Edgar Filing: Patient Safety Technologies, Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934

Filed by the Registrant x

Filed by a Party other than the Registrant ¨

Check the appropriate box:

¨ Preliminary Proxy Statement

¨ Confidential, For Use of the Commission Only (As Permitted by Rule 14a-6(e)(2))

x Definitive Proxy Statement

¨ Definitive Additional Materials

¨ Soliciting Material Pursuant to § 240.14a-12

PATIENT SAFETY TECHNOLOGIES, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

x No fee required

¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

¨ Fee paid previously with preliminary materials.

¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

PATIENT SAFETY TECHNOLOGIES, INC.

July 8, 2009

Dear Stockholders:

You are cordially invited to attend the Annual Meeting of Stockholders of Patient Safety Technologies, Inc., which will be held on August 6, 2009, at 10:00 a.m., at the Los Angeles Airport Marriott Hotel located at 5855 W. Century Blvd., Los Angeles, California.

At the Annual Meeting, stockholders will be asked to (1) elect three Class I Directors to hold office for a term expiring in 2010, elect two Class II Directors to hold office for a term expiring in 2011, and elect two Class III Directors to hold office for a term expiring in 2012, (2) ratify the appointment of the Company’s independent registered public accounting firm, (3) approve the amendment and restatement of the Company's certificate of incorporation to increase the authorized shares of Common Stock, (4) approve the Patient Safety Technologies, Inc. 2009 Stock Option Plan and (5) approve the amendment of the Company’s certificate of incorporation to provide for annual election of all directors. Information of these matters is set forth in the accompanying Proxy Statement.

It is important that your shares be represented at the Annual Meeting, whether or not you plan to attend in person. Please indicate on the enclosed proxy card your vote on the matters presented, and sign, date and return the proxy card in the enclosed envelope. If you do attend the Annual Meeting and wish to vote in person, your proxy can be withdrawn at that time. We urge you to vote “FOR” the election of all of the nominees named in the Proxy Statement, “FOR” ratification of the appointment of the Company’s independent registered public accounting firm, “FOR” the approval of the amendment and restatement of the Company's certificate of incorporation to increase the authorized number of shares, “FOR” the Patient Safety Technologies, Inc. 2009 Stock Option Plan and “FOR” the approval of the amendment of the Company’s certificate of incorporation to provide for annual election of all directors.

If you have any questions about your proxy card, voting procedures or other matters in the Proxy Statement, please feel free to call us at (951) 587-6201.

Sincerely,

Patient Safety Technologies, Inc.

/s/ Steven H. Kane

Steven H. Kane

Chairman of the Board, President and Chief

Executive Officer

PATIENT SAFETY TECHNOLOGIES, INC.

43460 Ridge Park Drive, Suite 140

Temecula, California 92591

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

OF PATIENT SAFETY TECHNOLOGIES, INC.

To Be Held On August 6, 2009

The 2009 Annual Meeting of the Stockholders of Patient Safety Technologies, Inc., a Delaware corporation, will be held on August 6, 2009, at 10:00 a.m., at the Los Angeles Airport Marriott Hotel, located at 5855 W. Century Blvd., Los Angeles, California for the following purposes, each of which is described more fully in the accompanying proxy statement:

1. Proposal No. 1A (For Holders of Common Stock only): To elect three Class I Directors to hold office for a term expiring in 2010, elect one Class II Director to hold office for a term expiring in 2011, and elect one Class III Director to hold office for a term expiring in 2012, or until each of their successors have been duly elected and qualified or until their earlier death, resignation or removal, in accordance with the Company’s bylaws. In the event that Proposal No. 5 described below is approved by the stockholders, each director will be elected to serve until the Company’s next annual meeting of stockholders, or until each of their successors have been duly elected and qualified or until their earlier death, resignation or removal, in accordance with the Company’s bylaws.

2. Proposal No. 1B (For Holders of Preferred Stock only): To elect three Class I Directors to hold office for a term expiring in 2010, elect two Class II Directors to hold office for a term expiring in 2011, and elect two Class III Directors to hold office for a term expiring in 2012, or until each of their successors have been duly elected and qualified or until their earlier death, resignation or removal, in accordance with the Company’s bylaws. In the event that Proposal No. 5 described below is approved by the stockholders, each director will be deemed to have been elected to serve until the Company’s next annual meeting of stockholders, or until each of their successors have been duly elected and qualified or until their earlier death, resignation or removal, in accordance with the Company’s bylaws.

2. Proposal No. 2: To ratify the appointment by our Board of Squar, Milner, Peterson, Miranda & Williamson, L.L.P. to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2009.

3. Proposal No. 3: To approve the amendment and restatement of the Company's certificate of incorporation to increase the authorized number of shares of Common Stock from 25,000,000 shares to 100,000,000 shares.

4. Proposal No. 4: To approve the Patient Safety Technologies, Inc. 2009 Stock Option Plan.

5. Proposal No. 5: To approve the amendment of the Company’s certificate of incorporation to provide for annual election of all directors.

6. To consider and transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

The Board has fixed the close of business on June 16, 2009 as the record date for the determination of the stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof. Each stockholder of record as of the Record Date will be entitled to one vote for each share of Common Stock and one vote for each share of Preferred Stock held on the Record Date.

July 8, 2009	By Order of the Board of Directors

	/s/ Steven H. Kane
	Steven H. Kane
	Chairman of the Board, President, and Chief Executive Officer

You are cordially invited to attend the Annual Meeting in person. Whether or not you expect to attend, please vote your shares using any of the following methods: Common stockholders may vote by telephone or the Internet, as described in the instructions in the proxy card; Common and Preferred stockholders may complete, sign and date the proxy card or voting instruction card and return it in the prepaid envelope; or Common and Preferred stockholders may vote in person at the meeting. A return envelope (which is postage prepaid if mailed in the United States) is enclosed for your convenience. Even if you have voted by proxy, you may still vote in person if you attend the Annual Meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the Annual Meeting, you must obtain a proxy issued in your name from that record holder.

PATIENT SAFETY TECHNOLOGIES, INC.

43460 Ridge Park Drive, Suite 140

Temecula, California 92591

PROXY STATEMENT

FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON

August 6, 2009

QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT AND VOTING

Why am I receiving these materials?

You have been sent this proxy statement and the enclosed proxy card because Patient Safety Technologies, Inc. is soliciting your proxy to vote at the Annual Meeting on the proposals described in this proxy statement. You are invited to attend the Annual Meeting to vote in person on the proposals. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may vote your shares as further described in the proxy statement and on the enclosed proxy card. The Notice of Annual Meeting of Stockholders, this proxy statement and the accompanying proxy cards are first being mailed to stockholders on or about July 23, 2009.

When Is the Annual Meeting?

August 6, 2009, 10:00 a.m. Pacific Daylight Time.

Where Will the Annual Meeting Be Held?

The meeting will be held at the Los Angeles Airport Marriott Hotel, located at 5855 W. Century Blvd., Los Angeles, California.

Who can vote at the Annual Meeting?

Only stockholders of record at the close of business on June 16, 2009, will be entitled to vote at the Annual Meeting. You are entitled to one vote for each share of Common Stock and Preferred Stock held on that date. As of the Record Date, there were 17,197,872 shares of Common Stock and 10,950 shares of Preferred Stock outstanding and entitled to vote.

Stockholder of Record: Shares Registered in Your Name

If, on the Record Date, your shares were registered directly in your name with the Company, then you are a stockholder of record. As a stockholder of record, you may vote in person at the Annual Meeting or vote by proxy. Whether or not you plan to attend the Annual Meeting, the Company encourages you to fill out and return the enclosed proxy card to ensure your representation at the Annual Meeting.

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

If, on the Record Date, your shares were held in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to direct your brokerage firm, bank, dealer or other similar organization on how to vote the shares in your account. You are also invited to attend the Annual Meeting, as discussed further below. However, since you are not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy from your broker or other agent. Your brokerage firm, bank, dealer or other agent should have provided you a voting instruction card for you to use in directing the stockholder of record how to vote your shares or obtain a proxy allowing you to vote your shares personally.

What am I voting on?

There are five matters scheduled for a vote at the Annual Meeting:

Proposal No. 1A (For Holders of Common Stock only): To elect three Class I Directors to hold office for a term expiring in 2010, elect one Class II Director to hold office for a term expiring in 2011, and elect one Class III Director to hold office for a term expiring in 2012, or until each of their successors have been duly elected and qualified or until their earlier death, resignation or removal, in accordance with the Company’s bylaws. In the event that Proposal No. 5 described below is approved by the stockholders, each director will be deemed to have been elected to serve until the Company’s next annual meeting of stockholders, or until each of their successors have been duly elected and qualified or until their earlier death, resignation or removal, in accordance with the Company’s bylaws.

Proposal No. 1B (For Holders of Preferred Stock only): To elect three Class I Directors to hold office for a term expiring in 2010, elect two Class II Directors to hold office for a term expiring in 2011, and elect two Class III Directors to hold office for a term expiring in 2012, or until each of their successors have been duly elected and qualified or until their earlier death, resignation or removal, in accordance with the Company’s bylaws. In the event that Proposal No. 5 described below is approved by the stockholders, each director will be deemed to have been elected to serve until the Company’s next annual meeting of stockholders, or until each of their successors have been duly elected and qualified or until their earlier death, resignation or removal, in accordance with the Company’s bylaws.

Proposal No. 2: To ratify the appointment by our Board of Squar, Milner, Peterson, Miranda & Williamson, L.L.P. to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2009.

Proposal No. 3: To approve the amendment and restatement of the Company's certificate of incorporation to increase the authorized number of shares of Common Stock from 25,000,000 shares to 100,000,000 shares.

Proposal No. 4: To approve the Patient Safety Technologies, Inc. 2009 Stock Option Plan.

Proposal No. 5: To approve the amendment of the Company’s certificate of incorporation to provide for annual election of all directors.

To consider and transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

Each of these proposals, as well as the recommendation of the Board with respect to each of these proposals, is described in greater detail elsewhere in this proxy statement.

With respect to the election of directors, you may either vote “FOR” the nominee proposed by the Board or you may abstain from voting for the nominee specified. For each of the other matters to be voted on, you may vote “FOR” or “AGAINST” or “ABSTAIN” from voting.

How do I vote?

If you are a stockholder of record, you may vote in person at the Annual Meeting or vote by proxy using the enclosed proxy card. Registered holders of Common Stock may also vote over the Internet or by telephone, as described below. To vote in person, you need only attend the Annual Meeting, where you will be given a ballot to vote on each of the proposals.

To vote using the proxy card, simply complete, sign and date the enclosed proxy card and return it promptly in the postage prepaid envelope provided. If you are a holder of record of Common Stock, you should complete, sign and date the proxy card marked with “Common Stock” in the upper right hand corner. If you are a holder of record of Preferred Stock, you should complete, sign and date the proxy card marked with “Preferred Stock” in the upper right hand corner. If you are a holder of record of both Common Stock and Preferred Stock, you should complete, sign and date both proxy cards. So long as we receive your signed proxy card by the Annual Meeting, your shares will be voted as you have directed on the card.

Can I vote by telephone or electronically?

If you are a holder of Common Stock registered in your name, you may vote by telephone, or electronically through the Internet, by following the instructions included with your proxy card. Registered holders of Preferred Stock must sign and return the enclosed proxy card in the enclosed envelope. If your shares of Common Stock are held in “street name,” please check your proxy card or contact your broker or nominee to determine whether you will be able to vote by telephone or electronically. Please follow the voting instructions on the enclosed proxy card.

If you vote your proxy over the Internet or by telephone, you do NOT need to mail back your proxy card.

Whether or not you plan to attend the Annual Meeting, the Company encourages you to vote by proxy to ensure your representation at the Annual Meeting. You may still attend the Annual Meeting and vote in person even if you have already voted by proxy.

What if my Shares are Registered in the Name of Broker or Bank

If you are a beneficial owner of shares registered in the name of your brokerage firm, bank, dealer, or other similar organization, you should have received a voting instruction card with these proxy materials from that organization. Simply complete and mail the voting instruction card to ensure your representation at the Annual Meeting. Alternatively, you may vote in person at the Annual Meeting. However, to vote in person at the Annual Meeting, you must obtain a valid proxy from your brokerage firm, bank, dealer or other similar organization. Follow the instructions from your brokerage firm, bank, dealer, or other similar organization included with these proxy materials, or contact your brokerage firm, bank, dealer, or other similar organization to request a proxy form.

If you do not give instructions to your broker, your broker can vote your shares only with respect to “discretionary” items, but not with respect to “non-discretionary” items. Discretionary items are proposals considered routine under the rules of certain self-regulatory organizations, such as the New York Stock Exchange and the American Stock Exchange, on which your broker may vote shares held in street name in the absence of your voting instructions. On non-discretionary items for which you do not give your broker instructions, the shares will be treated as broker non-votes (which are considered shares for which the brokerage firm, bank, dealer, or other similar organization or nominee has not received voting instructions from the record holder and does not have discretionary authority to vote the shares on certain proposals).

How many votes do I have?

On each matter to be voted upon at the Annual Meeting, you have one vote for each share of Common Stock and one vote for each share of Preferred Stock you own as of the Record Date. The Common Stock and Preferred Stock will vote together as a single class with regard to each of the proposals to be considered at the Annual Meeting, except with respect to Proposal Number 1 where each share of Preferred Stock votes for two directors as a separate class, except that holders of Preferred Stock will vote as a separate class on the election of two directors.

What if I return a proxy card but do not make specific choices?

If you return a signed and dated proxy card without marking any voting selections, all of your shares will be voted “FOR” the election of each nominee for director and “FOR” each of the other proposals described in this proxy statement. If any other matter is properly presented at the meeting, your proxy (one of the individuals named on your proxy card as your proxy) will vote your shares using his or her best judgment.

Who is paying for this proxy solicitation?

The Company will pay for the entire cost of soliciting proxies. The Company may also reimburse brokerage firms, banks, dealers, or other similar organizations or agents for the cost of forwarding proxy materials to beneficial owners. In addition to these mailed proxy materials, the Company’s directors and officers may also solicit proxies in person, by telephone or by other means of communication; however, directors and officers will not be paid any additional compensation for soliciting proxies.

What does it mean if I receive more than one proxy card?

If you receive more than one proxy card marked “Common Stock” or “Preferred Stock” in the upper right hand corner, it means that your shares are registered in more than one name or are registered in different accounts. Please complete, sign, date and return each proxy card to ensure that all of your shares are voted at the Annual Meeting.

Can I change my vote after submitting my proxy card?

You can change your vote by revoking your proxy at any time before the final vote at the Annual Meeting. You may revoke your proxy in any one of three ways:

You may submit another properly completed proxy card with a more recent date than that of the proxy card first submitted before the Annual Meeting date;

You may send a written notice that you are revoking your proxy to the Company’s Corporate Secretary at 43460 Ridge Park Drive, Suite 140, Temecula, California 92590; or

You may attend the Annual Meeting and vote in person in accordance with the procedures specified above. However, simply attending the Annual Meeting will not, by itself, revoke your proxy. Furthermore, if your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the holder of record to be able to vote at the meeting.

Following the final vote at the Annual Meeting, you may not revoke your proxy or otherwise change your vote.

How are votes counted?

Votes will be counted by the inspector of election appointed for the Annual Meeting.

How many votes are needed to approve each proposal?

Proposal No. 1: For the two director positions to elected by holders of Preferred Stock, the nominees for director receiving the highest number of affirmative votes properly cast in person or by proxy at the Annual Meeting by the holders of Preferred Stock, voting as a separate class, will be elected. For all other director positions, the nominees for director receiving the highest number of affirmative votes properly cast in person or by proxy at the Annual Meeting by the holders of Common Stock and Preferred Stock, voting together as a single class, will be elected. Abstentions and broker non-votes will have no effect on the result of the vote

Proposal No. 2: Proposal No. 2 (to ratify the appointment by our Board of Squar, Milner, Peterson, Miranda & Williamson, L.L.P. to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2009) will be approved if a majority of the total votes properly cast in person or by proxy at the Annual Meeting by the holders of Common Stock and Preferred Stock, voting together as a single class, vote “FOR” the proposal. Abstentions and broker non-votes will have no effect on the result of the vote.

Proposal No. 3: Proposal No. 3 (the amendment and restatement of the Company’s certificate of incorporation to increase the authorized number of shares of Common Stock) must receive a "FOR" vote from the majority of the outstanding shares of Common Stock and Preferred Stock, voting together as a single class. Abstentions and broker non-votes will have the same effect as votes "against" Proposal No. 3.

Proposal No. 4: Proposal No. 4 (to approve the Patient Safety Technologies, Inc. 2009 Stock Option Plan) will be approved if a majority of the total votes properly cast in person or by proxy at the Annual Meeting by the holders of Common Stock and Preferred Stock, voting together as a single class, vote “FOR” the proposal. Abstentions and broker non-votes will have no effect on the result of the vote.

Proposal No. 5: Proposal No. 5 (to approve the amendment of the Company’s certificate of incorporation to provide for annual election of all directors) must receive a “FOR” vote from the majority of the outstanding shares of Common Stock and Preferred Stock, voting together as a single class. Abstentions and broker non-votes will have the same effect as votes “against” Proposal No. 5.

The approval of each proposal described in this proxy statement is independent from the approval of each of the other proposals described in this proxy statement.

What is the quorum requirement?

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if at least a majority of the outstanding shares of Common Stock and Preferred Stock are represented by stockholders present at the Annual Meeting or by proxy. As of the Record Date, there were 17,197,872 shares of Common Stock and 10,950 shares of Preferred Stock outstanding and entitled to vote.

Your shares will be counted towards the quorum only if you submit a valid proxy card or if you vote at the Annual Meeting. Abstentions, broker non-votes and votes withheld from director nominees count as "shares present" at the annual meeting for purposes of determining a quorum. However, abstentions and broker non-votes do not count in the voting results. A broker non-vote occurs when a broker or other nominee who holds shares for another does not vote on a particular item because the broker or nominee does not have discretionary authority for that item and has not received instructions from the owner of the shares. If there is no quorum, a majority of the votes present at the Annual Meeting may adjourn or postpone the Annual Meeting to another date upon which a quorum may be obtained.

Any adjournment may be made with respect to one or more proposals for the Company, but not necessarily for all proposals of the Company. In the event that a quorum is present at the Annual Meeting but sufficient votes to approve any proposal are not received, the persons named as proxies may propose one or more adjournments of the Annual Meeting to permit further solicitation of proxies or to obtain the vote required for approval of one or more proposals.

How can I find out the results of the voting at the Annual Meeting?

Preliminary voting results are to be announced at the Annual Meeting. Final voting results will be published in the Company’s Quarterly Report on Form 10-Q for the quarter ending September 30, 2009.

YOUR BOARD OF DIRECTORS HAS APPROVED EACH OF THE PROPOSALS SET FORTH HEREIN.

REASONS FOR THE ANNUAL MEETING

The Annual Meeting is being held in order to vote on several important proposals. Each proposal that will be presented at the Annual Meeting is described in greater detail below.

PROPOSAL NO. 1A & PROPOSAL NO. 1B

ELECTION OF DIRECTORS

Background

At the Annual Meeting, stockholders will vote on the election of seven directors. Two directors are to be elected by a vote of the holders of Preferred Stock voting as a separate class under the terms of the Company’s charter documents (Mr. Herbert Langsam and Dr. Louis Glazer are the nominees for these director positions). All other directors are to be elected by a vote of all holders Common Stock and Preferred Stock voting together as a single class.

Under the terms of the Company’s current charter, the Company has a classified Board of Directors divided into three classes, Classes I, II and III. Directors of each Class are normally elected staggered terms of three years per Class. However, because the Company has not held an Annual Meeting of Stockholders during the last two years, directors of all Classes are standing for election at the 2009 Annual Meeting of Stockholders:

Class I directors will be elected for a one-year term ending in 2010.

Class II directors will be elected for a two-year term ending in 2011.

Class III directors will be elected for a three-year term ending in 2012.

At the Annual Meeting, stockholders are also being asked to approve an amendment to the Company’s Certificate of Incorporation eliminating the classification of the Board of Directors, meaning that all directors would be elected on an annual basis, as further described in Proposal 5 below. If the stockholders approve the foregoing proposal at the Annual Meeting, then in lieu of the staggered terms described above, each director nominee will be deemed to be elected for a one-year term ending in 2010.

Directors serve until their successors are elected and qualified. No current disagreement exists between the Company and any of the current members of the Board regarding the operations, policies or practices of the Company.

Director Nominees

Steven H. Kane, Chairman of the Board, President and Chief Executive Officer of the Company, is nominated for election to the Board as a Class I Director for a term expiring in 2010. Mr. Kane was appointed to fill an open directorship on February 7, 2008, in accordance with the terms of a Securities Purchase Agreement dated October 17, 2007 by and between the Company and Francis Capital Management, LLC.

John P. Francis, is nominated for election to the Board as a Class I Director for a term expiring in 2010. Mr. Francis was appointed to fill an open directorship on November 26, 2007, in accordance with the terms of a Securities Purchase Agreement dated October 17, 2007 by and between the Company and Francis Capital Management, LLC.

Howard E. Chase, is nominated for election to the Board as a Class I Director for a term expiring in 2010. Mr. Chase was appointed to fill an open directorship on June 22, 2009.

Herbert Langsam, is nominated for election to the Board as a Class II Director for a term expiring in 2011. Mr. Langsam is nominated for a Board seat to be voted upon by holders of Preferred Stock voting as a separate class. Mr. Langsam was first elected to the Board on October 22, 2004.

Wenchen Lin, is nominated for election to the Board as a Class II Director for a term expiring in 2011. Mr. Lin was appointed to fill an open directorship on March 28, 2007, in accordance with the terms of a Subscription Agreement dated January 29, 2007 by and between the Company and A Plus International, Inc.

Louis Glazer, M.D. Ph.G., is nominated for election to the Board as a Class III Director for a term expiring in 2012. Dr. Glazer is nominated for a Board seat to be voted upon by holders of Preferred Stock voting as a separate class. Dr. Glazer was first elected to the Board on October 22, 2004.

Loren L. McFarland, has been nominated for election to the Board as a Class III Director for a term expiring in 2012. Mr. McFarland was appointed to fill an open directorship on June 22, 2009.

Information Regarding the Company’s Directors and Nominees

The names and certain information concerning the current directors and the persons nominated by the Board to be elected as directors of the Company at the Annual Meeting are set forth below. All shares represented by the proxies will be voted “FOR” the election to the Board of the nominees named below unless authority to vote for the nominees has been withheld in the proxy. Although the nominees have consented to serve as directors if elected, and the Board has no reason to believe that the nominees will be unable to serve as directors, if the nominees withdraw or otherwise become unavailable to serve, shares represented by the proxies will be voted “FOR” any substitute nominees designated by the Board.

The following table sets forth certain information regarding the Company’s current directors whose terms of office will continue after the Annual Meeting and the nominees for election to the Board at the Annual Meeting. The background information for each of the current directors and the nominees set forth below has been provided to the Company by each respective individual.

Nominees for Director

Name and Year First Elected Director	Age	Background Information

Steven H. Kane (2008)	56	Steven H. Kane has served as the Company’s President and Chief Executive Officer since May 2009, and has served as a director of the Company since November 26, 2007 and was appointed Chairman February 7, 2008. Before joining the Company as President and Chief Executive Officer in May 2009, Mr. Kane was the President, Chief Executive Officer and Director of Protalex, Inc. (OTCBB: PRTX) from 2002 to 2009 and has over 30 years experience in the health care industry. From April 1997 to August 2000, Mr. Kane served as Vice President of North American Sales & Field Operations for Aspect Medical. While at Aspect, he helped guide the company to a successful initial public offering in January 2000. Prior to Aspect, Mr. Kane was Eastern Area Vice President for Pyxis Corporation, where he was instrumental in positioning the company for its successful initial public offering in 1992. Pyxis later was acquired by Cardinal Health for $1 billion. Prior to that, Mr. Kane worked in sales management with Eli-Lilly and Becton Dickinson.

John P. Francis (2007)	43	John P. Francis has served as a director of the Company since November 26, 2007 and is a current nominee for reelection as a Class I Director. Mr. Francis has served as Managing Member of Francis Capital Management, LLC, an investment management firm specializing in small capitalization equities, since 2000. Mr. Francis has over eighteen years of experience in investment management, finance and accounting. Mr. Francis earned his bachelor’s degree in economics and MBA from the Anderson School of Business at the University of California, Los Angeles.

Howard E. Chase (2009)	73	Howard E. Chase, is a current nominee for election as a Class I Director. Since December 2001, he has served as President and Chief Executive Officer of The Hollandbrook Group, LLC, which provides advisory, director and executive services to early stage companies. Mr. Chase served as President and Chief Executive Officer of Carret Holdings, Inc. (formerly Matrix Global Investments, Inc.), a holding company for asset management businesses, from June 1999 until December 2001. Mr. Chase served as President and Chief Executive Officer of Trident Rowan Group, Inc., a U.S. public holding company with interests in certain Italian companies and real estate, from September 1993 to March 1998 and served as Chairman of the Board of TRGI from March 1998 to December 1999. From 1984 to August 1995, Mr. Chase was a partner in the law firm of Morrison Cohen Singer & Weinstein, LLP in New York City. Mr. Chase served on the board of Thoatec Corporation from 1986 until May 2009. Mr. Chase currently sits on the board of several companies, including ThinGap LLC, an electrical motor manufacturer, and the Music Academy of the West, a Santa Barbara, California non-profit organization. Mr. Chase earned his bachelor’s degree from Harvard University and his law degree from Harvard Law School.
Herbert Langsam (2004)	78	Herbert Langsam has served as a Class II Director of the Company since October 22, 2004 and is a current nominee for reelection as a Class II Director. Since 1999, Mr. Langsam has also served as president of Medicare Recoveries, Inc., a private company located in Oklahoma City, Oklahoma, focused on providing Medicare claims and recovery services. Mr. Langsam serves as a member of the board of trustees for the Geriatric Research Drug Therapy Institute and as an adjunct professor at the University of Oklahoma Pharmacy School. Previously, Mr. Langsam was the founder, president and chief executive officer of Langsam Health Services, a conglomerate of health care companies that serviced 17,000 long-term care residents, which was acquired by Omnicare, Inc. in 1991. Mr. Langsam also served as the vice president of pharmacy services for Omnicare, Inc. following its acquisition of Langsam Health Services. Mr. Langsam received his B.S. in pharmacy from the University of Oklahoma.
Wenchen Lin (2007)	53	Wenchen Lin has served as a Class II Director of the Company since March 28, 2007 and is a current nominee for reelection as a Class II Director. Mr. Lin has almost twenty years experience as the President and founder of A Plus International, a manufacturer producing a variety of surgical dressings, film and plastic products and servicing the custom procedural tray industry on cotton textile products. A Plus has established relationships with key market leaders in the industries A Plus services. Mr. Lin began his career serving in executive positions in large trade and shipping companies, such as Trade Diversified, Inc. and Brother Trucking Co. and has substantial knowledge and experience in oversees factories, trade, transport and distribution. Mr. Lin received his MBA from Ohio University and his accounting degree from Taiwan Suzhou University.

Louis Glazer, M.D., Ph.G. (2004)	78	Louis Glazer, M.D., Ph.G. has served as a Class III Director of the Company since October 22, 2004 and is a current nominee for reelection as a Class III Director. From 2004 to 2006, Dr. Glazer has served in various positions of the Company, including Chairman of the Board, Chief Executive Officer, Vice-Chairman and Chief Health and Science Officer, overseeing the development of the Company’s Safety-Sponge™ system. Until 2002, Dr. Glazer served as the chief anesthesiologist and medical director for the Vitreo-Retinal Clinic in Memphis, Tennessee for over 25 years. Prior to that, Dr. Glazer taught obstetrics anesthesia at the University of Tennessee, while practicing anesthesiology at numerous hospitals in Memphis, Tennessee. Dr. Glazer received his B.S. in pharmacy from the University of Oklahoma and his M.D. from the University of Bologna School of Medicine in Italy. He presently serves on the Executive Council of the Center for Patient Safety Research and Practice at Harvard Medical School and the Brigham and Women’s Hospital in Boston, MA.

Loren L. McFarland (2009)	50	Loren L. McFarland, is a current nominee for election as a Class III Director. He is currently an independent consultant providing financial advisory services to start-ups in the medical device industry. He served as Chief Financial Officer and Treasurer of Mentor Corporation, a NYSE listed medical device company from May 2004 to November 2007. From 1985 to 2004 he filled various financial positions at Mentor including Vice President of Finance and Corporate Controller from 2001 to May 2004, Controller from 1989 to 2001, Assistant Controller from 1987 to 1989 and General Accounting Manager from 1985 to 1987. Prior to his employment with Mentor, Mr. McFarland was employed by Touche Ross and Co., a public accounting firm, as a Certified Public Accountant and auditor from 1981 to 1985. Mr. McFarland earned his bachelor’s degree in Business Administration and Accounting from the University of North Dakota and a master’s degree in Business Administration from the Anderson School at University of California at Los Angeles in 1999. Mr. McFarland recently completed the ISS Director Certification Program at UCLA.

Our Board has determined that Messrs. Langsam, Chase and McFarland are each “independent” as that term is defined by the NASDAQ Stock Market Rules. Under the NASDAQ definition, an independent director is a person who is not an executive officer or employee of the company or any other individual having a relationship which, in the opinion of the issuer's board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and who: (1) is not currently, and has not been over the past three years, employed by the company (and none of whose family members has been an executive officer of the Company during that period); (2) has not (or whose immediate family members have not) been paid, or accepted a position providing for, more than $120,000 during any 12-month period in the current or past three fiscal years (other than compensation for service as a director); (3) has not (and whose immediately family has not) been a partner in or controlling shareholder or executive officer of an organization which the company made, or from which the company received, payments in excess of the greater of $200,000 or 5% of that organization’s consolidated gross revenues, in any of the most recent three fiscal years; (4) has not (and whose immediate family members have not), over the past three years been employed as an executive officer of a company in which an executive officer of the Company has served on that company’s compensation committee; or (5) is not currently (and whose immediate family members are not currently), and has not been over the past three years (and whose immediate family members have not been over the past three years) a partner of the Company’s outside auditor. A director who is, or at any time during the past three years was, employed by the Company or by any parent or subsidiary of the Company shall not be considered independent.

Role of the Board

Pursuant to Delaware law, our business, property and affairs are managed under the direction of our Board. The Board has responsibility for establishing broad corporate policies and for the overall performance and direction of the Company, but is not involved in day-to-day operations. Members of the Board keep informed of our business by participating in board and committee meetings, by reviewing analyses and reports sent to them regularly, and through discussions with our executive officers.

2008 Board Meetings

Our Board met eleven times during the fiscal year ended December 31, 2008. Each Board member, including each of the director nominees, with the exception of Mr. Lin, attended 90% or more of the aggregate number of meetings of the Board and of the committees on which he or she served that were held while he or she was a director or committee member, respectively, during fiscal 2008. Mr. Lin attended 73% of the meetings held.

Board Committees

Our Board has established the following committees:

Compensation Committee

The Compensation Committee operates pursuant to an Amended and Restated Charter of the Compensation Committee. The Compensation Committee determines and recommends to the Board the compensation to be paid the Company’s executive officers and also reviews the amount of salary and bonus for each of the Company’s other officers and employees. In addition, the Compensation Committee determines and recommends to the Board the terms of stock option grants to be awarded to the Company’s officers, employees, directors and consultants under the Company’s equity incentive plans. The Committee may also determine other individual performance awards for such officers and employees.

The Compensation Committee members currently are Howard E. Chase, Loren L. McFarland and Herbert Langsam. Mr. Chase and Mr. McFarland are considered independent under Rule 10A-3 under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Each member of the Compensation Committee is a “non-employee director” for purposes of Rule 16b-3 under Section 16 of the Exchange Act. None of these individuals is a present or former officer or employee of the Company. Mr. Chase serves as the Chairman of the Compensation Committee.

Audit Committee

The primary function of the Audit Committee is to oversee and monitor the Company’s accounting and reporting processes and the audits of the Company’s financial statements. The Audit Committee members currently are Loren L. McFarland, Howard E. Chase and Herbert Langsam, all of whom are considered independent under Rule 10A-3 under the Exchange Act. Mr. McFarland serves as the Chairman of the Audit Committee. The Board has determined the Mr. McFarland is an “audit committee financial expert,” as the Securities and Exchange Commission has defined that term.

Nominating Committee

The primary function of the Nominating Committee is to participate in the consideration of potential nominations for election to the Board. Once prospective nominees are selected, the Nominating Committee presents them to the Board for their evaluation and consideration. The Nominating Committee members currently are Howard E. Chase, Wenchen Lin and Steven H. Kane. Mr. Chase is considered independent under Rule 10A-3 under the Exchange Act and serves as the Chairman of the Nominating Committee.

Shareholder Nominations

In order to be considered for election at the 2010 Annual Meeting of Stockholders, a recommendation from a stockholder must be received by the Board no later than March 1, 2010, the 120th calendar day before the date this proxy statement is sent to stockholders in connection with this year’s Annual Meeting. The stockholder recommendation must include the stockholder’s name and contact information, the candidate’s name and contact information, a description of any relationship between the stockholder and the candidate, a description of the candidate’s qualifications, and a signed statement from the candidate that he or she is willing and able to serve on the Board. Stockholders must submit recommendations in writing to the Board at c/o Corporate Secretary, Patient Safety Technologies, Inc., 43460 Ridge Park Drive, Suite 140, Temecula, CA 92590.

Vote Required

The five nominees for director who will be elected by a vote of the Common Stock and Preferred Stock, voting together as a single class, and the two nominees for director who will be elected by a vote of the Preferred Stock voting as a separate class, receiving the highest number of affirmative votes properly cast in person or by proxy at the Annual Meeting by the holders of Common Stock and Preferred Stock, voting as described above, will be elected. Abstentions and broker non-votes will have no effect on the result of the vote.

Voting by the Proxies

The Proxies will vote your shares in accordance with your instructions. If you have not given specific instructions to the contrary, your shares will be voted to approve the election of the nominees named in the Proxy Statement. Although the Company knows of no reason why the nominees would not be able to serve, if a nominee were not available for election, the Proxies would vote your Common Stock to approve the election of any substitute nominee proposed by the Board of Directors. The Board may also choose to reduce the number of directors to be elected as permitted by our bylaws.

BOARD RECOMMENDATION

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE ALL OF YOUR SHARES “FOR” THE ELECTION TO THE BOARD OF ALL OF THE NOMINEES DESCRIBED IN PROPOSAL NO. 1A AND PROPOSAL 1B.

PROPOSAL NO. 2

RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS

Background

On October 6, 2006, the Company, upon the approval of the Audit Committee (which consisted solely of directors who are not “interested persons” of the Company), engaged Squar, Milner, Peterson, Miranda & Williamson, L.L.P. to serve as the Company’s independent registered public accounting firm. Squar Milner has served as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2006, 2007 and 2008 and has been approved by the Audit Committee to act as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2009. The engagement of Squar Milner to serve as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2009 has been unanimously approved by the Board of Directors, and is subject to ratification by the Company’s stockholders at the Annual Meeting.

If the selection is not ratified, the Audit Committee will consider whether it is appropriate to select another independent registered public accounting firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our shareholders.

The Company has invited a representative of Squar Milner to be present at the Annual Meeting and if accepted, will have an opportunity to make a statement if he or she so chooses and will be available to respond to appropriate questions.

Unless marked to the contrary, the shares represented by the enclosed proxy card will be voted “FOR” ratification of the appointment of Squar Milner as the independent public accountants of the Company for the fiscal year ended December 31, 2009.

Fees Paid to Independent Registered Public Accounting Firm for 2008 and 2007

The following are aggregate fees billed to the Company by its independent auditors for work performed in 2008 and 2007:

	Fiscal Year Ended December 31, 2008		Fiscal Year Ended December 31, 2007

Audit Fees	$	195,000	$	169,000
Audit-Related Fees	$	4,000	$	—
Tax Fees	$	13,000	$	9,000
All Other Fees	$	—	$	—

Total Fees	$	212,000	$	178,000

Audit Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end consolidated financial statements and reviews of the interim consolidated financial statements included in quarterly reports and services that are normally provided by independent registered public accounting firms in connection with statutory and regulatory filings.

Audit-Related Fees. Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards.

Tax Fees. Tax fees consist of fees billed for professional services for tax compliance. These services include assistance regarding federal, state and local tax compliance.

All Other Fees. All other fees would include fees for products and services other than the services reported above.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-audit Services of Independent Auditors

Consistent with policies of the Securities and Exchange Commission regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of the independent auditors. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by the independent auditors. Our Audit Committee will consider whether the provision of non-audit services is compatible with maintaining the independent auditor’s independence, and will approve such services, should such a situation arise.

Audit Committee Report

Effective June 22, 2009, Loren L. McFarland, Howard E. Chase and Herbert Langsam joined the Audit Committee. Mr. McFarland was appointed Chairman of the Committee. On June 22, 2009 Steven H. Kane resigned from the Audit Committee. Mr. Kane had served on the Audit Committee as Interim Chairman since January 17, 2008. On June 11, 2008, Arnold E. Spangler resigned as a director and member of the Audit Committee. From June 11, 2008 through June 22, 2009, the Audit Committee was comprised of Steven H. Kane.

The Audit Committee has reviewed and discussed the audited financial statements with management. The Audit Committee has discussed with Squar Milner the matters required to be discussed by SAS 61, as may be modified or supplemented. The Audit Committee has received the written disclosures and the letter from the independent accountants required by Independence Standards Board Standard No. 1 (Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees), as may be modified or supplemented, and has discussed with Squar Milner the independent accountant's independence. Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company's Annual Report on Form 10-K for the last fiscal year for filing with the Commission, and the Board approved such inclusion. This report is provided by the following directors:

Howard E. Chase

Herbert Langsam

Loren L. McFarland

Vote Required

Proposal No. 2 (the ratification of the appointment by the Board of Squar Milner to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2009) will be approved if a majority of the total votes properly cast in person or by proxy at the Annual Meeting by the holders of Common Stock and Preferred Stock, voting together as a single class, vote “FOR” the proposal. Abstentions and broker non-votes will have no effect on the result of the vote.

BOARD RECOMMENDATION

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE ALL OF YOUR SHARES “FOR” THE RATIFICATION OF SQUAR MILNER TO SERVE AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AS DESCRIBED IN THIS PROPOSAL NO. 2.

PROPOSAL NO. 3

INCREASE IN AUTHORIZED NUMBER OF SHARES OF COMMON STOCK

Background

The Company is requesting stockholder approval of the amendment and restatement of the Company’s certificate of incorporation to increase the authorized number of shares of Common Stock of the Company, from 25,000,000 shares to 100,000,000 shares. The Board of Directors has unanimously approved the amendment.

If stockholders approve this Proposal No. 3, Article IV, Section A the Company’s certificate of incorporation will be amended and restated as set forth in the form of Amended and Restated Certificate of Incorporation attached as Appendix A to this proxy statement (the “Restated Certificate”). Assuming the approval of this Proposal No. 3, the Restated Certificate will become effective upon its filing with the Secretary of State of the State of Delaware.

Information concerning the proposed increase in authorized number of shares

An increase in the number of authorized shares of Common Stock in and of itself does not affect the rights of the holders of currently issued and outstanding Common Stock and Preferred Stock. However, the issuance of any additional shares of Common Stock will dilute the Company’s earnings per share and the net asset value per share of current holders. The issuance of additional shares will also dilute the percentage voting interest of current holders.

Notwithstanding these potential drawbacks, the Board has determined that an increase in the Company’s authorized capital stock is in the best interest of the Company and its stockholders, as the Company current authorized capital has been effectively exhausted, and additional shares are need to meet the Company’s current obligations and support its future growth.

The Company has no current commitments to issue additional shares of Common Stock, except as follows:

Up to 14,563,000 shares are issuable upon exercise of outstanding warrants;

Up to 4,712,000 shares are issuable upon exercise of outstanding options to purchase Common Stock;

In the event that stockholders approve the adoption of the Company’s 2009 Stock Option Plan as described in Proposal 4 below, an additional 3,000,000 shares will be reserved for issuance under this Plan.

The Company may from time to time consider issuance of additional shares in connection to raise additional capital, or in connection with acquisitions or business combinations.

Vote Required

Proposal No. 3 (amendment and restatement of the Company's certificate of incorporation to increase the authorized number of shares of Common Stock from 25,000,000 shares to 100,000,000 shares) will be approved if the total votes properly cast in person or by proxy at the Annual Meeting by a majority of the outstanding shares of Common Stock and Preferred Stock, voting together as a single class, vote “FOR” the proposal. Abstentions and broker non-votes will have no effect on the result of the vote.

BOARD RECOMMENDATION

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE ALL OF YOUR SHARES “FOR” THE AMENDMENT OF THE COMPANY’S CERTIFICATE OF INCORPORATION TO INCREASE THE COMPANY’S AUTHORIZED SHARES, AS DESCRIBED IN THIS PROPOSAL NO. 3.

PROPOSAL NO. 4

APPROVAL OF THE COMPANY’S 2009 STOCK OPTION PLAN

Subject to ratification by the stockholders, the Board of Directors has unanimously adopted and approved the Patient Safety Technology, Inc. 2009 Stock Option Plan (the “2009 Plan”). The following summary of the 2009 Plan is qualified in its entirety by reference to its complete text, which is attached to this Proxy Statement as Appendix B.

In the event stockholder approve this Proposal No. 4, the Board will have the discretion to grant options to purchase up to 3,000,000 shares of Common Stock of the Company under the 2009 Plan. These shares are in addition to the 2,500,000 shares reserved for issuance under the Company’s 2004 Stock Option Plan (the 2004 Plan). As of May 31, 2009, options to purchase an aggregate of 1,627,000 shares of Common Stock and restricted stock awards of an aggregate of 849,000 shares had been issued pursuant to the 2004 Plan.

Description of the 2009 Plan

General

The purpose of the 2009 Plan is to allow the Company to provide equity-based incentives designed to attract, retain and motivate employees of the Company and its subsidiaries. The Board believes that equity based compensation plays an important role in aligning the incentives of the Company’s employees with the interests of its stockholders.

The 2009 Plan will be administered by our Board or by a committee designated by our Board. The Board or its committee may grant options under the 2009 Plan to employees (including employees who are officers and directors of the Company) and directors of the Company, as well as consultants, advisors and other independent contractors who provide services to the Company.

The Board has approved reserving 3,000,000 shares of Common Stock for issuance under the 2009 Plan (subject to adjustment for stock splits and similar events). This number of shares represents approximately 17.5% of the outstanding Common Stock of the Company as of the Record Date.

Description of Stock Options

The Board or its committee may grant non-statutory options to all eligible plan participants and may grant incentive stock options to eligible plan participants who are employees of the Company or its subsidiaries. With respect to each grant, the Board or its committee will determine the number of shares subject to the award, and the exercise price, term, manner of exercise and vesting terms or other conditions for the option to become exercisable.

Transferability of Options

Options granted under the 2009 Plan are non-transferable during the recipient’s lifetime, and may be transferred only in the event of the holder’s death, by will or the laws of descent and distribution.

Amendment of the 2009 Plan

The Board may amend, suspend or discontinue the 2009 Plan at any time.

Change of Control

In connection with certain change of control transactions, all outstanding options may become exercisable prior to consummation of the transaction if the options are not assumed by the Company’s successor entity. Any options not exercised or assumed will generally expire upon completion of certain change of control transactions.

Termination of Plan and Dilution

The 2009 Plan will terminate on March 11, 2019, unless sooner terminated by the Board. No options may be granted after termination of the 2009 Plan, although options outstanding at the time of termination will continue to be exercisable in accordance with their terms. The issuance of shares of Common Stock upon the exercise of options granted under the 2009 Plan will dilute the voting power of current stockholders. The extent of dilution will depend on the number of shares subject to options awarded and exercised.

Federal Income Tax Consequences

THE FOLLOWING DISCUSSION SETS FORTH CERTAIN UNITED STATES INCOME TAX CONSIDERATIONS IN CONNECTION WITH THE 2009 PLAN. THESE TAX CONSIDERATIONS ARE STATED IN GENERAL TERMS AND ARE BASED ON THE INTERNAL REVENUE CODE OF 1986 IN ITS CURRENT FORM AND CURRENT JUDICIAL AND ADMINISTRATIVE INTERPRETATIONS THEREOF. THIS DISCUSSION DOES NOT ADDRESS STATE OR LOCAL TAX CONSIDERATIONS WITH RESPECT TO THE 2009 PLAN. MOREOVER, THE TAX CONSIDERATIONS RELEVANT TO THE 2009 PLAN MAY VARY DEPENDING ON A PARTICIPANT’S STATUS AND CIRCUMSTANCES.

When a non-statutory stock option granted pursuant to the 2009 Plan is exercised, the plan participant will realize ordinary income for tax purposes measured by the difference between the aggregate purchase price of the shares as to which the option is exercised and the aggregate fair market value of shares on the exercise date. The Company will be entitled to a deduction in the year the option is exercised equal to the amount the plan participant is required to report as ordinary income.

Options that qualify as incentive stock options do not require the plan participant to recognize ordinary income for federal tax purposes upon exercise; and the Company will not be entitled to a federal income tax deduction in connection with the exercise of these options. However, the difference between the option price and the fair market value of the shares acquired upon exercise of an incentive stock option will be treated as an “item of tax preference” for purposes of the alternative minimum tax.

Under existing federal income tax law, if shares purchased pursuant to the exercise of such an option are not disposed of by the optionee before the later of two years from the date of grant of the option or within one year after the date of exercise of the option, then any gain or loss recognized upon ultimate disposition of the shares will be treated as long-term capital gain or loss. If the optionee disposes of the shares acquired by exercise of an incentive stock option before the expiration of the holding period described in the preceding sentence, the optionee must recognize as ordinary income an amount equal to the difference between the optionee’s basis in the shares and the selling price. In that event, the Company will be entitled to a deduction equal to the amount the employee is required to report as ordinary income.

New Plan Benefits

The Board has prospectively authorized a single option award under the 2009 Plan subject to its approval of the 2009 by the Company’s stockholders. The recipient of this prospective option award of 100,000 shares is an officer of the Company who is not a named executive officer. This option, if issued, will be granted at the fair market value as of the date of grant. No other prospective awards have been authorized as of the date of this Proxy Statement with regard to additional issuances.

Vote Required

Proposal No. 4 (the authorization and approval of the Patient Safety Technology, Inc. 2009 Stock Option Plan) will be approved if a majority of the total votes properly cast in person or by proxy at the Annual Meeting by the holders of Common Stock and Preferred Stock, voting together as a single class, vote “FOR” the proposal. Abstentions and broker non-votes will have no effect on the result of the vote.

BOARD RECOMMENDATION

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE ALL OF YOUR SHARES “FOR” THE APPROVAL OF THE PATIENT SAFETY TECHNOLOGY, INC. 2009 STOCK OPTION PLAN AS DESCRIBED IN THIS PROPOSAL NO. 4.

PROPOSAL NO. 5

AMENDMENT OF CERTIFICATE OF INCORPORATION

TO PROVIDE FOR ANNUAL ELECTION OF DIRECTORS

Background

Under the Company’s current certificate of incorporation, the Company’s Board is divided into three classes of directors. Approximately one-third of the directors stands for election each year for a three-year term.

The Board has unanimously approved, and is recommending that the stockholders vote in favor of, an amendment to the Company’s certificate of incorporation to eliminate the division of the Board into multiple classes. If this proposal is approved, all of the directors of the Company would be elected for one-year terms at each annual meeting of stockholders of the Company.

Information Concerning the Proposed Restructuring of the Board

The proposed elimination of the division of the Board into classes is intended to enhance the ability of the stockholders to alter the composition of the Board on an annual basis. However, the change in Board structure may affect the continuity and stability in the Company’s leadership and policies, by allowing the entire Board to be replaced each year.

The proposal is the result of the Board ongoing review of the Company’s corporate governance procedures. The Board weighed the advantages and disadvantages of a declassification of the Board structure, in light of recent trends in corporate governance amongst similarly situated companies. Proponents of unified boards of directors believe that classified boards reduce the accountability of directors by limiting the ability of stockholders to evaluate director performance and elect directors on an annual basis. Conversely, advocates of classified boards believe that longer director terms provide greater continuity and stability, and make it easier for Boards to support forward-looking strategies that will enhance stockholder value in the long run.

Although the proposal is not being advanced in connection with any expected change of control of the Company, the change in the structure of the Board may make it easier for a change of control of the Company to be effected. If this proposal is approved, the entire Board may be replaced at the next annual stockholders’ meeting through the normal election process. As a result, the change in the Board structure may tend to encourage certain takeover bids, which could include takeover bids that some stockholders may feel would not be in their best interests. Elimination of Board classification may also reduce the negotiating leverage of the Company’s Board and management with certain prospective acquirors, if these potential buyers believe they can acquire control more easily by through a director election contest, rather than arms-length negotiations with the current Board.

While the Company believes that the advantages of having a unitary Board outweigh the potential disadvantages, you should consider all of the relevant effects of a classified Board when voting on this Proposal No. 5.

Amendment of Certificate of Incorporation

If both this Proposal and Proposal No. 2 (increase in authorized number of shares of Common Stock) are approved by the stockholders at the annual meeting, then the Company’s Amended and Restated Certificate of Incorporation will be amended and restated to read as set forth in Appendix A attached to this proxy statement, which eliminates the classified Board provisions contained in our current Certificate of Incorporation.

If this Proposal is approved by the stockholders at the annual meeting, but Proposal No. 2 (increase in authorized number of shares of Common Stock) is not, then Article V, Section A.2. of the Company’s Amended and Restated Certificate of Incorporation will be amended to read as set forth in Appendix A attached to this proxy statement, but no other changes will be made to our Certificate of Incorporation.

Vote Required

Proposal No. 5 (amendment of the Company’s certificate of incorporation to provide for annual election of directors) will be approved if the total votes properly cast in person or by proxy at the Annual Meeting by a majority of the outstanding shares of Common Stock and Preferred Stock, voting together as a single class, vote “FOR” the proposal. Abstentions and broker non-votes will have the same effect as a vote “AGAINST” this proposal.

BOARD RECOMMENDATION

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE ALL OF YOUR SHARES “FOR” THE PROPOSED AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO PROVIDE FOR ANNUAL ELECTION OF DIRECTORS, AS DESCRIBED IN THIS PROPOSAL NO. 5.

ADDITIONAL INFORMATION

BENEFICIAL OWNERSHIP OF THE COMPANY’S COMMON STOCK

OF PRINCIPAL STOCKHOLDERS, DIRECTORS AND MANAGEMENT

The following tables set forth certain information with respect to beneficial ownership (as that term is defined in the rules and regulations of the SEC) of the Company’s Common Stock and Preferred Stock as of June 30, 2009, by (1) each person who is known by the Company to be the beneficial owner of more than five percent of the outstanding Common Stock and/or Preferred Stock, (2) each director, including director-nominees, of the Company, (3) each named executive officer listed in the Summary Compensation Table and (4) all directors and named executive officers of the Company as a group. Except as otherwise indicated, to the Company’s knowledge, all shares are beneficially owned and investment and voting power is held as stated by the persons named as owners. The address for all beneficial owners, unless stated otherwise below, is c/o Patient Safety Technologies, Inc., 43460 Ridge Park Drive, Suite 140, Temecula, CA 92590.

	Beneficial Ownership
Name and Address of Beneficial Owner	Number of Shares of Common Stock (1)			Percent of Class			Number of Shares of Preferred Stock (2)		Percent of Class

Greater than 5% Beneficial Owners :
Compass Management Limited 795 Ridge Lake Blvd., Suite 106 Memphis, TN 38120		2,600,000	(3)		14.3	%		—		—

Francis Capital Management, LLC 429 Santa Monica Blvd., Suite 320 Santa Monica, CA 90401		3,251,640	(4)		17.0	%		—		—

Radisson Trading Company No. 87 Lang 58 Rong Hua West Rd., Shanghai 201103 China		1,280,000	(5)		7.2	%		—		—

DSAM Fund LP 222 Broadway, 6th Floor New York, NY 10038		1,114,000	(6)		6.3	%		—		—

A Plus International, Inc. 5138 Eucalyptus Avenue Chino, California 91710		1,100,000	(7)		6.3	%		—		—

Alan E. Morelli 225 Mantua Road Pacific Palisades, California 90272		1,627,252	(8)		8.6	%		—		—

Charles J. Kalina III 93 Grove Street Somerville, NJ 08876		1,068,993	(9)		6.1	%		—		—

Melanie Glazer 801 Ocean Ave. #403 Santa Monica, CA 90403		471,922	(10)		2.7	%		8,150		74.4	%

Zealous Partners LLC 15641 Redhill Ave. #200 Tustin, CA 92780		79,068	(11)			*		2,600		23.7	%

Directors and Named Executive Officers :
John P. Francis, Director	3,251,640	(4)	17.0	%	—	—

Wenchen Lin, Director	1,100,000	(7)	6.3	%	—	—

Brian Stewart, Vice President Business Development	663,000	(12)	3.8	%	—	—

Herbert Langsam, Director	202,903	(13)	1.2	%	—	—

Louis Glazer, M.D., Ph.G., Director	471,922	(14)	2.7	%	8,150	74.4	%

Steven Kane, Chairman of the Board, President and Chief Executive Officer	166,666	(15)	1.0	%	—	—

Howard E. Chase, Director	200,000	(16)	1.2	%	—	—

Loren L. McFarland, Director	200,000	(17)	1.2	%	—	—

William M. Adams, former Chief Executive Officer	668,517	(18)	3.8	%	—	—

Richard Bertran, former President of SurgiCount	287,500	(19)	1.7	%	—	—

David Bruce, former Chief Executive Officer	—		—		—	—

William B. Horne, former Chief Executive Officer	412,612	(20)	2.4	%	—	—

Mary Lay, Interim Chief Financial Officer	—		—		—	—

All directors and named executive officers as a group (13 persons)	7,624,760		42.1	%	8,150	74.4	%

* Represents less than 1%

(1)

Applicable percentage ownership is based on 17,197,872 shares of Common Stock outstanding as of June 30, 2009, together with securities exercisable or convertible into shares of Common Stock within 60 days of June 30, 2009 for each security holder. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of Common Stock that a person has the right to acquire beneficial ownership of upon the exercise or conversion of options, convertible stock, warrants or other securities that are currently exercisable or convertible or that will become exercisable or convertible within 60 days of June 30, 2009 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

(2)

Applicable percentage ownership is based on 10,950 shares of Series A Convertible Preferred Stock outstanding. Each share of Series A Convertible Preferred Stock is convertible into 22.5 shares of Common Stock. Except as otherwise required by law, each holder of Series A Convertible Preferred Stock is entitled to vote on all matters submitted to our stockholders, voting together with the holders of Common Stock as a single class, with each shares of Series A Convertible Preferred Stock entitled to one vote per share.

(3)

Consists of: (a) 1,600,000 shares of Common Stock; and (b) warrants to purchase 1,000,000 shares of Common Stock.

(4)	Consists of: (a) 1,272,000 shares of Common Stock; and (b) warrants to purchase 1,979,640 shares of Common Stock. John Francis has voting and investment control over the securities held by Francis Capital Management, LLC.

(5)	Consists of: (a) 800,000 shares of Common Stock; and (b) warrants to purchase 480,000 shares of Common Stock.

(6)	Consists of: (a) 640,000 shares of Common Stock; and (b) warrants to purchase 474,000 shares of Common Stock.

(7)	A Plus International, Inc. owns 800,000 shares of Common Stock and warrants to purchase 300,000 shares of Common Stock. Mr. Lin has the power to vote and direct the disposition of all securities owned by A Plus International, Inc.

(8)	Consists of warrants to purchase 1,627,252 shares of Common Stock.

(9)	Consists of: (a) 600,682 shares of Common Stock; and (b) warrants to purchase 468,311 shares of Common Stock.

(10)

Consists of: (a) 83,326 shares of Common Stock; (b) warrants to purchase 70,221 shares of Common Stock; (c) 60,000 shares of Common Stock issuable upon exercise of stock options with an exercise price of $4.10 per share that expire on January 31, 2016; (d) 75,000 shares of Common Stock issuable upon exercise of stock options with an exercise price of $5.27 per share that expire on March 30, 2015; and (e) 183,375 shares of Common Stock issuable upon conversion of 8,150 shares of Series A Convertible Preferred Stock. Includes Common Stock and Preferred Stock controlled by his spouse, Melanie Glazer.

(11)	Consists of: (a) 20,568 shares of Common Stock; and (b) 58,500 shares of Common Stock issuable upon conversion of 2,600 shares of Series A Convertible Preferred Stock.

(12)

Consists of: (a) 130,000 shares of Common Stock; (b) warrants to purchase 348,000 shares of Common Stock; (c) 60,000 shares of Common Stock issuable upon exercise of stock options with an exercise price of $5.27 per share that expire March 30, 2015; and (d) 125,000 shares of Common Stock issuable upon exercise of stock options with an exercise price of $0.75 per share.

(13)

Consists of: (a) 118,403 shares of Common Stock; (b) 15,000 shares of Common Stock issuable upon exercise of stock options with an exercise price of $4.30 per share that expire on January 25, 2016; (c) 4,500 shares of Common Stock issuable upon exercise of stock options with an exercise price of $5.27 per share that expire on March 30, 2015; and (d) warrants to purchase 65,000 shares of Common Stock.

(14)

(15)	Consists of warrants to purchase 166,666 shares of Common Stock.

(16)	Consists of 200,000 shares of Common Stock issuable upon exercise of stock options with an exercise price of $0.99 that expire on June 22, 2019.

(17)	Consists of 200,000 shares of Common Stock issuable upon exercise of stock options with an exercise price of $0.99 that expire on June 22, 2019.

(18)	Consists of (a) 82,017 shares of Common Stock; (b) 300,000 shares of Common Stock issuable upon exercise of stock options with an exercise price of $1.25 that expire on April 10, 2010; and (c) warrants to purchase 286,500 shares of Common Stock.

(19)

Consists of (a) 175,000 shares of Common Stock issuable upon exercise of stock options with an exercise price of $1.25 that expire on September 16, 2009; (b) 50,000 shares of Common Stock issuable upon exercise of stock options with an exercise price of $1.39 that expire on September 16, 2009; and (c) warrants to purchase 62,500 shares of Common Stock.

(20)	Consists of (a) 91,000 shares of Common Stock; and (b) warrants to purchase 321,612 shares of Common Stock.

INFORMATION REGARDING THE COMPANY’S

EXECUTIVE OFFICERS, ITS BOARD AND ITS COMMITTEES

Directors and Executive Officers

Our directors and executive officers as of June 30, 2009 are as follows:

Name	Age	Position (s)

Steven H. Kane	56	Chairman of the Board of Directors, President and Chief Executive Officer

Mary A. Lay	52	Interim Chief Financial Officer and Corporate Secretary

Brian Stewart	37	Vice President Business Development

Howard E. Chase	73	Director

John P. Francis	43	Director

Louis Glazer, M.D., Ph.G.	78	Director

Herbert Langsam	78	Director

Wenchen Lin	53	Director

Loren L. McFarland	50	Director

The information below is for executive officers that are not members of our Board of Directors. Please refer to Proposal No. 1, Election of Directors, for information on members of our Board of Directors.

Mary A. Lay, age 52, Interim Chief Financial Officer and Principal Accounting Officer, Secretary. Prior to joining the Company in July 2008, from 2005 to 2008, Ms. Lay served as the Chief Financial Officer of Meret Optical Communications, Inc. a privately held manufacturer of RF Subsystems; from 2002 to 2004 as Vice President of Finance and Acting Chief Financial Officer of Sorrento Networks Corporation a mid-market manufacturer of intelligent optical networking solutions listed on the NASDAQ Global Market; and from 1999 to 2002 as Chief Financial Officer for a development stage Internet company and a golf publication and manufacturing company. Ms. Lay earned a MBA from the University of Phoenix and a BA of Business with emphasis in Financial Accounting from National University. She received her CPA certification in Maryland.

Brian E. Stewart, age 37, Co-Founder of SurgiCount Medical, Inc., Vice President Business Development. Prior to returning to SurgiCount in January 2009, Mr. Stewart worked in the investment banking division of Credit Suisse from 2007 to 2009 and CIBC World Markets from 2002 to 2007. In addition to his investment banking and entrepreneurial experience, Mr. Stewart’s previous experience includes Strome Investment Management, a hedge fund in Santa Monica, CA. Mr. Stewart received his MBA from The Anderson School at UCLA and his BA in Economics from UCLA where he graduated Phi Beta Kappa and Summa Cum Laude.

Board of Directors and Committee Information

The Board has three committees: an Audit Committee, a Compensation Committee and a Nominating Committee. The Audit Committee and Compensation Committee operate pursuant to committee charters.

For the year ended December 31, 2008, the compensation earned by each director of the Company varied. Steven H. Kane and David Augustine earned $125,000 and $20,000, respectively in director fees. Arnold Spangler received a stock award valued at $134,750. The other directors were eligible to receive a fee of $500 plus reimbursement of expenses incurred in attending each board meeting. During 2008, the Company did not compensate Messrs. Langsam, Lin, Francis, Glazer and Adams for serving on the Board of Directors. All compensation earned by Messrs. Kane, Augustine and Spangler is set forth under “Director Compensation” below. All compensation earned by Messrs. Kane and Augustine for fiscal year 2008 was accrued but not paid. Mr. Augustine’s accrued directors fees were paid in June 2009.

The Board met seven times during the fiscal year ended December 31, 2007 and eleven times during the fiscal year ended December 31, 2008. Each Board member, with the exception of Mr. Lin attended 90% or more of the aggregate number of meetings of the Board and of the committees on which he or she served that was held during the period for which he or she was a director or committee member, respectively. Mr. Lin, attended 73% of the meeting held. Furthermore, it is the Company’s policy to invite, but not require, each of its directors and director nominees to attend the Company’s annual meeting of stockholders.

The following table provides membership and meeting information for 2008 and 2007 for each of the Board’s committees:

Name	Audit				Nominating				Compensation
	2008		2007		2008		2007		2008		2007
Louis Glazer, M.D., Ph.G.(1)		—		—		—		—		X		—
Herbert Langsam(2)		—		X		—		—		X		X
Arnold E. Spangler(3)		X		X		—		—		—		—
David Augustine (4)		X		—		X		—		—		X
Wenchen Lin(5)		—		—		X		—		—		—
John P. Francis(6)		—		—		—		—		—		X
Steven H. Kane(7)*		X		—		X		—		X		—
William Adams(8)		—		—		—		—		—		—

Total meetings in fiscal years		-1-		-0-		-0-		-0-		-0-		-0-

* Committee Chairperson.

X Denotes committee member.

(1)	Louis Glazer was elected to the Board at the Special Meeting on October 22, 2004 and was also appointed as a member of the respective committees listed above.

(2)	Herbert Langsam was elected to the Board at the Special Meeting on October 22, 2004 and was also appointed as a member of the respective committees listed above.

(3)	Arnold Spangler was appointed to the Board as of January 6, 2006 and resigned on June 11, 2008. Mr. Spangler currently does not serve on the Board or as an officer.

(4)	David Augustine was appointed to the Board as a director effective January 24, 2007 and resigned March 10, 2009. Mr. Augustine currently does not serve on the Board or as an Officer.

(5)	Wenchen Lin was appointed to the Board as a director effective March 28, 2007.

(6)	John P. Francis was appointed to the Board as a director effective November 26, 2007.

(7)	Steven H. Kane was appointed to the Board as a director effective February 7, 2008.

(8)	William Adams was appointed to the Board as a director effective June 11, 2008 and resigned January 5, 2009. Mr. Adams currently does not serve on the Board or as an Officer.

Below is a description of each committee of the Board. The Board has determined that each member of each committee meets the required applicable rules and regulations regarding “independence” and that each member is free of any relationship that would interfere with his or her individual exercise of independent judgment with regard to the Company. Each of the committees described below has authority to engage legal counsel or other experts or consultants, as it deems appropriate to carry out its responsibilities.

Audit Committee

The Audit Committee operates pursuant to an Amended and Restated Charter of the Audit Committee, which sets forth the responsibilities of the Audit Committee. The primary function of the Audit Committee is to oversee and monitor the Company’s accounting and reporting processes and the audits of the Company’s financial statements.

The Audit Committee members currently are Loren L. McFarland and Howard E. Chase, both of whom are considered independent under Rule 10A-3 under the Exchange Act. Mr. McFarland serves as the Chairman of the Audit Committee.

Nominating Committee

The Nominating Committee recommends prospective nominees for directors to the Board. The Board has the authority to appoint qualified persons to the Board to fill a vacancy when a vacancy arises. The Nominating Committee members currently are Howard E. Chase, Wenchen Lin and Steven H. Kane. Mr. Chase is considered independent under Rule 10A-3 under the Exchange Act. Mr. Chase serves as the Chairman of the Nominating Committee.

Compensation Committee

The Compensation Committee members currently are Howard E. Chase, Loren L. McFarland and Herbert Langsam. Messrs. Chase, McFarland and Langsam are all considered independent under Rule 10A-3 under the Exchange Act. Each member of the Compensation Committee is a “non-employee director” for purposes of Rule 16b-3 under Section 16 of the Exchange Act. Mr. Chase serves as the Chairman of the Compensation Committee.

Nomination of Directors

The Company currently has a separate nominating committee of the Board. The Nominating Committee members participate in the consideration of potential nominations for election to the Board. Once the prospective nominees are selected, the Nominating Committee presents them to the Board for their evaluation and consideration.

To fulfill its responsibility to recruit and recommend to the Board nominees for election as directors, the Nominating Committee’s role is to review, on an annual basis, the appropriate skills and characteristics required of directors in the context of the current make-up of the Board. This assessment of nominees is based upon various criteria, including their integrity, independence, accomplishments, prior or current association with institutions noted for their excellence, ability to exercise sound business judgment, demonstrated leadership ability, breadth and knowledge about issues affecting the Company, and background and experience in areas important to the operation of the Company.

In the case of incumbent directors whose terms of office are set to expire, the Board reviews such directors’ overall service to the Company during their terms, including the number of meetings attended, level of participation and quality of performance. Consideration of new director nominee candidates typically involves a series of internal discussions, review of information concerning candidates and interviews with selected candidates. In identifying potential new director candidates, the Nominating Committee seeks recommendations from members of the Board, members of management, and stockholders. The Nominating Committee may also, if necessary or appropriate, retain a professional search firm in order to assist it in these efforts.

The Nominating Committee considers recommendations for Board candidates submitted by stockholders using the same criteria (described above) that it applies to recommendations from directors and members of management.

After consideration, and consistent with the Board’s policies described above, the Board unanimously approved the nominations of Steven H. Kane, John P. Francis, Howard E. Chase, Wenchen Lin, and Loren L. McFarland. Dr. Louis Glazer and Herbert Langsam were nominated by the holders of the Preferred Stock and such nominations were unanimously approved by the Board.

Compensation Committee Interlocks and Insider Participation

During the last fiscal year, no executive officer of the Company served either as: (1) a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire Board of Directors) of another entity, one of whose executive officers served on the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire Board of Directors) of the Company; (2) a director of another entity, one of whose executive officers served on the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire Board of Directors) of the Company; or (3) a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire Board of Directors) of another entity, one of whose executive officers served as a director of the Company.

Our Compensation Committee did not meet during 2008. As a result, our Board made all compensation decisions for 2008. Our Board has reviewed the Compensation Discussion and Analysis and discussed that analysis with management. Based on its review and discussions with management, our Board has decided that the Compensation Discussion and Analysis will be included in the company’s Annual Report on Form 10-K for 2008 and the Company’s 2009 proxy statement. This report is provided by the following directors:

Steven H. Kane		Wenchen Lin
John Francis		Dr. Louis Glazer
Herbert Langsam

COMPENSATION DISCUSSION AND ANALYSIS

Our compensation program is designed to attract, motivate, and retain key executives who are deemed to drive the Company’s success. We seek to employ the best executive talent in our line of business. We want to reward our executives for business achievements and satisfaction of corporate objectives. Additionally, the overall executive compensation program, taken as a whole, should align the interests of the executives with the stockholders’ interest. We achieve these objectives through a compensation package that:

provides competitive total compensation consisting primarily of cash and stock,

allows our officers to participate in the benefit programs that we offer to all full-time employees,

provides certain officers additional fringe benefits,

differentiates rewards based on the officer’s contributions to the Company’s performance, and

encourages our named executive officers to act as owners with an equity interest in Patient Safety.

Determining Executive Compensation

The independent members of the Board approve the compensation of our named executive officers. The Compensation Committee makes a recommendation to the independent directors for annual compensation (including salary, bonus and stock-based compensation) of our named executive officers. These recommendations are based on:

Chief executive officer

The chief executive officer’s historical earnings;

A market competitive assessment of similar roles at other companies;

The earnings of other named executive officers; and

An evaluation of the chief executive officer’s performance for the fiscal year.

Named executive officers (other than the chief executive officer)

The executive’s historical earnings;

A market competitive assessment of similar roles at other companies;

Internal comparisons to the compensation of other executives;

Evaluations of performance for the fiscal year; and

The chief executive officer’s recommendations for each named executive officer’s base pay, and bonus amounts.

The evaluation is based on the success of the named executive officer in achieving his performance commitments, which include financial, strategic and company culture/leadership goals. The Board approves the named executive officer’s salary, bonus and stock-based compensation in the first quarter of the fiscal year after the relevant performance information is available.

The Components of our Executive Compensation Program

Our executive compensation program consists of three elements: (1) base salaries, which provide financial security and recognize individual achievement; (2) annual cash incentives, which are awarded based on achieving yearly performance goals; and (3) long-term equity incentives, which are meant to ensure that the interests of our executives and stockholders are aligned.

We use this mix of programs for a variety of reasons:

As a whole, the mix of elements allows us to offer compensation packages comparable to those offered by other organizations from which we may seek to recruit executive talent.

As a package, these particular programs provide both a current and a long-term incentive for our executive officers, and help align the executives’ incentives with stockholder interests. In particular, equity incentive awards offer a long term incentive to enhance the value of the Company’s Common Stock, while cash bonus programs reward achieving tangible performance targets.

The incentive programs provide a retention incentive for our executives.

We also provide our named executive officers with a package of fringe benefits that is provided to all full-time benefits eligible employees. These benefits include such items as health insurance and group term life insurance. We provide certain executives with an additional automobile allowance benefit.

We believe that our named executive officers should have formalized employment agreements. The existence of employment agreements helps set clear expectations for the employment relationship. We also believe that the level of security that an employment contract provides to the executive is an important retention tool, and that in many instances we need to offer written employment agreements to compete effectively for executive talent. Certain terms of our current employment agreements with the named executive officers are discussed in the “Employment Agreements” section.

Our Process for Setting Executive Pay

The Compensation Committee’s focus is to determine the compensation of the chief executive officer and to review the proposals of the chief executive officer regarding the compensation for other named executive officers. In 2009, the Compensation Committee will present recommendations to the entire Board of Directors for their approval.

Our executive compensation process begins with the chief executive officer’s submission of each executive’s total pay package to the Compensation Committee for its consideration. We maintain a pay structure with ranges for each type of compensation (base pay, bonus, equity grant) for the named executive officers. We have developed this structure based on our knowledge of our industry.

Our process for determining the value of each component of executive pay has functioned in the following manner for 2009:

Base pay: Base compensation for all of our named executive officers is provided for in their respective employment agreements, and the Company has the ability to make annual increases to the base pay level. Looking at information from other reporting companies, the chief executive officer makes a recommendation for executive base pay increases to the Compensation Committee. The Compensation Committee reviews the information provided by the chief executive officer and its supporting data, and makes a determination of annual base pay increases.

Annual bonus: Our annual bonus program for executives is administered in the following manner. Our Compensation Committee determines the amount of bonuses, if any, for each of our named executive officers. To the extent bonuses are made they are on a completely discretionary basis at the reasonable and good faith discretion of the Compensation Committee, based upon the financial performance of the Company.

Equity grants: In certain circumstances, the Compensation Committee may award equity grants to named executive officers. The reasons for these grants include:

an incentive to join the Company, based on compensation that is being forfeited through the termination of previous employment,

to encourage retention of critical talent,

as a strategic investment in someone deemed critical to the Company’s leadership, and

to reward outstanding performance.

The chief executive officer recommends the equity grant, if any, to a named executive officer. At the time the offer of employment is made, the chief executive officer provides the Compensation Committee with a proposal for equity grants as part of the hiring process. In 2009, the amount of the grant will be based on a grid of equity grant ranges for the position, which the Company maintains. In 2009, the Compensation Committee will consider the chief executive officer’s recommendation and make a final decision based on the factors listed above. Equity grants that were made to named executive officers during 2008 were authorized by the full Board in lieu of the Compensation Committee. All of the options granted in 2008 were valued at fair market value as of the date of grant (as further explained below).

We establish the exercise price for our options in the following manner.

For a new hire, the Compensation Committee approves the grant and establishes the price based on the average closing bid and ask price on the day of Compensation committee approval; however, if the executive has not yet started employment as of the date of Compensation Committee approval, the price is set as the average closing bid and ask price on the executive’s first day of work.

For a new contract for a current executive, the Compensation Committee approves the grant and establishes the price based on the Company’s closing price on the day of Compensation Committee approval.

We believe that the grant of fair market value stock options, even though there is now a financial statement impact before the options are exercised, continues to provide substantial benefits to the Company and the executive. We benefit because the options align the executive’s financial interest with the shareholders’ interest:

The executives benefit because:

They can realize additional income if our shares increase in value, and

They have no personal income tax impact until they exercise the options

We do not maintain any equity ownership guidelines for our named executive officers. We have adopted a corporate policy which expressly prohibits any named executive officer from trading in derivative securities of our Company, short selling our securities, or purchasing our securities on margin at any time. We do not time the granting of our options with any favorable or unfavorable news relating to our Company. Proximity of any awards to an earnings announcement, market event or other event related to us is purely coincidental.

Because we feel that each of our named executive officers provides unique services to us, we do not use a fixed relationship between base pay, short term bonus and equity awards. When the Compensation Committee makes the final decisions about a named executive officer’s total compensation package for a particular year, the three elements (base pay, bonus and equity award) are considered both individually and as a complete package. We do not take into account amounts that a named executive officer may have realized in a particular year as a result of short-term bonus awards or stock option exercises, when we establish pay levels and goals for the current year. Overall, we believe that our total compensation program is reasonable while being competitive with market peers.

In 2008, our Compensation Committee did not meet. Due to the financial position of the Company, with the exception of Richard Bertran, our Board set the base salaries of our named executive officers at the same level as 2007. In the case of Mr. Bertran, our Board increased his base salary because of his increased responsibilities with the Company. Our Board also determined that in order to conserve cash no annual bonuses were to be granted or paid in 2008 to our named executive officers. Our Board did make several equity awards to our named executive officers based on each individual’s performance during 2008. Our Board did not document its analysis for any of these compensation decisions.

The following table sets forth information concerning the annual and long-term compensation earned by or paid to our Chief Executive Officer and to other persons who served as executive officers at and/or during the fiscal year ended December 31, 2008, who earned compensation exceeding $100,000 during 2008 and (the “named executive officers”), for services as executive officers for the last two fiscal years.

SUMMARY COMPENSATION TABLE

Name and principal position	Year	Salary ($)	Bonus ($)	Stock Awards ($) (8)	Option & Warrant Awards ($) (8)	Non-Equity Incentive Plan Compensation ($)	Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($) (9)	Total ($)
William B. Horne,
Former Chief	2008	131,429	-	-	469,653	-	-	-	601,082
Executive & Chief	2007	218,750	-	30,991	30,896	-	-	-	280,637
Financial Officer (1)

William M. Adams,
Former President &	2008	312,500	-	-	646,381	-	-	11,480	970,361
Chief Executive	2007	312,500	-	-	29,148	-	-	-	341,648
Officer of
SurgiCount (2)

Richard Bertran,	2008	260,417	-	-	421,788	-	-	12,343	694,548
Former President of	2007	231,243	-	-	53,329	-	-	-	284,572
SurgiCount(3)

Mary A. Lay
Interim Chief	2008	77,903	-	-	-	-	-	-	77,903
Financial Officer(4)

Lynne Silverstein,
Former Executive	2007	105,000	-	25,000	-	-	-	-	130,000
Vice President (5)

James Schafer,
Former Director of	2007	67,051	-	37,500	-	-	-	-	104,551
Manufacturing of
SurgiCount(6)

Milton “Todd” Ault
III, Former Chief	2007	-	-	26,100	-	-	-	-	26,100
Executive Officer (7)

(1)

Mr. Horne resigned October 13, 2008.

(2)

Mr. Adams resigned January 5, 2009.

(3)

Mr. Bertran resigned January 6, 2009.

(4)

Ms. Lay was appointed Interim Chief Financial Officer on October 13, 2008.

(5)

Ms. Silverstein resigned October 15, 2007.

(6)

Mr. Schafer resigned August 8, 2007.

(7)

Mr. Ault resigned January 5, 2007.

(8)

Represents the dollar amount recognized for financial reporting purposes of restricted stock grants, warrant grants, and stock options awarded in 2008 and 2007, respectively, computed in accordance with SFAS 123(R). Discussion of the assumptions made in valuing the Company’s stock options and warrants is set forth in the footnotes to the Company’s financial statements provided in Item 8 – “Financial Statements and Supplementary Data” of the Company’s Annual Report on For 10-K for the year ended December 31, 2008.

(9)

Primarily represents car payments paid by the Company.

The following table sets forth information with respect to the named executive officers concerning equity awards outstanding as of the fiscal year ended December 31, 2008.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END