in total assets reflects the impact of the negative cash flow from operations of $(8,131,433). Similarly, the loss for the year ended December 31, 2012 of $(10,758,185) corresponds to the asset decline.   

Shareholders' deficiency increased by $10,734,052. This represented the net loss for the year of $10,881,754, share repurchases totaling $493,270, and the effect of option and warrant exercises of $5,503, which were partially offset by the positive share-based compensation adjustments of $646,477.

Restricted cash held in the interest reserve for our 14% Senior Notes declined from $1,206,371 at the beginning of the year to $539,510 at December 31, 2012. Payments to the collection account totaled $2,671,875 plus a modest amount of interest income. Cash expenses were $4,200,000 in interest expense and $20,968 in fees.

Our unrestricted cash decreased from $6,173,627 to $406,961 during 2012, a decline of $5,766,666.

Fixed assets increased $192,866 during the year ended December 31, 2012, principally due to $172,220 of new manufacturing equipment.

During 2012 we wrote off $244,561of intellectual property, representing the balance of the Key-Lok carrying value and some minor fixed assets with a low carrying value. Amortization of issuance costs of our 14% Senior Notes totaled $492,390.

Accounts payable, accrued expenses and accrued interest decreased by $348,612 during 2012. Current liabilities at year end included the $5,606,029 current portion of the 14% Senior Notes and the $2,442,000 that we had drawn on our credit agreement with our principal shareholder through the end of the year.

Since September 2012, we have been funding our operations from a line of credit extended by our principal investor, Vision Opportunity Master Fund Ltd. (“VOMF”). The credit agreement allows us to draw up to $4,285,000 over twelve months ending August 2013. The outstanding principal balance bears interest at an annual rate of 10% and matures on December 31, 2013. As of December 31, 2012, the amount available for future draws under the credit agreement totaled $1,843,000.

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

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

In connection with the termination of the GBO Agreement and the cancellation of our 14% Senior Notes, we agreed to pay a total of $1,550,000 to settle any royalty obligations arising from our original acquisition of the blood collection technology sold to GBO. We have agreed to pay four quarterly payments of $250,000 each beginning on October 31, 2013 and a final $550,000 payment on December 31, 2014.

30

We estimate our cash required to fund operations at the current level will be approximately $350,000 to $500,000 per month. Our primary cash requirements will be to fund the launch of our drug delivery devices, our prefilled syringe series of products and two new products we are evaluating for purchase. Our ability to continue operations at their current level will depend upon our cash position from time to time.

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

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

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

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

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

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

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

Item 8.       Financial Statements and Supplementary Data.

The following financial statements of the company are included at the end of this report:

• Report of Independent Registered Public Accounting Firm

• Balance Sheets as of December 31, 2012 and 2011

• Statements of Operations for the Years Ended December 31, 2012 and 2011

• Statements of Shareholders' Equity/(Deficiency) for the Years Ended December 31, 2012 and 2011

• Statements of Cash Flows for the Years Ended December 31, 2012 and 2011

• Notes to Financial Statements

Item 9.       Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Not applicable.

Item 9A.  Controls and Procedures.

MedPro’s management, under the supervision and with the participation of the Chief Executive Officer (the “CEO”) and Chief Financial Officer (the “CFO”), evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2012.  Based on that evaluation, the CEO and CFO concluded that MedPro’s disclosure controls and procedures are effective in timely making known to them material information required to be disclosed in the reports filed or submitted under the Securities Exchange Act.  There were no changes in MedPro’s internal control over financial reporting during the year that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.

Limitations on the Effectiveness of Controls

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

31

Item 9B.    Other Information.

Not applicable.

PART III

Item 10.     Directors, Executive Officers and Corporate Governance.

Directors and Executive Officers

The following table shows information regarding our current directors and executive officers. The directors are elected by the stockholders. The executive officers serve at the pleasure of the Board of Directors.

Name	Age	Title
W. Craig Turner	59	Chief Executive Officer and Chairman of the Board of Directors
Marc T. Ray	59	Vice President Finance, Chief Financial Officer
Gregory C. Schupp	57	Chief Operating Officer
C. Garyen Denning	32	Executive Vice President
Gary A. Peterson	61	Director
Warren Rustand	69	Director
Ernest L. Fletcher	60	Director
W. Leo Kiely III	65	Director
Carl Kleidman	54	Director
Andrew P. Merkatz	44	Director

W. Craig Turner is the founder of MedPro and has been Chairman of the board of directors of our predecessor since its inception. He was appointed Chairman of our Board of Directors when our merger took effect in December 2007. Mr. Turner is also the President and Chairman of the Board of Directors of CRM Companies, Inc., a real estate development company specializing in the development of commercial and industrial properties with more than 450 employees. At CRM Properties, Mr. Turner has been responsible for the development of over $250 million in commercial and industrial properties. Previously, Mr. Turner served as Director of Industrial Development for the Commonwealth of Kentucky under then Governors John Y. Brown and Martha Layne Collins. Mr. Turner is the father-in-law of C. Garyen Denning.

Marc T. Ray was appointed Vice President Finance and Chief Financial Officer of our predecessor in October 2007 and continued in the same capacity when our merger took effect in December 2007. Mr. Ray served as the Treasurer and as a member of the Board of Directors of MedPro from July 1994 to August 2007. Mr. Ray has been working in public accounting and industry since 1976 and has been a Certified Public Accountant since 1978. From November 2004 to October 2007 Mr. Ray served as the managing member of Ray, Foley, Hensley & Company, PLLC, a public accounting firm that he founded in Lexington, Kentucky. From February 1994 to October 2004, Mr. Ray was President of the Lexington, Kentucky based public accounting firm Ray, Hager & Henderson, PSC. From 1976 through 1978 and 1982 through January 1994, Mr. Ray was employed or was a partner with Coopers & Lybrand, a predecessor of PriceWaterhouseCoopers.  In the intervening years Mr. Ray was employed as a financial analyst with a fortune 500 company and was a partner in a local accounting firm.

Gregory C. Schuppjoined MedPro as Chief Operating Officer effective April 23, 2011. Since 2009, Mr. Schupp served as Director of Operations, G.M. of United States manufacturing for the Sorin Group, a global medical device manufacturer and distributor based in Milan, Italy.  From 2005 through 2008, he served as Vice President Operations of the New Jersey facilities of Maquet, Inc., a global medical equipment company headquartered in Rastatt, Germany.  Mr. Schupp has served in strategic and operational positions for medical and telecommunications manufacturers for over twenty years.

C. Garyen Denning was appointed Executive Vice President in March 2011, having previously served as Director, Program Management since joining MedPro in February 2006. He previously served as a sales manager for Union Beverage, a wine distributor in Chicago, Illinois.  Mr. Denning received his undergraduate degree in economics from Wake Forest University and a master’s degree from the Warrington College of Business Administration at the University of Florida.  Mr. Denning is the son-in-law of W. Craig Turner.

32

Gary A. Petersonwas appointed as a Director when our merger took effect in December 2007. He also served as a director of our predecessor since 1998 and as its President and Chief Executive Officer from 1998 to 2003.  Mr. Peterson is President and Chief Executive Officer of BATON Development Inc., a virtual incubator for new medical products and has been the Managing Member of BATON Ventures LLC and PSF Health Care LLC, and a Venture Partner in Affinity Ventures II LLC, all venture capital funds.  Mr. Peterson has spent over 35 years in the medical device and health services business and has served as a director of numerous public and private companies.  He was co-founder and Chief Operating Officer and Executive Vice President of Angiomedics Incorporated, which was acquired by Pfizer, Inc. in 1986 and renamed Schneider USA. Schneider then sold to Boston Scientific for over $2 billion. Before starting Angiomedics, Mr. Peterson was responsible for product management and long term planning for Cardiac Pacemakers, Inc. (which became Guidant and was subsequently acquired by Boston Scientific) and held various sales and marketing management positions with Renal Systems, Inc. (now Minntech).

Warren Rustand was appointed as a Director when our merger took effect in December 2007. Mr. Rustand is currently managing partner for SC Capital Partners LLC. He has served as a member of the Board of Directors for over 50 public, private, and not-for-profit organizations, including as Chairman of more than half of those organizations. In the medical field, Mr. Rustand has served as Chairman of Tucson Medical Center, Chairman of Health Partners of Arizona, Chairman of TLC Vision, Chairman of Medical Body Sculpting, and Chairman of Health Equity, Incorporated. Mr. Rustand also served as Appointment Secretary and Cabinet Secretary to former US President Gerald Ford.

Dr. Ernest L. Fletcher, who served as Governor of the Commonwealth of Kentucky from 2003 to 2007, was appointed a director in October 2008.  Governor Fletcher was elected to the United States House of Representatives in 1998 from Kentucky’s 6th Congressional District. In Congress, he served as a member of the House Committees on Energy and Commerce and was selected to chair the Policy Subcommittee on Health.  His legislative career began in 1995 as a State Representative for Kentucky’s 78th District.  He has also been an Air Force fighter pilot, engineer, family doctor, lay minister, state legislator, and United States Congressman.  Governor Fletcher was a family practice physician in Lexington for twelve years, including two years as CEO of the Saint Joseph Medical Foundation.  He is currently a business development and healthcare consultant.

W. Leo Kiely III was appointed a director in October 2008.  He retired in July 2011 as Chief Executive Officer of MillerCoors, a joint venture combining the U.S. and Puerto Rico operations of SABMiller plc and Molson Coors Brewing Company.  Mr. Kiely formerly served as President and Chief Executive Officer of Molson Coors Brewing Company.  He served as President and Chief Operating Officer of Coors Brewing Company from March 1993 to May 2000. Before joining Coors Brewing Company, he held executive positions with Frito-Lay, Inc., a subsidiary of PepsiCo and Ventura Coastal Corporation, a division of Seven Up Inc. Mr. Kiely began serving on the Board of Directors of Altria Group, Inc. in October of 2011. He serves on the Boards of the Denver Center for the Performing Arts and the Bonfils Foundation in Denver, Colorado.

Carl Kleidman was elected as a director in August 2010.  He is currently Chief Investment Officer of Fortitude Partners, LLC, a private equity firm based in New York. He previously served as the Managing Director of Investments of Vision Capital Advisors LLC ("Vision"), a New York based hedge fund manager through December 2012. Before joining Vision in November 2007, Mr. Kleidman served as a Managing Director at Centrecourt Asset Management from January to November 2007, and at ComVest Investment Partners from 2002 through 2005. He has also served as Head of Investment Banking at Commonwealth Associates and Barington Capital Group, and was a partner at the law firm of Shea and Gould. Mr. Kleidman is a director of Novaray Medical, Inc., a medical imaging company.

Andrew P. Merkatz, age 44,was appointed to the Board of Directors on March 18, 2013. He is currently the Managing Director of Investments at Vision Capital Advisors where, for the past five years where he is responsible for overseeing Vision's largest investments. He has more than 20 years of private equity and operational experience focused primarily on lower middle market growth companies. Mr. Merkatz began his career at the middle market private equity firm, Interlaken Capital. He later served as Chief Operating Officer for Site-Specific Inc., one of the first Internet advertising agencies. Mr. Merkatz currently serves on the Board of Directors of several of Vision's portfolio companies. Mr. Merkatz holds an M.B.A. from Harvard Business School and a B.A. in Economics, with distinction, from the University of Pennsylvania.

Committees of the Board of Directors

The standing committees of MedPro's board of directors are its audit committee, executive compensation committee and nominating committee.  These standing committees were established in 2008.  The board of directors appoints the members

33

of each committee for a term beginning after the first regular meeting of the board following the annual shareholders meeting and until their respective successors are elected and qualified.  The charters of each of the standing committees of our board of directors are available on our corporate website at http://www.medprosafetyproducts.com.

Audit Committee

The audit committee selects the auditing firm to be retained each year as independent auditors of MedPro's financial statements and to perform services related to the audit. It pre-approves any audit and non-audit services to be performed by the independent auditors. It reviews the scope and results of the audit with the independent auditors. It also reviews MedPro's financial statements and results of operations, internal accounting and control procedures, financial reporting policies and practices, internal audit reports, and makes reports and recommendations to the board as it deems appropriate. The audit committee reviews and approves related party transactions and other transactions as required by applicable rules and regulations.

The current members of the audit committee are Messrs. Peterson,  Fletcher and Kiely, which Mr. Peterson chairs.  As described under “Item 13. Certain Relationships and Related Transactions, and Director Independence” below, each of its members is an independent director.  Mr. Kiely qualifies as an audit committee financial expert.

Executive Compensation Committee

The executive compensation committee determines the cash and other incentive compensation, if any, to be paid to MedPro's Chief Executive Officer, evaluates the performance of the Chief Executive Officer, and administers MedPro's 2008 Stock and Incentive Compensation Plan.  The Chief Executive Officer determines the compensation of the other executives and employees under guidelines for incentive compensation approved by the executive compensation committee.  The current members of the executive compensation committee are Messrs.  Rustand, Fletcher and Kiely, which Mr. Kiely chairs.

Nominating and Governance Committee

The nominating and governance committee exercises general oversight with respect to the governance of the board of directors. It reviews and recommends candidates for director, evaluates and recommends governance practices, leads the board performance review, makes recommendations concerning the size and composition of the board, reviews and recommends policies applicable to directors, including compensation and retirement, assesses the independence of directors, recommends membership of board committees, reviews shareholder proposals and makes recommendations of changes to MedPro's articles of incorporation and bylaws.  The current members of the nominating and governance committee are Messrs. Peterson, Rustand, and Kleidman which Mr. Kleidman chairs.

Nomination Policy

In evaluating candidates for director, the corporate governance and nominating committee considers experience, mix of skills and other qualities desired to achieve appropriate board composition, taking into account the experience, skills and qualities of current board members and needs of the board and MedPro as identified by the committee from time to time. The committee has not established specific minimum criteria or qualifications because from time to time the needs of the board and Company may change. However, the committee will generally look for people who have demonstrated high ethical standards, integrity and sound business judgment.

Consideration of new board nominee candidates typically involves a series of internal discussions, review of information concerning candidates and interviews with selected candidates. In general, candidates for nomination to the board are suggested by board members or by officers of MedPro.  MedPro did not employ a search firm or pay fees to other third parties in connection with seeking or evaluating board nominee candidates. The committee will consider candidate proposals by shareholders that comply with the requirements of MedPro's bylaws and will evaluate candidates proposed by shareholders using the same criteria as for other candidates. A shareholder seeking to recommend a prospective nominee for the committee's consideration should submit the candidate's name and qualifications to the Company's Secretary by fax to (859) 225-5347 or by mail to Bethany Denning, Corporate Secretary, MedPro Safety Products, Inc., 145 Rose Street, Lexington, Kentucky 40507.

Communications with the Board of Directors

Shareholders and other parties interested in communicating directly with the board of directors or individual directors may do so by writing in care of MedPro's Corporate Secretary, Bethany Denning, 145 Rose Street, Lexington, Kentucky 40507,

34

or by fax to (859) 225-5347. The nominating committee is considering procedures for handling correspondence received by MedPro and addressed to the board of directors, or an individual director. The Corporate Secretary reviews any correspondence received in this manner to filter advertisements, solicitations, spam and other such items.

Code of Ethics

We have adopted a code of ethics applicable to directors, officers and employees, which is included with our Code of Conduct and is posted on our website at http://www.medprosafetyproducts.com. If we amend or waive any of the provisions of the Code of Conduct applicable to our directors, executive officers or senior financial officers, we intend to disclose the amendment or waiver on our website. We will provide to any person without charge, upon request, a copy of the Code of Conduct. You can request a copy by contacting MedPro's Corporate Secretary, Bethany Denning, 145 Rose Street, Lexington, Kentucky 40507, or by fax to (859) 225-5347.

Conflicts of Interest

Certain conflicts of interest may exist from time to time between MedPro and certain officers and directors due to the fact that some of them may have other business interests to which they devote their attention. Some of our officers and directors may continue to do so notwithstanding the fact that management time should be devoted to our business. MedPro has not established policies or procedures for the resolution of current or potential conflicts of interest between us, our officers and directors or affiliated entities. There can be no assurance that our management will resolve all conflicts of interest in favor of us, and conflicts of interest may arise that can be resolved only through the exercise by management of their best judgment as may be consistent with their fiduciary duties.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers and people who own more than 10 percent of our common shares to file initial stock ownership reports and reports of changes in ownership with the Securities and Exchange Commission. Based solely on a review of these reports, the Company believes that all of the persons required to file such reports did so on a timely basis except for the following filers. Vision Capital Advisors, LLC filed two reports relating to the issuance of Series D Preferred Stock after the due date. Gary A. Peterson filed one report relating to a sale of shares after the due date.

35

Item 11.     Executive Compensation.

The Summary Compensation Table below shows the compensation earned by our executive officers for the last three fiscal years.

Summary Compensation Table

Name and principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)(2)		Non-Equity Incentive Plan Compensation ($)(1)		All Other Compensation  ($) (3)		Total  ($)
W. Craig Turner
Chairman and	2012	$	396,560	$	—	$	217,910	$	200,000	$	15,290	$	829,760
Chief Executive	2011	$	396,494	$	—	$	444,675	$	200,000	$	34,600	$	1,075,769
Officer
and President
Gregory C.
Schupp,	2012	$	252,672	$	—	$	—	$	—	$	14,003	$	266,675
Chief Operating	2011	$	173,636	$	30,000	$	245,954	$	—	$	86,161	$	535,751
Officer
Marc T. Ray,
Chief Financial	2012	$	246,558	$	—	$	—	$	—	$	15,152	$	261,710
Officer and	2011	$	234,462	$	35,000	$	171,160	$	—	$	34,600	$	475,222
Vice President of
Finance
C. Garyen
Denning,	2012	$	240,100	$	—	$	—	$	—	$	12,182	$	252,282
Executive Vice	2011	$	186,194	$	35,000	$	171,160	$	—	$	30,202	$	422,556
President
Walter W.
Weller, III (3)	2012	$	—	$	—	$	—	$	—	$	242,885	$	242,885
Former President	2011	$	309,523	$	—	$	—	$	—	$	131,032	$	440,555
and Chief
Operating Officer

(1) The Executive Compensation Committee awarded Mr. Turner $200,000 on February 8, 2012, based on 2011 performance.  The amount of the Non Equity Award was not determinable at year end, and the Company did not accrue and charge these expenses until 2012 when all events to determine the amount of the award had occurred.

(2) Represents the aggregate grant date fair value recorded under ASC 718 with respect to stock options awarded to the named executive.  The terms of these awards are described under “Stock Option Awards,” below.

(3) Mr. Weller resigned from all his positions with MedPro in September 2011.

(4) The following table shows the various components of All Other Compensation paid in 2011and 2012.

36

Name	Profit Sharing Amount	401(k)  Match	Group Term  Life	Severance	Relocation Expenses	Health Savings Account Contribution	Totals
Mr. Turner
2012	$0	$10,000	$1,290			$4,000	$15,290
2011	$19,857	$9,800	$943			$4,000	$34,600
Mr. Schupp
2012	$0	$9,089	$914			$4,000	$14,003
2011	$18,547	$7,068	$268		$57,945	$2,333	$86,161
Mr. Ray
2012	$0	$9,862	$1,290			$4,000	$15,152
2011	$19,857	$9,800	$942			$4,000	$34,599
Mr. Denning
2012	$0	$7,942	$240			$4,000	$12,182
2011	$17,823	$8,203	$176			$4,000	$30,202
							$	—
Mr. Weller
2012	$0	$0	$0	$242,885		$0	$242,885
2011	$19,857	$9,800	$798	$98,577		$2,000	$131,032

Employment Agreements

MedPro has employment agreements with its each of its executive officers. Each agreement extends for an initial three-year term, subject to automatic one-year extensions thereafter, unless we or the executive provide prior written notice of intent not to renew.  The current terms of the employment agreements expire on the following dates:

W. Craig Turner	June 30, 2013
Marc T. Ray	December 31, 2013
Gregory C. Schupp	April 24, 2014
C. Garyen Denning	December 31, 2013

Each agreement provides that the executive will be paid a base salary and is eligible for a bonus of up to a specific percentage of base salary.  The annual base salaries and maximum bonus percentages for 2012 are currently as follows:

Name	Annual Salary	Maximum Bonus (% of annual salary)
W. Craig Turner	$395,000	150	%
Gregory C. Schupp	$253,500	70	%
Marc T. Ray	$246,562	70	%
C. Garyen Denning	$240,000	70	%

The board of directors has sole discretion to increase the base salary and determine the amount of and criteria for any bonus for Mr. Turner.  On February 2, 2011, the Executive Compensation Committee recommended and the Company's independent directors adopted an incentive compensation plan for Mr. Turner, which is described below. Either the board of

37

directors or the CEO can increase the base salary and determine the amount of and criteria for any incentive compensation for the other executive officers, subject to applicable corporate governance requirements of any securities exchange on which our common stock may then be listed.

As part of the budgeting process in connection with entering into a credit agreement with Vision Opportunity Master Fund in September 2012, each executive agreed to reduce his base salary by 20% effective February 1, 2013.

Each of the executives is entitled to participate in our stock option and incentive compensation arrangements for management and in our employee benefit plans, policies and practices on the same terms and conditions as other employees, including vacation and holiday time.  We agreed to grant Mr. Schupp options to purchase 50,000 shares at the current trading price of the common stock upon commencement of his employment in 2011.  

Each employment agreement contains confidentiality, non-solicitation and non-competition covenants.  The executive agrees not to encourage employees to leave the Company, encourage customers to terminate their relationships with the Company, and compete with the Company during his employment and during a restricted period.  For Mr. Turner, the restricted period extends for six months after terminating employment.  For the other executives, the restricted period ends on the later of (i) the expiration of the term of his employment agreement or (ii) two years after terminating employment.  Each executive also agrees to maintain the confidentiality of the Company's information during and after employment with the Company.

The employment agreements provide that if the executive voluntarily terminates his employment, or if we terminate the executive for cause (as defined in the employment agreement), then we will have no further obligations to the executive after the date of termination.  Should we terminate the executive other than for cause, we must continue to pay the executive's monthly base salary (but no other amounts related to any employee benefit plans and no further accrual of vacation, sick or holiday time) until the end of the term of the agreement, subject to and in exchange for any written releases we deem appropriate.

Our agreement with Mr. Turner provides that upon termination of employment following a “change of control,” he will receive a single sum payment in an amount equal to his monthly base salary for 36 months (less any applicable social security, federal, state or local tax withholdings), based on the monthly base salary in the month in which such termination occurs.

The employment agreement for Mr. Turner defines a "change of control" as the occurrence of one of the following events:

• any person or group acquires ownership of our stock that, together with stock held by that person or group, constitutes more than 50% of the total fair market value or total voting power of our stock.

• any person or group acquires, during a 12-month period ending on the date of the most recent acquisition by that person or group, ownership of stock possessing 30% or more of the total voting power of the stock of our Company,

• a majority of the members of our board of directors are replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of our board of directors before the date of the appointment or election.

• any person or group, during a 12-month period ending on the date of the most recent acquisition by that person or group, acquires assets from our Company or a parent entity that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of our assets immediately before the acquisition or acquisitions.

There is no change of control in the event of a transfer to an entity that is controlled by the shareholders of our company immediately after the transfer.  In addition, the transfer of our assets to one of the following recipients will not constitute a "change of control":

• a shareholder of our company (immediately before the asset transfer) in exchange for or with respect to its stock;

• an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by us;

• a person or group that owns, directly or indirectly, 50% or more of the total value or voting power of all of our outstanding stock; or

• a person, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a person described in the preceding subparagraph.

The agreement provides for us to pay Mr. Turner the amount of any state, local or federal tax incurred as a result of payments made to either him that would not have been imposed but for the occurrence of a change of control.

38

Mr. Ray's employment agreement provides that upon a change of control any amounts he would be due in connection with any unexpired term may be accelerated, without discount, at his discretion.  His employment agreement defines a “change of control” as (1) a change in ownership of 50% or more within a 12 month period as a result of a single transaction or a series of transactions with one or more related buyers or a consortium of buyers, or (2) any sale, merger, consolidation or leveraged buyout resulting in our company no longer being public as a standalone company.  We have agreed to indemnify Mr. Ray against any excise tax (in connection with parachute payments) or additional taxes, other than ordinary income taxes, due to the acceleration of payments as a result of a change of control.

The agreement for Mr. Turner provides for him to have the use of a personal assistant.  Mr. Schupp's contract also provides for reimbursement of up to $62,000 of relocation expenses he incurred in connection with joining MedPro in 2011.

Incentive Compensation

In February 2011, the Executive Compensation Committee recommended and the Company's independent directors approved an incentive compensation plan for the chief executive officer. Based upon the achievement of performance goals established for each fiscal year, as determined by the independent members of the board of directors, Mr. Turner is eligible for cash incentive compensation ranging from 50% of base salary for “threshold” performance, 100% of base salary for “target” performance, to 150% of base salary for “maximum” performance. Mr. Turner generally proposes performance measures for each fiscal year based on the Company's strategic objectives, which measures are reviewed, modified and approved by the Executive Compensation Committee and the independent directors.

Mr. Turner's performance measures for 2011 were to: (i) increase his direct involvement with operations; (ii) redefine the roles of the Company's leadership team and recruit a senior executive responsible for operations and manufacturing; (iii) develop the Company's 2011 financial plan; (iv) engage the board in strategic planning; (v) analyze market opportunities and develop growth strategies; (vi) enter into product development agreements with strategic partners; (vii) enter into capital funding arrangements with third parties, including potential strategic partners; (viii) acquire manufacturing or engineering capabilities; (ix) complete an exchange listing; and (x) ensure the sound financial condition of the Company. Based upon the independent directors' assessment of the achievement of organizational goals and Company's progress toward developing a drug delivery system and toward establishing relationships with potential strategic partners such as pharmaceutical companies and medical device distributors that could lead to revenue-producing contracts, in March 2012 the Executive Compensation Committee recommended and the independent directors approved an award to Mr. Turner of $200,000, or approximately 50% of base salary, as cash incentive compensation for 2011.

Mr. Turner's performance measures for 2012 were to: (i) increase market awareness of the Company and its products as a leader in the field of medical safety technology; (ii) recruit a senior executive responsible for public and corporate relations; (iii) develop the Company's 2012 financial plan, including capital funding arrangements with potential strategic partners; (iv) engage the board in strategic planning; (v) execute product distribution agreements; (vi) expand the Company's product portfolio; (vii) identify opportunities to expand into new product and geographic markets; and (viii) acquire manufacturing or engineering capabilities. As part of the budgeting process in connection with entering into a credit agreement with Vision Opportunity Master Fund in September 2012, the Company reduced the base salaries of its executive officers and took other steps to reduce compensation expense. Accordingly, Mr. Turner was not awarded incentive compensation for 2012.

Stock Option Awards

The Company grants share-based awards to employees under its 2008 Stock and Incentive Compensation Plan ("2008 Plan"). The purposes of the 2008 Plan are to: (a) encourage employees and directors to help increase the profitability and growth of the Company; (b) provide competitive compensation to employees; (c) attract and retain exceptional personnel and encourage excellence in the performance of individual responsibilities; and (d) motivate key employees and directors to contribute to the Company's success. The 2008 Plan became effective upon adoption by the board of directors in August 2008. The 2008 Plan was subsequently approved by shareholders as required by the Internal Revenue Code in order to award incentive stock options.

The 2008 Plan authorizes the issuance of a maximum of 7,500,000 common shares for awards to employees and

directors, subject to adjustment as described below. If an award granted under the 2008 Plan expires or terminates without exercise, the shares no longer subject to that award will again become available for issuance under the Plan. A maximum of 1,500,000 common shares subject to stock-based awards or $1,000,000 for cash-based awards may be granted during any one fiscal year to any one individual. A maximum of 300,000 shares may be issued upon the exercise of incentive stock options. A maximum number of 50,000 shares may be issued without consideration as restricted stock awards, restricted stock units or

39

other “full-value awards.” The 2008 Plan permits grants of stock options (including incentive stock options and nonqualified stock options), stock appreciation rights, restricted stock awards, restricted stock units, and cash performance awards. To date, all of the share-based awards granted under the 2008 Plan have been stock options.

On February 2, 2011, the Executive Compensation Committee approved awards of service-based and performance-based options to our CEO, Mr. Turner. On that date, he was granted options to purchase 300,000 options at an exercise price of $2.62 per share, the average of the bid and ask price on the date of grant. Options for 100,000 shares will vest on each of December 31, 2011, 2012 and 2013 if Mr. Turner continues to serve as CEO on each date. The Committee also approved a second award of options to purchase 300,000 shares upon the achievement of performance goals. Options for up to 100,000 shares will be granted annually if and to the extent that the Company achieves predetermined goals for financial

results, business and product development, capital market milestones, and organizational initiatives in each of 2011, 2012, and 2013. The Committee also determined that Mr. Turner was entitled to 100,000 options at an exercise price of $2.725 as a performance-based award for 2011. The award was not granted until March 5, 2012 and was not recorded in the 2011 financial statements. As of the date this report was filed, the Committee had not made a determination with respect to the options, if any, to be granted to Mr. Turner as a performance-based award for 2011.

No other stock options were awarded to the Company's executive officers during 2012.

40

Outstanding Equity Awards at Fiscal Year-End

The following table shows the stock options held by the named executives as of December 31, 2012. We have not awarded restricted stock to our executive.

Option Awards
(a)	(b)	(c)	(d)	(e)		(f)
Name and Grant Date	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity  Incentive Plan  Awards:  Number of Shares, Underlying Unexercised Unearned Options(#)	Option  Exercise Price  ($)		Option  Expiration Date
W. Craig Turner
8/18/2008	—	1,050,000	n/a	$1.81	(1)	1/31/2013
5/27/2009	25,974	—	n/a	$4.24		5/27/2014
2/2/2011	—	300,000	n/a	$2.62		2/2/2021
Gregory C. Schupp
8/15/2011	—	50,000	n/a	$2.96		8/15/2021
12/9/2011	—	100,000	n/a	$2.25		12/9/2021
Marc T. Ray
8/18/2008	—	350,000	n/a	$1.81	(1)	1/31/2013
5/27/2009	25,974	—	n/a			5/27/2019
9/29/2010	—	150,000	n/a			9/29/2020
12/9/2011	—	100,000	n/a			12/9/2021
C. Garyen Denning
8/18/2008	—	250,000	n/a	$1.81	(1)	1/31/2013
5/27/2009	19,481	—	n/a	$3.85		5/27/2019
10/6/2009	6,849	—	n/a	$3.65		10/6/2019
9/29/2010	—	52,500	n/a	$2.70		9/29/2020
12/9/2011	—	100,000	n/a	$2.25		12/9/2021

(1) The exercise price of the options granted on August 18, 2008 equaled the per share valuation of our common stock agreed upon in connection with the purchase of Series A Stock preferred stock and warrants for $13 million on December 28, 2007. The options could only be exercised during a 30-day period beginning on the earliest of January 1, 2013, the date the holder terminates service with us, or the date of a change of control of our company. In December 2012, each holder of these options agreed to terminate the holder's right to withhold shares to satisfy the tax withholding obligation due upon exercise in exchange for a nominal cash payment. The options were not exercised during the January 2013 exercise period and expired on February 1, 2013.

41

Options Exercised and Stock Vested

No options were exercised by the named executive officers during 2012.

Director Compensation

None of MedPro's non-employee directors received cash compensation for service as a director through the second quarter of 2011.  

The Company has made a one-time grant of stock options to each of its non-employee directors for their service through the second quarter of 2011. Messrs. Peterson and Rustand, who have served as directors since December 27, 2007, were each awarded options to purchase 100,000 shares on August 18, 2008, at an exercise price of $1.81 per share.  The options may be exercised only during the 30-day period ending on January 31, 2013.  If before that date, the recipient terminates service with us or a change of control of our company (as defined in the 2008 Plan) occurs, then the recipient must exercise the options 30 days after the event.   Messrs. Fletcher, Kiely and Kleidman, the three non-employee directors who subsequently joined the board, have each been awarded 50,000 share options at the same exercise price and on the same terms as the options awarded to Messrs. Peterson and Rustand on August 18, 2008. All of these options were allowed to lapse at the end of their term.

Beginning with the third quarter of 2011, MedPro paid each of its non-employee directors an annual retainer of $25,000, payable in quarterly installments. In addition, on August 23, 2011, the board of directors adopted the 2011 Non-Employee Director Stock Option Program and reserved 500,000 of the shares authorized for issuance under the 2008 Plan for the stock options to be awarded under the Program. The Director fees were suspended after the second quarter payment in 2012.

The Program provides that each non-employee director automatically receives an award of options to purchase 25,000 shares each year upon election at each annual meeting. The options have a ten-year term and become exercisable on the first anniversary of the award date. The exercise price is trading price at close of trading on the award date, which was $2.96 for initial grant of options on August 23, 2011. Vested options may be exercised for one year following termination of service due to death or disability. Unvested options will become fully exercisable upon a change of control, as defined by the 2008 Plan.

The following table shows the compensation paid to our non-employee directors in 2012. Compensation paid to Mr. Turner, the only executive officer who served as director during 2012, is included in the Summary Compensation Table. 

Director Compensation

Name	Fees earned or paid in cash ($)		Option Awards ($)			Total ($)
Ernest Fletcher	$	12,500	$	37,500	(2)	$	50,000
Leo Kiely	12,500		37,500		(2)	50,000
Carl Kleidman	12,500		37,500		(2)	50,000
Gary Peterson	12,500		37,500		(2)	50,000
Warren Rustand (1)	12,500		37,500		(2)	50,000

(1) Does not included compensation for financial advisory fees paid to Mr. Rustand's firm. See “Item 13 -- Certain Relationships and Related Transactions, and Director Independence.”

(2) Each Director was awarded a 25,000 share option on August 28,2012 at an exercise price based on market value of

$1.50. The option fair value for Director share-based compensation expense was $0.9402 per share or $23,505 each.

As of the end of the year each Director has 50,000 options outstanding as share-based Director compensation under the

2011 modification to the current plan.

42

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth information known to us regarding beneficial ownership of our common stock as of February 28, 2012, by:

• each person known by us to be the beneficial owner of more than 5% of either class of our common stock;

• each of our executive officers and directors; and

• our executive officers and directors as a group.

	Shares Beneficially Owned (1)
Name	Number  of Shares	Percentage of class (2)
Vision Opportunity Master Fund, Ltd. ("VOMF") (4)	25,304,300	61.05	%
Vision Capital Advantage Fund LLC ("VCAF") (5)	6,638,525	18.47	%
W. Craig Turner (3)	4,892,446	14.02	%
Gary A. Peterson (6)	807,898	2.34	%
Baton Development (6)	661,037	1.91	%
C. Garyen Denning (8)	498,420	1.43	%
Marc T. Ray (9)	322,724	*
Warren Rustand (7)	233,658	*
Ernest L. Fletcher (10)	39,000	*
W. Leo Kiely III (11)	25,000	*
Carl Kleidman (11)	25,000	*
Gregory C. Schupp (11)	150,000	*
Executive officers and directors as a group (7 persons)	6,994,146	19.52	%
*           Indicates less than 1%
(1) Unless otherwise indicated, each of the listed shareholders has sole voting and investment power with respect to the shares. Under SEC rules, each a person or group is considered to be the beneficial owner of securities that the person may acquire within 60 days through the exercise or conversion of convertible securities, options, warrants and rights, if any. Those securities are included in the total number of outstanding shares when computing the percentage beneficially owned by the person or group. The securities are not included in the total number of outstanding shares when computing the percentage of shares beneficially owned by any other person or group.
(2) Percentages are based upon 34,540,878 outstanding shares.  Shares underlying currently exercisable warrants and convertible preferred shares are deemed outstanding for determining the ownership percentage solely of the holder.
(3) Business address is 145 Rose Street, Lexington, Kentucky 40507.
(4) Includes 6,908,518 shares issuable upon the conversion of 4,751,079 Series A Preferred Shares and 84,946 Series D Preferred Shares, and the exercise of warrants. VOMF’s business address is 20 West 55th Street, New York, New York 10019.  Adam Benowitz, Managing Member of Vision Capital Advisors LLC, has voting and investment power with respect to the securities owned by VOMF.

43

(5) Includes common shares issuable upon the exercise of 1,404,209, Series A Preferred Shares. VCAF’s business address is 615 South DuPont Highway, Dover, Delaware 19901.  Adam Benowitz, Managing Member of Vision Capital Advisors LLC, has voting and investment power with respect to the securities owned by VCAF.

(6) Mr. Peterson is the CEO of Baton Development, LLC. Business address is 10040 East Happy Valley Road # 37, Scottsdale, Arizona 85255. Includes 9,861 shares, 25,000 options, 112,000 shares held by his spouse and 661,037 shares held by Baton Development, LLC.

(7) Includes currently exercisable warrants for 96,023 and 25,000 options.

(8) Includes 178,830 options, 143,907 shares held by Mr. Denning's wife and minor children and 158,183 options exercisable by his wife who is also an employee.

(9) Includes 275,974 options currently exercisable and 100 shares beneficially owned as a trustee.

(10) Includes 14,000 shares held in an IRA and 25,000 options.

(11) No direct shares, all options.

*           Indicates less than 1%

Equity Compensation Plan Information

The following table provides information with respect to our equity compensation plans as of December 31, 2011:

Plan category	Number of shares to be issued upon the  exercise of outstanding options	Weighted-average exercise price of  outstanding options	Number of securities remaining available for future issuance  under equity  compensation plans (excluding securities reflected in column  (a))
Equity compensation plans approved by security holders	4,600,471	$2.19	1,816,529
Equity compensation plans not approved by security holders	—		—
Total	4,600,471		1,816,529

Item 13.     Certain Relationships and Related Transactions, and Director Independence.

Director Independence

Our Board of Directors is currently composed of seven members. Three of our directors, Leo Kiely, Gary Peterson and Ernest Fletcher, are independent under the definition of the NASDAQ Stock Exchange. W. Craig Turner is an officer and employee. Warren Rustand is a Managing Director of SC Capital, which has received cash and equity compensation for financial services provided in connection with the past capital transaction and has received fees under an advisory services agreement described below. Carl Kleidman was the Managing Director of Investments of Vision Capital Advisors, LLC, the adviser to VOMF and VCAF through 2012. On March 18, 2013, Andrew Merkatz, the current Managing Director of Investments of Vision Capital Advisors, LLC, was elected as our seventh director.

Certain Relationships and Related Transactions

44

The following section describes transactions between MedPro and its directors, executive officers and their affiliates since January 1, 2011.

Technology Development and Option Agreement

On August 24, 2007, we entered into a Technology Development and Option Agreement (the “Technology Agreement”) with SGPF, LLC.  W. Craig Turner, our Chairman and CEO, owned 100% of the equity units of SGPF.  SGPF was established to acquire technology underlying a family of prefilled safety syringe products (the “Blunt Technology”) that we believed had potential for successful commercialization, at a time when MedPro did not have the financial resources to acquire the technology and risked losing the opportunity to other interested parties.

In October 2008, MedPro exercised the option to acquire the Blunt Technology from SGPF. MedPro paid $3,345,000 in cash, which amount included all amounts SGPF had paid to date under its agreement with the original holders of the technology, and assumed the obligation to pay the remaining $1,500,000 of technology transfer payments to the holders due in quarterly payments through the first quarter of 2010. In addition, MedPro agreed to issue 690,608 shares of common stock to SGPF only upon the occurrence of one of the following events:

• Within 30 days of MedPro's realization, on a cumulative basis, of $5,000,000 of gross sales revenue from the Blunt Technology, or

• A 'change of control' of MedPro, defined as any event or set of circumstances, including but not limited to the termination of his employment, whereby W. Craig Turner ceases to possess, directly or indirectly, the power to direct or cause the direction of the management and policies of MedPro; or

• The sale or licensing of any part of the Blunt Technology intellectual property to another entity.

Ongoing Relationships

Lease

Until April 2011, our offices were located in leased space in Lexington, Kentucky. The lease was non-cancelable and ran through August 2012 at a monthly rent of $6,975. The lessor was a partnership in which MedPro’s Chairman and CEO held an interest. The lease expired as of August 31, 2012.

Advisory Agreements with SC Capital Partners

SC Capital Partners, LLC served as a financial adviser in connection with the December 2007 private placement to VOMF and other investors.  For those services, SC Capital received a total of $1,040,000 in cash, 593,931 newly issued shares of common stock and warrants to purchase 533,458 shares of common stock.  The warrants, which SC Capital assigned, have an exercise price of $1.81 and a five year term.  Upon completion of the merger, Warren Rustand, Managing Partner of SC Capital, became a MedPro Director.

In March 2008, we entered into a financial advisory agreement with SC Capital. SC Capital has agreed to provide us with advisory services, finder services, merger and acquisition services and strategic alliances services.  On January 11, 2010, we signed a new agreement with SC Capital on substantially similar terms.  The current contract has an initial 24 month term and continues on a month to month basis until terminated upon 30 day notice.

We paid SC Capital a consulting fee of $15,000 per month through June 2012 when future payments were terminated by mutual agreement.  We agreed to pay additional compensation to SC Capital in connection with any definitive agreements we enter into with parties specifically identified by SC Capital during and within 24 months after termination of the agreement.  For an equity financing transaction, we must pay SC Capital a consulting fee equal to 8% of the principal cash amount of all securities and institutional and secondary financings introduced by SC Capital and provide SC Capital with warrants to purchase a number of shares or units equal to 8% of the number of shares or units sold under the equity financing.  In a debt financing transaction, we must pay SC Capital a consulting fee equal to 3% of any gross proceeds received by MedPro in connection with a debt financing.  In a committed debt facility, the fee owed to SC Capital is to be calculated on the gross available amount committed to us.  In connection with any merger and acquisition transaction occurring during the

45

term of the agreement, SC Capital would be entitled to 2.5% of the total transaction consideration for the first $20 million and 2.0% for any amount over $20 million.  For strategic alliances or other business realignments resulting from SC Capital’s services, we must pay a consulting fee equal to 8% of the value of the transaction.

During 2009 we paid SC Capital a financing fee of $240,000, equal to 8% of the $3,000,000 we received in connection with our March 24, 2009 issuance of Series C Preferred Stock to VOMF and VCAF in exchange for all of their outstanding warrants plus cash. During 2010, we paid SC Capital $600,000 in fees in connection with our issuance of $30,000,000 of 14% Senior Notes.

2010 VOMF Bridge Loans

During 2010, MedPro borrowed a total of $2,800,000 from VOMF under the terms of a series of short-term bridge loans to MedPro. Under the terms of the financing agreements, we agreed to add a representative of VOMF to our board of directors upon VOMF's request.

In consideration of these loans, we issued to VOMF 741,672 warrants to purchase shares of our common stock at either $4.00 or $3.00 per share.  Each warrant has a five-year term.  Each warrant provides that the warrant price will adjust if specified corporate transactions occur, including a provision that if we issue any additional shares of common stock at either a price per share less than the warrant exercise price (or the adjusted price then in effect) or without consideration, then the warrant price will adjust to the price per share paid for the additional shares of common stock upon each such issuance.

The $2,800,000 outstanding principal balance of the VOMF bridge loans plus accrued interest of $57,214 were paid in full on September 1, 2010.  

2012 VOMF Senior Secured 10% Debt and Convertible D Preferred

On September 12, 2012, we entered into a credit agreement that provides for a $4,285,000 senior secured line of credit to be funded by our principal investor, Vision Opportunity Master Fund, Ltd. We may make periodic draw downs in specific amounts totaling $4,285,000 through August 31, 2013, provided that any conditions to funding have been satisfied prior to any specific drawdown and that no event of default is then in effect. The outstanding principal amount borrowed pursuant on the credit line will bear interest at a rate of 10% per annum, payable on the maturity date, which is December 31, 2013. As of December 31, 2012, we had drawn $2,442,000 under the credit line, leaving $1,843,000 of additional borrowing capacity.

In consideration for the credit line, the Company agreed to issue Vision up to 128,875 shares of new Series D Stock, to be issued in conjunction with, and based on the amount of each draw down on the credit line. The Series D Stock has a $50.00 per share liquidation preference that is senior to the Company's other series of preferred stock and its common stock. As of December 31,2012 the Company had issued 84,946 shares of Series D stock VOMF.

    The following table summarizes the draws to date, the Series D stock issued, the liquidation preference and the common equivalent number of shares upon conversion.

Date	Loan Amount	Loan Interest Rate		Series D Shares Issued	Liquidation Preference	Common Equivalent Shares
9/21/2012	$727,000	10	%	23,858	$1,192,900	397,634
9/30/2012	662,000	10	%	16,020	801,000	267,000
10/31/2012	422,000	10	%	19,620	981,000	327,000
11/30/2012	309,000	10	%	6,953	347,650	115,883
12/31/2012	322,000	10	%	18,495	924,750	308,250
	$2,442,000			84,946	$4,247,300	1,415,767

The loan amounts have been allocated to debt and temporary equity based upon a relative fair value allocation as agreed by contract. The allocation resulted in temporary equity of $949,663 and an accreted value of the debt of $1,615,910. As of December 31, 2012 debt discount accretion of $123,569 has been recorded as additional interest expense and an increase to the carrying value of the debt.

46

Family Relationships

C. Garyen Denning, MedPro’s Executive Vice President, is the son-in-law of W. Craig Turner, our Chairman.  Mr. Denning was paid an aggregate salary, bonus and taxable perquisites of approximately $252,282 during 2012.

Bethany Denning, who served as MedPro’s Director of Organizational Development and Human Resources until March 2013, is the wife of C. Garyen Denning, our Executive Vice President and the daughter of W. Craig Turner, our Chairman.  Ms. Denning was paid an aggregate salary, bonus and taxable perquisites of approximately $111,950 during 2012.

Item 14.     Principal Accountant Fees and Services.

The following table presents fees for professional services rendered by Rodefer Moss & Co, PLLC for the audit of the company’s annual financial statements for 2012 and 2011 and fees billed for other services rendered by Rodefer Moss & Co, PLLC.

	2012	2011
Audit fees	$62,500	$62,000
Audit-related fees for Quarterly Review of Financial Statements	33,000	33,000
Audit and audit-related fees	95,500	95,000
Tax fees	—	—
All other fees	—	—
Total fees	$95,500	$95,000

Audit fees include fees for the audit of the annual financial statements and reviews of the condensed financial statements included in our quarterly reports.  Audit-related fees relate principally to audit-related and review services associated with registration statements filed with the Securities and Exchange Commission. These fees were reviewed and approved by the Company's Audit Committee in advance of the engagement of the auditors.

PART IV

Item 15.     Exhibits and Financial Statement Schedules.

(a) Financial Statements

The following financial statements of the company are included at the end of this report:

Report of Independent Registered Public Accounting Firm

Balance Sheets as of December 31, 2012 and 2011

Statements of Operations for the Years Ended December 31, 2012 and 2011

Statements of Shareholders' Equity/ (Deficiency) for the Years Ended December 31, 2012 and 2011

Statements of Cash Flows for the Years Ended December 31, 2012 and 2011

Notes to Financial Statements

(b) Financial Statement Schedules

Not applicable.

(c) Exhibits

47

Exhibits and Financial Statement Schedules

3.1	Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on January 4, 2008).
3.2	Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K filed on January 4, 2008).
3.3	Bylaw amendment dated August 10, 2009 (incorporated herein by reference to Form 8-K filed on August 17, 2008).
4.1	Certificate of Designations, Series A Convertible Preferred Stock Turner (incorporated by reference to Exhibit 4.1 to Amendment No. 1 on Form S-1/A (Reg. No. 333-149163) filed on July 3, 2008).
4.2	Form of Series A Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.3 to Form 8-K/A filed on September 10, 2007).
4.3	Form of Series B Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.4 to Form 8-K/A filed on September 10, 2007).
4.4	Series A Convertible Stock Purchase Agreement dated as of September 5, 2007 (incorporated by reference to Exhibit 4.6 to Form 10-K filed on April 18, 2008).
4.5	Amendment to Certificate of Designations, Series A Convertible Preferred Stock (incorporated by reference to Exhibit 4.6 to Form 10-K filed on March 30, 2009)
4.6	Form of Common Stock Purchase Warrant held by Vision Opportunity Master Fund, Ltd. (incorporated by reference to Exhibit 4.9 to Form 10-K filed on March 30, 2010).
4.7	Certificate of Designations, Series E Convertible Preferred Stock (incorporated herein by reference to Exhibit 3.1 to Form 8-K filed January 7, 2013).
4.8	Amendment to Certificate of Designations, Series A Convertible Preferred Stock dated September 24, 2012.
4.9	Certificate of Designations, Series D Convertible Preferred Stock (incorporated herein by reference to Exhibit 3.1 to Form 8-K filed September 18, 2012).
10.1	Technology Development and Option Agreement, between SGPF, LLC and MedPro Safety Products, Inc. (incorporated by reference to Exhibit 10.2 to Form 10-K filed on April 18, 2008).
10.2	Amendment to Technology Development and Option Agreement, between SGPF, LLC and MedPro Safety Products, Inc. (incorporated by reference to Exhibit 10.1 to Form 8-K filed on October 6, 2008).
10.3	Second Amendment to Technology Development and Option Agreement, between SGPF, LLC and MedPro Safety Products, Inc. (incorporated by reference to Exhibit 10.4 to Form 10-Q filed on November 15, 2010).
10.4	Financial Advisory Agreement dated January 11, 2010, between MedPro Safety Products, Inc and SC Capital Partners LLC. (incorporated by reference to Exhibit 10.5 to Form 10-Q filed on November 15, 2010).

48

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

 _________________________ 

*    Filed herewith

49

SIGNATURES

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

	MEDPRO SAFETY PRODUCTS, INC.
		(Registrant)
April 1, 2013	By:	/s/ W. Craig Turner
		W. Craig Turner
		Chief Executive Officer, Chairman of the Board of Directors
		(Principal Executive Officer)

April 1, 2013	By:	/s/ Marc T. Ray
		Marc T. Ray
		Vice President Finance and Chief Financial Officer
		(Principal Financial and Accounting Officer)

50

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Shareholders of MedPro Safety Products, Inc.

We have audited the accompanying balance sheets of MedPro Safety Products, Inc. (the “Company”) as of December 31, 2012 and 2011, and the related statements of operations, stockholders' deficiency, and cash flows for the years then ended. The Company's management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of MedPro Safety Products, Inc. as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Rodefer Moss & Co., PLLC

Knoxville, Tennessee

March 29, 2013

51

MedPro Safety Products, Inc.

Balance Sheets

December 31, 2012 and December 31, 2011

	December 31, 2012		December 31, 2011
ASSETS
Current Assets
Cash and cash equivalents	$	406,961	$	6,173,627
Restricted cash	539,510		1,206,371
Accounts receivable, net	102		900,865
Accrued interest income	—		2,628
Prepaid expenses and other current assets	44,699		53,899
Total current assets	991,272		8,337,390
Property and Equipment
Equipment and tooling	1,324,922		1,152,702
Leasehold improvements	790,046		787,248
Computers, network and phones	250,307		237,945
Furniture and fixtures	140,726		139,521
Trade show booth	31,900		27,619
Total property and equipment	2,537,901		2,345,035
Less: accumulated depreciation	880,006		590,340
Property and equipment, net	1,657,895		1,754,695
Other Assets
Intangible assets, net of amortization of $1,558,096 and $1,053,011, respectively	7,063,080		7,812,726
Option payment for asset acquisition	50,000		—
Deferred financing costs, net of amortization of $1,142,071 and $649,681, respectively	902,429		1,394,819
Recoupable royalties - Visual Connections - Wing	100,000		100,000
Total other assets	8,115,509		9,307,545
Total assets	$	10,764,676	$	19,399,630

See notes to financial statements.

52

MedPro Safety Products, Inc.

Balance Sheets (Continued)

December 31, 2012 and December 31, 2011

	December 31, 2012			December 31, 2011
LIABILITIES AND SHAREHOLDERS’ DEFICIENCY
Current Liabilities
Accounts payable and accrued expenses	$	603,034		$	951,646
Accrued interest payable	700,000			700,000
Senior Note - Series D, including discount accretion of $123,569	1,615,906			—
Derivative liabilities – fair value of warrants	1,175,893			1,293,754
Senior Notes -Short Term	5,606,029			—
Total current liabilities	9,700,862			2,945,400
Long-Term Liabilities
Senior Notes - long term portion	24,393,971			30,000,000
Total long-term liabilities	24,393,971			30,000,000
Total liabilities	34,094,833			32,945,400
Convertible Redeemable Preferred Stock, Each Share Convertible into 16.67 Shares of Common Stock
Series D Preferred, $0.01 par value, 220,000 shares authorized, 84,946 shares issued and outstanding	949,663			—
Shareholders’ Deficiency
Preferred stock $.01 par value: 10,000,000 shares authorized:
Series A Preferred 6,668,229 shares issued and outstanding. Liquidation preference $3,033,057 and $2,426,114, respectively	66,682			66,682
Series B Preferred 0 and 1,493,779 shares issued and outstanding, respectively	—			14,937
Series C Preferred 0 and 1,571,523 shares issued and outstanding, respectively	—			15,715
Common stock $.001 par value; 90,000,000 shares authorized; 34,540,478 and 13,042,313 issued and outstanding, respectively	34,541			13,043
Additional paid-in capital	70,999,395			70,842,537
Accumulated deficit	(95,380,438		)	(84,498,684		)
Total shareholders’ deficiency	(24,279,820		)	(13,545,770		)
Total liabilities and shareholders’ deficiency	$	10,764,676		$	19,399,630

See notes to financial statements.

53

MedPro Safety Products, Inc.

Statements of Operations

Year Ended December 31, 2012 and 2011

	For the Year Ended			For the Year Ended
	December 31, 2012			December 31, 2011
Revenues
Product royalty income	$	2,671,875		$	2,303,125
Other revenue	—			10,000
Total revenue	2,671,875			2,313,125
Cost of revenues and amortization of intellectual property	754,715			628,579
Gross profit	1,917,160			1,684,546
Operating Expenses
Salaries, wages, and payroll taxes	2,930,752			3,402,560
Qualified profit sharing plan	73,616			207,663
Advertising and promotion	551,125			487,281
Product development costs	986,515			997,069
Professional fees	1,632,603			1,840,836
Insurance	390,688			322,236
General and administrative	667,572			688,072
Travel and entertainment	333,866			545,060
Write downs of abandoned equipment, leasehold improvements and technology	244,651			150,342
Depreciation	292,031			265,648
Total operating expenses	8,103,419			8,906,767
Loss from operations	(6,186,259		)	(7,222,221		)
Other Income/(Expenses)
Interest expense - including amortization of financing costs	(4,692,433		)	(4,692,406		)
Interest income	2,646			17,954
Change in fair value of derivative liabilities	117,861			(135,931		)
Total other income /(expenses)	(4,571,926		)	(4,810,383		)
Provision for income taxes	—			—
Net (loss)	(10,758,185		)	(12,032,604		)
Preferred stock
Debt discount accretion	(123,569		)	—
Net loss available to common shareholders	$	(10,881,754	)	$	(12,032,604	)
Net (loss) per common share
Basic net (loss) per share	$	(0.80	)	$	(0.93	)
Diluted net (loss) per share	$	(0.80	)	$	(0.93	)
Shares used in computing earnings per share
Weighted average number of shares outstanding - basic	13,521,643			12,983,132
Weighted average number of shares outstanding - diluted	13,521,643			12,983,132

See notes to financial statements. 

54

MedPro Safety Products, Inc.

Statements of Shareholders’ Deficiency

For the Year Ended December 31, 2012

and 2011

	Common Stock					Preferred Stock					Paid-In			Accumulated
	Shares		Amount			Shares		Amount			Capital			Deficiency
Balance December 31, 2010	13,091,507		$	13,092		9,733,531		$	97,334		$	71,344,241		$	(72,466,080	)
Earned portion of share-based compensation	—		—			—		—			427,771			—
Purchases of treasury shares	(259,355	)	(259		)	—		—			(637,784		)	—
Exercise of employee options	210,161		210			—		—			(291,691		)	—
Net (loss)	—		—			—		—			—			(12,032,604		)
Balance December 31, 2011	13,042,313		13,043			9,733,531		97,334			70,842,537			(84,498,684		)
Earned portion of share-based compensation	—		—			—		—			646,477			—
Purchases of treasury shares	(212,670	)	(212		)	—		—			(493,058		)	—
Exercise of employee options	3,517		3			—		—			(5,523		)	—
Exercise of investor warrants	16,972		17			—		—			—			—
Conversion of preferred stock to common stock	21,690,346		21,690			(3,065,302	)	(30,652		)	8,962			—
Debt discount accretion	—		—			—		—			—			(123,569		)
Net loss for the period ended December 31, 2012	—		—			—		—			—			(10,758,185		)
Balance December 31, 2012	34,540,478		$	34,541		6,668,229		$	66,682		$	70,999,395		$	(95,380,438	)

See notes to financial statements.

55

MedPro Safety Products, Inc.

Statements of Cash Flows

For the Year EndedDecember 31, 2012 and 2011

	December 31, 2012			December 31, 2011
Cash Flows From Operating Activities
Net income (loss)	$	(10,758,185	)	$	(12,032,604	)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation	292,031			265,648
Amortization of financing costs and intangible assets	997,475			997,475
Write downs of abandoned equipment, leasehold improvements and technology	244,651			150,342
Share based compensation	646,477			427,771
Change in fair value of warrant (derivative liabilities)	(117,861		)	135,931
Changes in operating assets and liabilities
Accounts receivable and accrued interest	903,391			(720,487		)
Other current assets	9,200			(24,531		)
Accounts payable and accrued expenses	(348,612		)	189,121
Net cash flows from operating activities	(8,131,433		)	(10,611,334		)
Cash Flows From Investing Activities
Purchases of property, equipment and intangibles	(195,321		)	(1,129,200		)
Option payment for asset acquisition	(50,000		)	—
Restricted cash-Interest Reserve	666,861			2,658,040
Net cash flows from investing activities	421,540			1,528,840
Cash Flows From Financing Activities
Senior note funds released from escrow	—			7,870,000
Withholding taxes on cashless stock option exercise	(5,503		)	(291,480		)
Purchase of treasury shares	(493,270		)	(638,043		)
Cash from issuance of preferred stock	949,663			—
Proceeds from borrowings	1,492,337			—
Net cash flows from financing activities	1,943,227			6,940,477
Net increase / (decrease) in cash	(5,766,666		)	(2,142,017		)
Cash at the beginning of the period	6,173,627			8,315,644
Cash at the end of the period	$	406,961		$	6,173,627
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	4,200,000		$	4,200,000
Non-Cash Activity
Non-cash portion of (gain) or loss on derivative liabilities associated with warrants	$	(117,861	)	$	135,931
Debt discount accretion	$	123,569		$	—

See notes to financial statements.

56

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

NOTE 1 – BASIS OF PRESENTATION A    ND NATURE OF BUSINESS

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

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

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

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

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

Revenues and Costs Recognition –  Revenues in 2012 and 2011 were derived from royalties on our blood collection products pursuant to our minimum volume contract.  Revenues and accounts receivable under our contracts and within existing customer relationships are recognized when the price has been fixed, delivery has occurred and collectability is reasonably assured.  In the case of our royalty income, revenues are recognized when the amount is determined based on contract terms and no possibility of refund exists.  The Company began accruing revenue from its tube-activated blood collection device late in 2010 and collected its first revenue in 2011.

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

Accounts Receivable – As is customary in the industry, the Company does not require collateral from customers in the ordinary course of business.  Accounts receivable are stated at the amount management expects to collect from outstanding balances.  Management provides for probable uncollected amounts through a charge to earnings and a credit to the allowance for doubtful accounts based on its assessment of the current status of individual accounts.  The Company does not accrue finance charges on its past due accounts receivable.  Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance and a credit to accounts receivable. There were no allowances for doubtful accounts at the end of 2012 or 2011. The Company has only one customer and revenue is pursuant to a minimum volume contract. That customer also manufactures the product.

Property and Equipment – Property and equipment are stated at cost less accumulated depreciation and amortization.  Depreciation and amortization for assets placed in service is provided using the straight line method over their estimated useful lives.  The cost of normal maintenance and repairs is charged against earnings.  Expenditures which significantly increase asset values or extend useful lives are capitalized.  The gain or loss on the disposition of property and equipment is recorded in the year of disposition.  

Intangible Assets – Intangible assets consist principally of intellectual properties such as regulatory product approvals and patents. Intangible assets are amortized using the straight line method over their estimated period of benefit, ranging from one to ten years upon being placed in full production.  We evaluate the recoverability of intangible assets periodically and take into account potential triggering events or circumstances that warrant revised estimates of useful lives or that indicate that

57

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

impairment exists. Amortization of the Vacumate technology began in December 2009 when products were shipped for human use evaluation by our customer.  The Company entered into a contract to sell the patents for these devices on December 31, 2012 which closed with respect to the Company with a title transfer on March 1, 2013.

Research and Development Costs – Research and development costs are charged to expense as incurred.  These expenses do not include an allocation of salaries and benefits for the personnel engaged in these activities.  Although not expensed as research and development, all salaries and benefits year ended December 31, 2012 and 2011, have been expensed.

Advertising – Advertising costs are expensed as incurred.  

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

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

The Company's tax returns for the years ended 2012 through 2009 are open for examination by Federal Tax authorities.

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

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

Concentration of Credit Risk – From time to time during the the year ended December 31, 2012 and the year ended December 31, 2011, certain bank account balances exceeded federally insured limits.  The Company utilizes overnight repurchase agreements to minimize risks, has not experienced losses in such accounts and believes it is not exposed to any significant credit risk on cash.

NOTE 3 – ACQUISITIONS AND CAPITAL FUNDING

In September 2010, the Company formed a wholly owned subsidiary MedPro Investments, LLC (“MPI”), which issued Senior Secured 14% Notes due October 30, 2016 in the aggregate principal amount of $30 million in private placements to institutional investors on September 1, 2010 and October 1, 2010. MPI is a single member Delaware limited liability company whose accounts are included with MedPro for financial statement purposes and is disregarded for tax purposes. In connection with the Note issuance, MedPro transferred the rights to receive all royalties under the GBO agreement to MPI. All of the royalties payable under the GBO agreement are committed to pay the principal and interest due on the Notes. The Company received approximately $23,294,000 in net proceeds after the establishing a $4,500,000 interest reserve and paying offering expenses. The Company used the net proceeds from the sale of the Notes to pay off all of its bank debt and all principal and accrued interest on the loans made in 2010 by VOMF, which together totaled $4,360,000.

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

58

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

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

NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements

Not Yet Adopted

In July 2012, the FASB issued the Accounting Standards Update 2012-02, Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (ASU 2012-02). This update is effective for fiscal years beginning after September 15, 2012. The update permits qualitative analysis of impairment of indefinite-lived intangible assets to determine if quantitative assessment of the value of such assets is necessary. It applies to intangible assets with an indefinite life other than goodwill. The update provides a series of events and circumstances that could impact significant inputs used to determine fair value of indefinite-lived assets. It also provides guidance as to frequency such qualitative and/or quantitative analysis must be performed. Finally, once an asset is determined to have a finite life, impairment assessment must be performed in accordance with paragraphs 350-30-35-18 through 35-19.

The intent of the update is to assess whether or not, on a more likely than not basis, using qualitative analysis as described in the update, an indefinite-lived asset is impaired. If it is determined to be impaired, a valuation on a quantitative basis must be performed. Similarly, if the indefinite-lived asset is determined to have a finite life it must be evaluated for amortization and/or impairment analysis. The Company has not yet adopted this update and is evaluating the impact of this update on its financial statements and whether or not any of its assets would fall into this category. It believes the impact on our financial statements will not be material.

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

In December 2011, the FASB issued the Accounting Standards Update 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities (ASU 2011-11) and the clarification release of the Accounting Standards Update 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities (ASU 2013-01) on January 31, 2013. These updates requires disclosure on both a gross and net basis of offsetting assets and liabilities in connection financial assets and liabilities. It is effective for annual reporting periods beginning on or after January 1, 2013 and interim reporting periods within those annual periods. The Company does not have any offsetting financial assets and liabilities at the present time. If, in the future, after the effective date, the Company acquires such assets and liabilities it will comply with the disclosure requirements of the update.

Adopted

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

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

In August 2012 the FASB issued Accounting Standards Update 2012-03, Technical Amendments and Corrections to SEC Sections - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 114, Technical Amendments

59

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22. The standard has been adopted and the technical corrections therein, if applicable, have been applied to its financial statements.

Reclassifications

Certain amounts in the 2011 financial statements have been reclassified to conform to the classifications used to prepare the 2012 financial statements.  These reclassifications had no material impact on the Company’s financial position, results of operations, or cash flow as previously reported. 

NOTE 5 – INTANGIBLE ASSETS

The Company’s intangible assets consist primarily of intellectual properties (medical device patents) that give the Company the right to produce or license certain medical devices. These various patents include the skin and tube-activated blood collection devices with an original cost of $2,525,425, the Key-Lok™ patent at $489,122, the syringe guard prefilled family of products at $4,845,000 and the winged infusion set at $1,250,000.  In 2010, the Company wrote the Key-Lok™ patent down to from the $489,122 original cost to $244,561. During the first quarter of 2012, the Company wrote off the balance of the Key-Lok patent cost of $244,561. The write down is reflected under the caption "Write downs of abandoned equipment, leasehold improvements and technology". The write down was triggered based on the limited remaining life of the patents, competing technology in the market and the estimated cost to redesign the product to be more functional. The Company decided to expend its resources on other products.

For the year ended December 31, 2012, amortization expense was $997,475, including $505,085 amortization of intellectual property and $492,390 amortization of loan fees. In 2011, amortization expense for the year ended was the same as in 2012. Estimated future amortization of these intangibles is expected to consist of the following amounts for the twelve month periods ended on December 31:

12 month periods ended December 31,	Amortization
2013	$1,401,327
2014	$1,289,155
2015	$1,106,638
2016	$981,309
After 2016	$969,000

60

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

NOTE 6 – LONG-TERM DEBT

Long-term debt at December 31, 2012 and December 31, 2011 consisted of the following:

	December 31, 2012		December 31, 2011
Senior Notes Payable, Interest at 14%, payable quarterly beginning on October 30, 2010, secured by the royalty contract on blood collection devices, guaranteed by MedPro Safety Products, Inc. on behalf of MedPro Investments, LLC, the issuer	$	30,000,000	$	30,000,000
Senior Notes Payable, Interest at 10%, payable at maturity on December 31, 2013, all assets not otherwise encumbered are pledged as collateral for the note	$	1,615,906	$	—
	$	31,615,906	$	30,000,000
Less: current portion	7,221,935		—
Long-term portion	$	24,393,971	$	30,000,000

Senior Secured 14% Notes Due 2016

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

The interest reserve is used to supplement royalty revenues received under the GBO agreement.  Royalty revenues are deposited into a collection account held in trust and are supplemented from the interest reserve as necessary to complete the scheduled payments on the 14% Senior Notes.  The balance in the interest reserve account at December 31, 2012 and December 31, 2011 was $539,510 and $1,206,371, respectively. The current period ending balance is less than the total amount of payments due in the next year.  Accordingly, the Company has classified the entire balance of the restricted cash account as a current asset.   As a result of a transaction that took place on December 31, 2012 the 14% Senior Notes will be paid off in two payments by GBO in connection with its purchase of the Company patents used under the manufacturing agreement. The Company was released from liability on this debt on March 1, 2013. The collateral for the 14% Senior Notes was released on March 1, 2013 in favor of a commitment by GBO which was guaranteed by its parent. On January 30, 2013, the balance of the interest reserve account was paid to the noteholders by the trustee as the Company's contribution to the transaction. As of March 1, 2013, the Company guarantee of the payments of principal and interest to the Noteholders was released and the patents were transferred to GBO. The Company retained a license to use the patents on a license and royalty free basis.

The 14% Senior Notes indenture limits the debt the Company can incur while the 14% Senior Notes are outstanding to an additional $7,500,000 of new senior debt and $15,000,000 of unsecured debt. These restrictions expired with respect to the Senior Noteholders with the payment by GBO on March 1, 2013.

Royalty collections through October 30, 2016 were originally allocated to the payment of principal and interest on the 14% Senior Notes.   Had these notes continued and the principal been paid down to $1,000,000, additional interest would have been paid to the Noteholders based on cash flow under the contract.  The final $1,000,000 of principal was to be paid with the last payment on the 14% Senior Notes.  Any payments made in 2016 were to be reduced by the marketing assistance payments due to our customer under the minimum volume contract.  The Company was also entitled to receive a servicing fee of $5,000 per quarter, plus out of pocket expenses, subject to quarterly limitations. Since the notes have been deemed paid with the March 1, 2013 payment by GBO, these provisions no longer apply.

61

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

Series D Senior Secured Promissory Note

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

MedPro may make periodic drawdowns in specific amounts totaling $4,285,000 through August 31, 2013, provided that any conditions to funding have been satisfied prior to any specific drawdown and that no event of default is then in effect. The drawdowns taken by the Company through December 31, 2012 are shown in the table under "Valuation and Allocation of Consideration", below. The original borrowing limit has been increased by $75,000 from $4,210,000 for specific expenditures by the Company and approved by the lender.

The outstanding principal amount borrowed pursuant to the Credit Line will bear interest at a rate of 10% per annum, payable on the maturity date, which is December 31, 2013.

In consideration for entering into the Series D Note, the Company agreed to issue Vision up to 126,412.5 shares of new Series D Convertible Preferred Stock (“Series D Preferred Stock”). Shares of Series D Preferred Stock (“Series D Shares”) will be issued in conjunction with each draw down. The Series D Preferred Stock has a $50.00 per share liquidation preference that is senior to the Company's other series of preferred stock and its common stock.

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

Funding Schedule

Vision's lending commitment as Noteholder pursuant to the Series D Note, totals $4,285,000, subject to the satisfaction of the conditions to funding. MedPro made an initial $727,000 draw on September 12, 2012. Thereafter, the Company may make drawdowns on the last day of each calendar month through December 31, 2012, in the specific monthly amounts set forth in the funding schedule attached to the Series D Note, or as subsequently modified. As a condition to each draw, MedPro must certify that as of the applicable funding date, (i) no Event of Default is or will be in effect, (ii) the Company has complied and is in compliance with all affirmative covenants set forth in the Series D Note, and (iii) the representations and warranties of the Company are true and correct in all material respects. The Company must also provide any other documentation reasonably requested by the Noteholder.

Interest; Maturity Date

The outstanding principal amount borrowed pursuant to the Series D Note will bear interest at a rate of 10% per annum. The outstanding principal amount of, and all accrued and unpaid interest on, the Series D Note becomes due and payable on the maturity date, which is December 31, 2013.

Additional Financing

If the Company enters into a new equity financing (an “Additional Financing”) before December 31, 2013, then the Company will have the right to cancel all remaining borrowings under the funding schedule of all of the Series D Notes. Any Additional Financing must be (i) made on terms no less favorable to the Company than those set forth in the Series D Note, and (ii) in an aggregate amount which equals or exceeds the amount of the aggregate amount of funding available under all Series D Notes at the time of the closing of such Additional Financing, plus $500,000.

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

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

62

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

Series D Shares that the Company would be required to issue to the Noteholder in connection with each such loan (as described below) will also be reduced by 50%.

Issuance of Series D Shares

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

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

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

The rights and preferences of the Series D Shares are described under “Series D Preferred Stock” in Note 9.

Prepayment

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

Collateral

The Company granted a security interest to VOMF, in its capacity as Collateral Agent for the holders of Series D Notes (the “Noteholder Group”) all of Company's rights, title and interest in all of its tangible and intangible assets except for assets that the Company has either pledged to secure its obligations under the 14% Senior Notes, or with respect to which the Company is not permitted to grant security interests pursuant to covenants in the agreements and documents governing the 14% Senior Notes.

The excluded assets include the equity interests of the Company's subsidiary MedPro Investments, LLC, which have been pledged to secure the Company's obligations under the 14% Senior Notes, the Company's interests in its Premium Safety Needle System and its Premium Winged Safety Blood Collection Set, the intellectual property rights related to those products, and the rights to receive royalty payments and other related rights pursuant the manufacturing agreement with the distributor of those products. The Collateral is specifically identified on Schedule II to the Series D Note.

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

Events of Default

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

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

63

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

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

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

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

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

(f) the Company or any of its subsidiaries:

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

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

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

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

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

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

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

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

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

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

Remedies upon an Event of Default

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

64

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

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

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

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

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

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

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

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

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

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

Affirmative Covenants

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

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

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

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

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

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

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

65

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

Negative Covenants

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

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

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

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

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

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

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

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

Transfers

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

Valuation and Allocation of Consideration

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

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

66

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

Series D Senior Debt and Preferred Shares Allocation	Cash Received	Debt Value		Preferred Stock Value		Preferred Shares
Draws against note through December 31, 2012	$2,442,000	$1,492,337		$949,663		84,946
Debt discount accretion		$123,569
Balance at December 31, 2012	$2,442,000	$1,615,906		$949,663		84,946
Relative Values	9/12/2012	$727,000		$505,722
	9/28/2012	$712,000		$516,410
	11/1/2012	$372,000		$197,052
	11/30/2012	$309,000		$162,311
	12/28/2012	$322,000		$110,842
		$2,442,000		$1,492,337
Allocation Ratios	9/12/2012	69.56	%	30.44	%	100.00	%
	9/28/2012	72.53	%	27.47	%	100.00	%
	11/1/2012	52.97	%	47.03	%	100.00	%
	11/30/2012	52.53	%	47.47	%	100.00	%
	12/28/2012	34.42	%	65.58	%	100.00	%

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

12 month periods ended December 31,	Maturities
2013	$	7,221,935
2014	7,957,317
2015	13,254,329
2016	3,182,325
Total	$	31,615,906

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

As of December 31, 2012, the Company had accrued severance and related expenses payable to a former officer of $2,221. In addition, the Company had minor receivables from employees totaling a net of $102. As of December 31, 2011, the respective balances were $253,987 and $115. The employee receivables related to unreimbursed personal expenses on the Company credit card that are billed to the employees and collected each month.

67

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

NOTE 8 – RELATED PARTY TRANSACTIONS

On January 11, 2010, we signed a new agreement with SC Capital, which was an extension and modification of our previously existing agreement, to provide the Company with assistance in securing debt or equity and to assist the Company with acquisition or disposition services.  The current contract had an initial 24 month term which has expired and is now continuing on a month to month basis until terminated by 30 day notice.

We paid SC Capital a consulting fee of $15,000 per month until the consulting fee portion of the agreement was terminated as of July 1, 2012.  We agreed to pay additional compensation to SC Capital in connection with any definitive agreements we enter into with parties specifically identified by SC Capital during and within 24 months after termination of the agreement.  For an equity financing transaction, we must pay SC Capital a consulting fee equal to 8% of the principal cash amount of all securities and institutional and secondary financings introduced by SC Capital and provide SC Capital with warrants to purchase a number of shares or units equal to 8% of the number of shares or units sold under the equity financing.  In a debt financing transaction, we must pay SC Capital a consulting fee equal to 3% of any gross proceeds received by MedPro in connection with a debt financing.  In a committed debt facility, the fee owed to SC Capital is to be calculated on the gross available amount committed to us.  In connection with any merger and acquisition transaction occurring during the term of the agreement, SC Capital would be entitled to 2.5% of the total transaction consideration for the first $20 million and 2% for any amount over $20 million.  For strategic alliances or other business realignments resulting from SC Capital’s services, we must pay a consulting fee equal to 8% of the value of the transaction. During 2010, we paid SC Capital $600,000 in fees in connection with our issuance of $30,000,000 of Notes.

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

During 2012 and 2011, the Company leased its office and storage facility in Lexington, Kentucky from a company owned by the Company’s Chairman, which is described in Note 11. This lease terminated on August 31, 2012.

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

NOTE 9 – SHAREHOLDERS’ EQUITY

The Company is authorized to issue 90,000,000 shares of common stock with a par value of $0.001 per share, and 10,000,000 shares of preferred stock with a par value of $0.01 per share, which is issuable in series. Of the 10,000,000 shares of preferred stock authorized, 6,668,229 shares are designated as Series A Convertible Preferred Stock (“Series A Stock”), 0 shares are designated as Series B Convertible Preferred Stock (“Series B Stock”), 0 are designated as Series C Convertible Preferred (“Series C Stock”) and 220,000 shares are designated as Series D Convertible Preferred Stock ("Series D Stock"). The Series D Stock is reflected as Temporary Equity, see Note 12.

The following table sets forth the number of the shares of the Company’s capital stock issued and outstanding at December 31, 2012 and December 31, 2011:

68

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

				Shares outstanding at	Shares outstanding at
	Shares Authorized	Par Value		December 31, 2012	December 31, 2011
Common stock	90,000,000	$	0.001	34,540,878	13,042,313
Preferred Shares	10,000,000	$	0.01	—
Series A Preferred	6,668,229	$	0.01	6,668,229	6,668,229
Series B Preferred	1,493,779	$	0.01	—	1,493,779
Series C Preferred	1,571,523	$	0.01	—	1,571,523
Series D Preferred - Temporary Equity	220,000	$	0.01	84,946
Common stock underlying outstanding stock purchase warrants				957,190	2,301,012

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

Series A Convertible Preferred Stock

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

Liquidation Rights. Upon any liquidation, dissolution or winding up of the affairs of the Company, the holder of Series A Stock is entitled to receive $1.81 per share, plus any accrued and unpaid dividends, before any amounts are paid on common stock or any junior stock. The amount of this preferential liquidation distribution would have been $3,033,057 through December 31, 2012 and $2,426,114 through December 31, 2011. These amounts have not been recorded in the financial statements.

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

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

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

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

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

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

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

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

The conversion price is initially $1.95 per share, but is subject to adjustment for certain events, including stock splits, stock dividends, distributions, reclassifications or reorganizations. In addition, the conversion price is subject to adjustment if the Company issues additional shares of common stock or securities convertible into, or exchangeable for, common stock, in either case at a price per common share less than the conversion price then in effect. The conversion price adjustment does not apply to the issuance of shares in certain transactions identified in the certificate of designations.

69

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

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

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

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

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

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

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

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

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

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

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

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

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

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

Series B Convertible Preferred Stock

Each share of Series B Stock converts into 4 shares of common stock at the present conversion price of $2.18 per share, which is subject to adjustment. The Series B Stock ranks equal to the Company’s common stock, but ranks junior to the Series A Stock and to our indebtedness. If the Company declares dividends, the Series B Stockholders will receive dividends on a pro rata basis with the common stockholders. Upon liquidation, dissolution or winding up of the Company, the holder of Series B Stock is entitled to an amount equal to the amount distributable per share of common stock multiplied by the number of shares of common stock into which the Series B Stock can be converted. The Series B Stock has no general voting rights. The B shares were converted into 5,975,116 common shares on December 31, 2012.

70

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

Series C Convertible Preferred Stock

Each share of Series C Stock converts into 10 shares of common stock, which ratio is subject to adjustment. The Series C Stock ranks equal to the Company’s Series B Stock and common stock, but ranks junior to the Series A Stock and to our indebtedness. If the Company declares dividends, the Series C Stockholders will receive dividends on a pro rata basis with the common stockholders. Upon liquidation, dissolution or winding up of the Company, the holder of Series C Stock is entitled to an amount equal to the amount distributable per share of common stock multiplied by the number of shares of common stock into which the Series C Stock can be converted. The Series C Stock has no general voting rights. The C shares were converted into 15,715,230 common shares on December 31, 2012.

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

Stock Repurchase Program

On June 25, 2009, the Company announced that its Board of Directors had authorized the repurchase of up to 1,000,000 shares of the Company’s common stock.  Through December 31, 2011 the Company had repurchased 488,239 shares in open market transactions at an average price per share of $2.17.  During the year ended December 31, 2012, the Company acquired additional 212,270 shares of its own common stock at an average price of $2.33 per share for a total cost of $493,927. The total number of shares repurchased since inception of the buyback program have been 700,509 shares at $2.66 per share average cost.  The Company has spent $1,863,483 on share repurchases since the inception of the buy-back program.

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

NOTE 10 - INCOME TAXES

The Company incurred no current or net deferred income tax expense or benefit for the years ended December 31, 2012 and 2011.  Income tax expense (benefit) varies from the amounts expected by applying ordinary federal income tax rates to income before income taxes versus taxable income as determine after applying permanent and temporary differences.  The Company has provided allowances for the entire amount of its operating losses for both 2012 and 2011.  Deferred income taxes reflect the net effects of temporary differences between the carrying amount of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Our open tax years include all returns filed for 2009 and later.

The tax effects of temporary differences that give rise to significant portions of the deferred assets at December 31, 2012 and 2011 are presented below:

Deferred tax assets (liabilities):	2012			2011
Fixed assets	$	408,394		$	284,960
Unearned share based compensation and warrants	4,971,818			4,923,311
State deferred tax asset	4,407,358			2,437,956
Other	731
Net operating loss carryforwards	18,786,069			15,723,680
Less: valuation allowance	(28,574,370		)	(23,369,907		)
Net deferred tax assets	$	—		$	—

The Company had no net deferred tax liabilities as of December 31, 2012 and 2011.  As of those dates, the majority of its deferred tax asset consisted of net operating loss carryforwards (tax effect) of $18,786,069 and $15,723,680, respectively, directly related

to its total net operating loss carryforwards of $67,954,912 and $57,100,515, respectively. These net operating loss carryforwards begin expiring in 2015 and are entirely offset by valuation allowances at December 31, 2012 and 2011, respectively.

71

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

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

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

As a result of its reverse merger on December 28, 2007, the Company’s ability to utilize loss carryforwards from the former MedPro (the loss corporation and the acquired corporation for tax purposes) to offset taxable income will be limited by Internal Revenue Code Section 382.  Future utilization of net operating loss will be based on the long-term tax exempt rate at the date of merger applied against the value of the loss corporation.  The value of the loss corporation, $(22,000,000) for purposes of the merger, was established by arms-length negotiation.  The available net operating loss will be further adjusted by the recognition, for tax purposes, of built-in gains or losses as of the date of acquisition.

The following table reconciles the federal statutory tax rate to the Company’s effective tax rate:

	2012		2011
Federal statutory tax rate	(35.00	)%	(35.00	)%
State and local income taxes, net of federal tax benefit	(3.88	)%	(4.12	)%
Derivative (gain) / loss and permanent differences	(0.30	)%	0.55	%
Share-based compensation	2.03	%	(1.20	)%
Loss on write down of intangibles	(2.21	)%	—	%
Valuation allowance	37.87	%	38.37	%
Amortization and Depreciation	1.49	%	1.33	%
Other differences	(0.92	)%	(0.76	)%
Effect of lower brackets	0.92	%	0.83	%
	—	%	—	%

NOTE 11 – LEASE COMMITMENT

Until April 2011, our Lexington, Kentucky offices were located in space we leased from a partnership in which our Chairman and CEO owns an interest. The lease was non-cancelable and ran through August 2012 at a monthly rent of $6,975. Total expense for this property was $55,800 through the December 31, 2012 and $83,700 for the year ended December 31, 2011.

In 2011, we leased new office space at 145 Rose Street, Lexington, Kentucky. The owner of the building is an unrelated party. Our monthly rent for the initial five year term is $8,000 per month. We have an option to terminate the lease by giving 90 days notice before the third anniversary of the lease and by paying one year's rent as a penalty for early termination. The initial term of the lease is five years commencing on April 1, 2011 and terminates on March 31, 2016. We have three renewal options of three years each. Rent will escalate based on the Consumer Price Index for all U.S. City Average, all items (1982-1984 = 100).

We leased space in New York for the year ended December 31, 2012. We had a renewal option with two months free rent for 2013. The 2012 rent was $3,110 per month for March through October. We did not pay rent for January, February, November or December. We have given notice that we will not renew this lease next year.

72

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

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

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

NOTE 12 - TEMPORARY EQUITY

On September 12, 2012, the Company designated the new series of Series D Stock which has been characterized as temporary equity by the Company. Due in part to the optional redemption feature, it is reflected as a mezzanine level temporary equity between debt and equity on the Company's balance sheet. The Series D Stock are being issued in connection with newly issued debt. The Company has authorized 220,000 shares of Series D Stock and had issued 84,946 shares as of December 31, 2012.

Series D Preferred Stock

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

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

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

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

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

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

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

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

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

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

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

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

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

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

73

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

• Discontinue involvement in the business of commercializing medical devices.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

74

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

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

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

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

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

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

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

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

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

The foregoing summary of the material terms and conditions of the Series D Stock is subject to the Certificate of Designation of the Relative Rights and Preferences of the Series D Convertible Preferred Stock, which was an exhibit to the Company's Current Report on Form 8-K filed on September 18, 2012. See Part IV, Item 15 - Exhibits and Financial Statement Schedules.

NOTE 13 – STOCK OPTIONS, WARRANTS AND DERIVATIVE LIABILITIES

Stock Option Awards

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

The fair value of the share-based payments is recognized as compensation expense over the various expected lives of the different options. For the the year ended December 31, 2012 and 2011, share-based compensation expense was $646,477 and $427,771, respectively.

The amount of unrecognized compensation expense for all share-based awards as of December 31, 2012 was approximately $1,901,412, which is expected to be recognized over a weighted-average remaining life of approximately 3.54 years.

The table below identifies the Company's December 31, 2012 and the year ended December 31, 2011 options granted for Officers, employees and Directors and the factors used to value the share-based compensation expense for each option.

75

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

Option Schedule and Valuation Assumptions for 2012 and 2011 Options
Grant Date	Expiration Date	Option Term in Years	Number of Options	Exercise Price		Market Price at Grant Date		Estimated Life for Valuation (Years)	Volatility Factor		Risk Free Return Factor		Valuation Per Option		Total Compensation Expense
2/2/2011	2/2/2021	10.00	100,000	$	2.62	$	2.62	3.5	72.15	%	1.12	%	$	1.344	$	134,350
2/2/2011	2/2/2021	10.00	100,000	$	2.62	$	2.62	4.5	72.15	%	2.10	%	$	1.523	$	152,272
2/2/2011	2/2/2021	10.00	100,000	$	2.62	$	2.62	5.5	72.15	%	2.10	%	$	1.578	$	157,843
8/15/2011	8/15/2021	10.00	50,000	$	2.96	$	2.96	3.0	78.36	%	0.34	%	$	1.496	$	74,794
8/23/2011	1/31/2013	1.44	50,000	$	1.81	$	2.96	1.44	77.821	%	0.22	%	$	1.542	$	77,078
8/23/2011	8/23/2021	10.00	125,000	$	2.96	$	2.96	3.0	77.821	%	0.38	%	$	1.488	$	186,001
12/9/2011	12/9/2021	10.00	300,000	$	2.25	$	2.25	9.95	104.088	%	0.82	%	$	1.712	$	513,480
12/9/2011	12/9/2021	10.00	275,000	$	2.25	$	2.25	9.95	104.088	%	1.82	%	$	2.045	$	562,507
3/5/2012	3/5/2022	10.00	100,000	$	2.73	$	2.73	5.0	113.393	%	0.87	%	$	2.180	$	217,910
8/28/2012	8/28/2022	10.00	125,000	$	1.50	$	1.50	3.0	102.38	%	0.36	%	$	0.940	$	117,242

During the year ended December 31, 2011

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

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

On August 23, 2011, the board of directors adopted the Director Program and reserved 500,000 of the shares authorized for issuance under the 2008 Plan for the stock options to be awarded under the Director Program.  The Director Program provides that each non-employee director automatically receives an award of options to purchase 25,000 shares each year upon election at each annual meeting.  The options have a ten-year term and become exercisable on the first anniversary of the award date. 

76

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

The exercise price is the trading price at close of trading on the award date, which was $2.96 for the initial grant of 125,000 options to our five non-employee directors on August 23, 2011.  Vested options may be exercised for one year following termination of service due to death or disability. Unvested options will become fully exercisable upon a change of control, as defined by the 2008 Plan.   The valuation and the factors used to value these options are listed in the table above.

In addition, one director was granted an option to acquire 50,000 common shares on August 23, 2011 under the same terms granted to the officers, employees and directors present for the August 18, 2008 award. The valuation and the factors used to value these options are listed in the table above.

On December 9, 2011, the Company awarded options to purchase 300,000 common shares to the Executive Officers other than the CEO and options to purchase 275,000 common shares to for the other employees. The valuation and the factors used to value these options are listed in the table above.

During the year ended December 31, 2012

On February 2, 2011, the Executive Compensation Committee approved awards of performance-based options to purchase up to 100,000 shares annually to our CEO based upon the achievement of predetermined goals for financial results, business and product development, capital market milestones, and organizational initiatives in each of December 31, 2011, December 31, 2012 and December 31, 2013.  On March 5, 2012, the committee determined that Mr. Turner's performance in 2011 had satisfied the objective and subjective criteria for performance-based options and awarded him 100,000 options exercisable at $2.725 per share. The valuation and the factors used to value these options are listed in the table above.

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

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

A summary of stock option activity for 2012 and 2011 is as follows:

	Shares		Weighted average  exercise price
Outstanding at December 31, 2010	3,908,471		$2.060
Granted	1,100,000		$2.440
Exercised	(1,050,000	)	$1.810
Expired/Forfeited	(187,662	)	$2.930
Outstanding at December 31, 2011	3,770,809		$2.200
Granted	225,000		$2.044
Exercised	(33,000	)	$2.250
Outstanding at December 31, 2012	3,962,809		$2.192

77

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

The following table summarizes information about stock options outstanding and exercisable at December 31, 2012:

Exercise Price	Options outstanding	Weighted average  remaining contractual life (years)	Options exercisable
$1.81	1,950,000	0.09 years	—
$1.81	100,000	0.09 years	—
$3.85	122,079	6.40 years	122,079
$4.24	25,974	1.40 years	25,974
$3.65	47,256	6.76 years	47,256
$2.70	425,500	7.74 years	425,500
$2.62	100,000	3.09 years	100,000
$2.62	100,000	3.09 years	100,000
$2.62	100,000	3.09 years	—
$2.96	50,000	8.62 years	50,000
$2.96	125,000	8.64 years	125,000
$1.81	50,000	0.09 years	—
$2.25	542,000	8.94 years	542,000
$2.73	100,000	9.17 years	100,000
$1.50	125,000	9.65 years	—
$2.19	3,962,809	3.54 years	1,637,809

1- Non-vested at December 31, 2012 or December 31, 2011. Weighted average remaining life at December 31, 2012.

The following table summarizes information about non-vested options for the year ended December 31, 2011 and the the year endedDecember 31, 2012.

	Shares		Grant Date Fair Value			Per Share Fair Value
Outstanding Non-Vested Options 1/1/2011	—		—			—
Granted 2011	1,100,000		$	1,858,325		$1.689
Vested 2011	(725,000	)	$	(1,287,415	)	$1.776
Forfeited / Exercised 2011	—		$	—
Outstanding Non-Vested Options at 12/31/2011	375,000		$	570,910		$1.522
Granted 2012	225,000		$	335,152		$1.490
Vested 2012	(375,000	)	$	(630,977	)	$1.683
Forfeited / Exercised 2012
Outstanding Non-Vested Options at 12/31/2012	225,000		$	275,085		$1.223

The weighted average fair value per share of options granted was $1.689 for 2011 and $1.490 for the the year ended December 31, 2012. The fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions for the options granted for the year ended December 31, 2012:

	2012		2011
Dividend yield	—	%	—	%
Expected volatility	107.28	%	90.03	%
Expected lives	3.00		5.63
Risk-free interest rate	0.59	%	1.23	%

78

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

The weighted average remaining contractual life of all options outstanding at December 31, 2011 was 4.64 years and at December 31, 2012 is 3.54 years. In addition to outstanding stock options, our stockholders have authorized an additional 1,691,529 shares of common stock that may be issued under the share-based payment plans.

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

Grant	Number	Exercise	Contractual
Date	of Shares	Price	Life in Years
2/2/2011	100,000	$2.62	3.09
8/28/2012	125,000	$1.50	9.65
Totals	225,000

As of December 31, 2012, we had $1,901,412 of total unrecognized compensation cost related to unvested options, net of expected forfeitures, which is expected to be recognized over the following periods: 2013 - $576,670, 2014 - $489,177, 2015 - $336,493, 2016 - $211,659 and $287,413 from 2017 and later years.

	2013	2014	2015	2016	2017
Unearned Compensation to be Expensed by Year	$576,670	$489,177	$336,493	$211,659	$287,413

On May 29, 2012, a former employee exercised his option to acquire 33,000 shares of the Company's common stock. The option was granted on December 9, 2011. The fair value of the stock on the exercise date was $2.71. The exercise price was $2.25. The gain on the exercise, taxed as compensation to the employee, was $15,015. The Company issued 3,517 shares net of the 27,449 shares necessary to exercise the option and the 2,034 shares needed to cover the withholding taxes.

Stock purchase warrants

Our original four Series A Stockholders received one Series A warrant and one Series B warrant for each of the 6,668,229 shares of Series A Stock they purchased on December 28, 2007. For making a total investment of at least $5 million, VOMF also received one Series J warrant and one C warrant for each of the 5,975,116 shares of Series A Stock it purchased. In 2008, VOMF transferred a portion of its Series A Stock and warrants to an affiliate, Vision Capital Advantage Fund, LLC ("VCAF") In 2008, VOMF and VCAF exercised the Series J warrants in full for cash and received 1,493,779 shares of new Series B Stock, which is convertible into four common shares for each share of Series B Stock. In March 24, 2009, VMOF and VCAF delivered $3,000,000 of cash and all of the A, B and C warrants they held, receiving in exchange 1,571,523 shares of new Series C Stock, which is convertible into ten common shares for each share of Series C Stock.

Series A and Series B Warrants

As of December 31, 2012 no Series A or B warrants remained outstanding. As of December 31, 2011, 512,941 Series A warrants and 512,941 Series B warrants remained outstanding. Each Series A warrant entitles holder to purchase one share of common stock at a purchase price of $1.81 per share. Each Series B warrant entitles holder to purchase one share of common stock at a purchase price of $1.99 per share. Both the Series A and Series B warrants expired as of December 28, 2012.

Series AA Warrants

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

79

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

Warrants issued with 2010 bridge financing

As consideration for interim financing provided to the Company by VOMF in 2010, the Company issued warrants to purchase 416,672 shares of our common stock at $3.00 per share and 325,000 shares of our common stock at $4.00 per share.  Each warrant has a five-year term.  Each warrant provides that the warrant price will adjust if specified corporate transactions occur, including a provision that if we issue any additional shares of common stock at either a price per share less than the warrant exercise price (or the adjusted price then in effect) or without consideration, then the warrant price will adjust to the price per share paid for the additional shares of common stock upon each such issuance.

The following table lists the loans and terms:

	Principal	Interest	Shares Subject to	Exercise Price
Date	Amount	Rate	Warrants	Per Share
February 8, 2010	$500,000	6%	—	—
February 26, 2010	$350,000	6%	212,500	$4.00
March 31, 2010	$450,000	6%	112,500	$4.00
May 4, 2010	$250,000	7%	208,334	$3.00
May 28, 2010	$300,000	7%	50,001	$3.00
June 30, 2010	$450,000	7%	75,002	$3.00
August 5, 2010	$500,000	7%	83,335	$3.00
	$2,800,000		741,672

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

Derivative Liabilities and Valuation

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

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

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

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

• As of December 31, 2012, the Company had 90,000,000 common shares authorized and 34,540,878 common shares issued and outstanding.  Therefore, the Company had a sufficient number authorized and unissued common shares to convert all of the preferred Series A stock at the conversion ratio then in effect had a notice of conversion been presented as of that date, meeting the “current status” test of ASC 815 (formerly EITF 00-19).

80

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

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

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

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

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

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

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

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

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

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

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

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

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

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

81

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

underlying the warrants based on then current trading volumes. Accordingly, we used level 2 inputs and level 3 inputs for purposes of our ASC 815 and ASC 820 analysis.

The liability for the warrants exchanged for $3,000,000 of cash and a total of 0 shares of new Series C Stock in March 24, 2009 was recomputed using the Black-Scholes method with updated inputs, and the difference was recorded as income from the decline in debt due to the reduction in fair value of the outstanding warrants at March 24, 2009, immediately before the exchange. The valuation difference on these warrants was $21,237,919, which accounts for the substantial portion of the total gain of $21,603,185 reported for the year ended December 31, 2009.

As of August 12, 2009, the Company's registration statement became effective, terminating the cashless exercise feature. A total of 1,025,882 Series A and B warrants remained outstanding at December 31, 2009, and all of the derivative liability had been written off or recognized as gain.

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

	Warrants Issued with 2010 Bridge Financing
Grant Date	2/26/2010			3/31/2010			4/30/2010			6/3/2010			6/30/2010			8/5/2010			Totals
Stock Price at Issue	$	3.40		$	3.10		$	3.00		$	3.00		$	3.00		$	2.70
Exercise Price	$	4.00		$	4.00		$	3.00		$	3.00		$	3.00		$	3.00
Warrants Granted in Connection with Debt	212,500			112,500			208,334			50,001			75,002			83,335			741,672
Warrant Term in Years	5			5			5			5			5			5
12/31/2010
Value at Quarter End	$	301,889		$	161,576		$	344,702		$	83,397		$	125,094		$	141,165		$	1,157,823
3/31/2011
Volatility	72.148		%	72.148		%	72.148		%	72.148		%	72.148		%	72.148		%
Risk Free Rate of Return	2.24		%	2.24		%	2.24		%	2.24		%	2.24		%	2.24		%
Change in Value	$	(108,199	)	$	(57,508	)	$	(117,557	)	$	(28,279	)	$	(42,416	)	$	(47,338	)
Value at Quarter End 3/31/11	$	193,690		$	104,068		$	227,145		$	55,118		$	82,678		$	93,827		1,157,823
6/30/2011
Volatility	82.902		%	82.902		%	82.902		%	82.902		%	82.902		%	82.902		%
Risk Free Rate of Return	0.81		%	0.81		%	0.81		%	0.81		%	0.81		%	0.81		%
Change in Value	$	59,469		$	31,755		$	59,873		$	14,459		$	23,142		$	26,025		$	214,723
Value at Quarter End	$	253,159		$	135,823		$	287,018		$	69,577		$	105,820		$	119,852		$	971,249
9/30/2011
Volatility	76.266		%	76.266		%	76.266		%	76.266		%	76.266		%	76.266		%
Risk Free Rate of Return	0.42		%	0.42		%	0.42		%	0.42		%	0.42		%	0.42		%

82

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

Change in Value	$	(39,820	)	$	(21,214	)	$	(38,454	)	$	(9,270	)	$	(15,360	)	$	(17,227	)	$	(141,345	)
Value at Quarter End	$	213,339		$	114,609		$	248,564		$	60,307		$	90,460		$	102,625		$	829,904
12/31/2011
Volatility	106.735		%	106.735		%	106.735		%	106.735		%	106.735		%	106.735		%
Risk Free Rate of Return	0.36		%	0.36		%	0.36		%	0.36		%	0.36		%	0.36		%
Change in Value	$	133,395		$	71,258		$	128,210		$	30,980		$	47,727		$	52,280		$	463,850
Value at Quarter End	$	346,734		$	185,867		$	376,774		$	91,287		$	138,187		$	154,905		$	1,293,754
3/31/2012
Volatility	113.393		%	113.393		%	113.393		%	113.393		%	113.393		%	113.393		%
Risk Free Rate of Return	0.51		%	0.51		%	0.51		%	0.51		%	0.51		%	0.51		%
Change in Value	$	48,329		$	26,145		$	50,069		$	12,241		$	18,361		$	20,848		$	175,993
Value at Quarter End	$	395,063		$	212,012		$	426,843		$	103,528		$	156,548		$	175,753		$	1,469,747
6/30/2012
Volatility	98.53		%	98.53		%	98.53		%	98.53		%	98.53		%	98.53		%
Risk Free Rate of Return	0.41		%	0.41		%	0.41		%	0.41		%	0.41		%	0.41		%
Change in Value	$	(161,017	)	$	(85,543	)	$	(158,492	)	$	(38,116	)	$	(57,260	)	$	(63,742	)	$	(564,170	)
Value at Quarter End	$	234,046		$	126,469		$	268,351		$	65,412		$	99,288		$	112,011		$	905,577
9/30/2012
Volatility	110.424		%	110.424		%	110.424		%	110.424		%	110.424		%	110.424		%
Risk Free Rate of Return	0.31		%	0.31		%	0.31		%	0.31		%	0.31		%	0.31		%
Change in Value	$	(162,928	)	$	(87,370	)	$	(181,745	)	$	(44,009	)	$	(66,467	)	$	(74,504	)	$	(617,023	)
Value at Quarter End	$	71,118		$	39,099		$	86,606		$	21,403		$	32,821		$	37,507		$	288,554
12/31/2012
Volatility	148.915		%	148.915		%	148.915		%	148.915		%	148.915		%	148.915		%
Risk Free Rate of Return	0.25		%	0.25		%	0.25		%	0.25		%	0.25		%	0.25		%
Change in Value	$244,378			$131,182			$253,470			$61,430			$92,816			$104,062			$887,338
Value at Quarter End	$315,497			$170,281			$340,076			$82,833			$125,637			$141,569			$1,175,893

83

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

Liabilities measured at fair value on a recurring or non-recurring basis as of December 31, 2012 and December 31, 2011 were as follows:

	Level 1		Level 2		Level 3		Total
2012
Derivative liabilities	$	—	$	1,175,893	$	—	$	1,175,893
Total Liabilities at Fair Value	$	—	$	1,175,893	$	—	$	1,175,893
2011
Derivative liabilities	$	—	$	1,293,754	$	—	$	1,293,754
Total Liabilities at Fair Value	$	—	$	1,293,754	$	—	$	1,293,754

Note- No assets or other liabilities were measured at fair value during 2012 or 2011.

The following table summarizes the terms and values of the Company’s stock purchase warrants outstanding at December 31, 2012 and December 31, 2011:

84

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

Warrant Holder	Exercise Price	Warrants Outstanding	Weighted Average Remaining Life	Shares Exercisable	Black-Scholes Valuation
At December 31, 2012
February 26, 2010	$4.00	212,500	2.41	212,500	$315,497
March 31, 2010	$4.00	112,500	2.50	112,500	$170,282
April 30, 2010	$3.00	208,334	2.67	208,334	$340,076
June 3, 2010	$3.00	50,001	2.76	50,001	$82,833
June 30, 2010	$3.00	75,002	2.75	75,002	$125,637
August 5, 2010	$3.00	83,335	2.93	83,335	$141,570
AA Warrants	$1.81	215,518	0.25	215,518	$85,619
December 31, 2012		957,190	1.50	957,190	$1,261,514
Weighted average exercise price					$3.07
At December 31, 2011
February 26, 2010	$4.00	212,500	3.17	212,500	$346,734
March 31, 2010	$4.00	112,500	3.25	112,500	$185,867
April 30, 2010	$3.00	208,334	3.33	208,334	$376,774
June 3, 2010	$3.00	50,001	3.42	50,001	$91,286
June 30, 2010	$3.00	75,002	3.50	75,002	$138,188
August 5, 2010	$3.00	83,335	3.58	83,335	$154,905
A Warrants	$1.81	512,941	1.00	512,941	$203,777
B Warrants	$1.99	512,941	1.00	512,941	$164,994
AA Warrants	$1.81	533,458	1.00	533,458	$211,928
December 31, 2011		2,301,012	1.74	2,301,012	$1,874,453
Weighted average exercise price					$2.37

NOTE 14 – EARNINGS PER SHARE

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

Potentially dilutive securities consist of options, warrants and convertible preferred stock. There were 3,962,809 outstanding options convertible into one share each of common stock at December 31, 2012. Stock purchase warrants outstanding at December 31, 2012 totaled 957,190 warrants convertible into an equal number of common shares. There were also four series of convertible preferred shares. Series A Preferred totaled 6,668,229 and convert into one share each of common stock. The Series B Preferred shares totaled 1,493,779 and had a four to one conversion ratio and was exercised at year end representing 5,975,116 of newly issued common shares. The Series C Preferred shares totaled 1,571,523 and had a ten to one conversion ratio and were converted at year end into 15,715,230 of newly issued common shares. As of December 31, 2012 there were

85

MedPro Safety Products, Inc.

Notes to Financial Statements

(Audited)

84,946 shares of Series D Preferred stock listed as temporary equity. Based on their liquidation preference of $50.00 per share and the stated conversion rate of $3.00, the potential gross dilution represents 1,415,767 shares of common stock.

Since the Company had a loss for the years endedDecember 31, 2012 and 2011, the potentially dilutive options, warrants and preferred shares were not considered and earnings per share were only presented on a non-dilutive basis.    

NOTE 15 – SUBSEQUENT EVENTS

On December 31, 2012, the Company entered into a series of agreements which will result in the sale of all of the blood collection patents that are the subject of the 2010 Medical Supply Manufacturing Agreement dated July 14, 2010 with GBO. The various agreements were attached to a Form 8K filed by the Company on January 7, 2013.

The transaction was designed to be effective through a series of steps beginning with the payment by the Company of $539,510 of restricted cash to the Senior 14% noteholders on January 30, 2013. On March 1, 2013, GBO made a payment of $22,000,000 to the noteholders which resulted in the release of the Company as an obligor and guarantor of the Senior 14% Notes as well as a guarantor of the royalty payments from GBO to MedPro Investments, LLC, a disregarded LLC wholly-owned by the Company. It also terminated MedPro requirements to pay marketing assistance payments of approximately $6,000,000 to GBO in the future. GBO will make an additional $7,400,000 payment to the noteholders on February 1, 2014. The noteholders have released MedPro and are looking solely to GBO and its parent's guarantee for the second payment.

The transaction and new agreement between the Company, GBO and Visual Connections, Inc. ("VCI") eliminated the royalty agreements between the Company (and Vacumate LLC) and VCI regarding the Vacumate products and patents. This new agreement releases the Company from obligations for royalties to VCI in exchange for a series of payments by GBO and the Company to VCI beginning March 1, 2013. The Company is obligated to pay Visual Connections, Inc. $1,550,000 over the next two years.

The Company also relinquished its claim for $100,000 due from VCI and was relieved from its obligation to pay the $159,000 of royalties accrued at December 31, 2013. The Company also was relieved of its obligation to pay $700,000 of accrued interest at year end and did not receive any royalties from GBO for the last quarter of 2012.

The Company sold the patents for the extinguishment of $30,000,000 in debt and took back a royalty free license to use the patents outside the fields of blood collection and phlebotomy. In order to use these patents, the Company must have working prototypes of the products by the end of 2015 and must have commercialized the products by the end of 2017.

See the Form 8K filed by the Company on January 7, 2013 for more complete details of limitations, representations, restrictions associated with this series of transactions.

86

INDEX TO EXHIBITS

The following exhibits are filed with this report.

Exhibit No. Description

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

_________________________ 

87