8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 22, 2007

Power3 Medical Products, Inc.

(Exact name of registrant as specified in its charter)

New York	000-24921	65-0565144
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

3400 Research Forest Drive, Suite B2-3

The Woodlands, Texas  77381

(Address of principal executive offices and zip code)

(281) 466-1600

(Registrant’s telephone number, including area code)

Copies to:

Darrin Ocasio, Esq.

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32^nd Floor

New York, New York 10006

Tel: (212) 930-9700

Fax: (212) 930-9725

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.03 Other Events.

On August 22, 2007, Power3 Medical Products, Inc. (“Power3” or the “Company”) entered into a Settlement Agreement and Release (the “Agreement”), with DKR SoundShore Oasis Holding Fund Ltd. (“DKR”). Pursuant to the terms of the Agreement, Power3 agreed to issue to DKR, Five Hundred Eighty Eight Thousand Two Hundred Thirty Five (588,235) shares of the Company’s common stock, in full satisfaction of all obligations arising out of a $50,000 principal amount convertible debenture including all related documentation thereto issued to DKR on October 28, 2004. Power3 also agreed to reduce the exercise price on the warrants held by DKR to $0.19 and DKR agreed to void all provisions relating to the cashless exercise of the warrants. As a result of the execution of the Settlement Agreement, each of the parties is released by the other from all known and unknown claims.

Item 9.01 Financial Statements and Exhibits

( c )Exhibits

Exhibit Number Description

Exhibit 10.1 Settlement Agreement and Release between Power3 Medical Products, Inc. and DKR SoundShore Oasis Holding Fund Ltd.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Power3 Medical Products, Inc.
By:	/s/ Steven B. Rash
	Steven B. Rash
	Chairman and CEO

Date: August 27, 2007

EX-10.1

SETTLEMENT AGREEMENT AND RELEASE

This Settlement Agreement and Release (the “Agreement”), dated as of August 22, 2007, is made by and between Power3 Medical Products, Inc., a New York corporation (“Power3”) and DKR SoundShore Oasis Holding Fund Ltd. (“DKR”).

WHEREAS, Power3 issued to DKR convertible debentures in the amount of $50,000 on October 28, 2004 (the “Debenture”) (the Debenture, as well as all related documentation thereto, shall collectively be referred to as the “Transaction Documents”);

WHEREAS, Power3 desires to issue, and DKR desires to accept, Five Hundred Eighty Eight Thousand Two Hundred Thirty Five (588,235) shares of Power3’s common stock in full satisfaction of all principal, interest, damages, including liquidated damages, and all obligations arising from the Transaction Documents;

WHEREAS, Power3 agrees to reduce the exercise price on all warrants issued under the Transaction Documents (the “Warrants”) to $0.19, and DKR accepts such price reduction, on condition that all provisions relating to cashless exercise of the Warrants be voided under the Transaction Documents.

NOW, THEREFORE, in consideration of the mutual conditions and covenants contained in this Agreement, and for other good and valuable consideration, the sufficiency and receipt of which is hereby acknowledged, it is hereby stipulated, consented to and agreed by and among Power3 and DKR as follows:

1.Power3 shall issue an aggregate of Five Hundred Eighty Eight Thousand Two Hundred Thirty Five (588,235) shares of common stock (the “Shares”) to DKR in full satisfaction of the Transaction Documents and all obligations arising pursuant to the Transaction Documents. Upon issuance of the Shares, DKR shall return, via overnight delivery, the original Debenture to Power3. The Shares shall initially contain a restrictive legend. Power3 shall cause the restrictive legend to be removed immediately upon DKR providing Power3 (or its attorneys) with an appropriate Seller’s representation letter and other necessary documentation. Power3 acknowledges receipt of such documentation provided by Seller and will cause such legend to be removed.

2.In consideration of the foregoing, DKR releases and discharges Power3, Power3’s officers, directors, principals, control persons, past and present employees, insurers, successors, and assigns (“Power3 Parties”) from all actions, cause of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims, and demands whatsoever, in law, admiralty or equity, which against Power3 Parties ever had, now have or hereafter can, shall or may, have for, upon, or by reason of any matter, cause or thing whatsoever, whether or not known or unknown, from the beginning of the world to the day of the date of this Release arising under the Transaction Documents.

3.In consideration of the foregoing, Power3 releases and discharges DKR, DKR’s officers, directors, principals, control persons, past and present employees, insurers, successors, and assigns (“DKR Parties”) from all actions, cause of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims, and demands whatsoever, in law, admiralty or equity, which against DKR Parties ever had, now have or hereafter can, shall or may, have for, upon, or by reason of any matter, cause or thing whatsoever, whether or not known or unknown, from the beginning of the world to the day of the date of this Release arising under the Transaction Documents.

4.Disclosure. Power3 agrees to file a Current Report on Form 8-K within 4 days following the date hereof, which shall disclose the material terms of this Agreement.

5.All parties acknowledge and represent that: (a) they have read the Agreement; (b) they clearly understand the Agreement and each of its terms; (c) they fully and unconditionally consent to the terms of this Agreement; (d) they have had the benefit and advice of counsel of their own selection; (e) they have executed this Agreement, freely, with knowledge, and without influence or duress; (f) they have not relied upon any other representations, either written or oral, express or implied, made to them by any person; and (g) the consideration received by them has been actual and adequate.

6.This Agreement contains the entire agreement and understanding concerning the subject matter hereof between the parties and supersedes and replaces all prior negotiations, proposed agreement and agreements, written or oral. Each of the parties hereto acknowledges that neither any of the parties hereto, nor agents or counsel of any other party whomsoever, has made any promise, representation or warranty whatsoever, express or implied, not contained herein concerning the subject hereto, to induce it to execute this Agreement and acknowledges ands warrants that it is not executing this Agreement in reliance on any promise, representation or warranty not contained herein.

7.This Agreement may not be modified or amended in any manner except by an instrument in writing specifically stating that it is a supplement, modification or amendment to the Agreement and signed by each of the parties hereto.

8.Should any provision of this Agreement be declared or be determined by any court or tribunal to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby and said illegal or invalid part, term or provision shall be severed and deemed not to be part of this Agreement.

9.This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state of New York. Both parties and the individuals executing this Agreement and other agreements on behalf of the Company agree to submit to the jurisdiction of such courts and waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs.

10.This Agreement may be executed in counterparts, each of which, when all parties have executed at least one such counterpart, shall be deemed an original, with the same force and effect as if all signatures were appended to one instrument, but all of which together shall constitute one and the same Agreement.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first indicated above.

DKR SOUNDSHORE OASIS HOLDING FUND LTD. By: DKR Oasis Management Company LP By: /s/Rajni Narasi Name: Rajni Narasi Title: Authorized Signatory	DKR Sound Shore Oasis Holding Fund LTD c/o DKR Oasis Management Company LP 1281 East Main Street Stamford, Connecticut 06902 Tel: (203) 324-8400 Fax: (203-3248488 Email: rnarasi@dkrcapital.com
POWER3 MEDICAL PRODUCTS, INC. By: /s/Steven B. Rash Name: Steven B. Rash Title: Chief Executive Officer	3400 Research Forest Drive, Suite B2-3 Woodlands, Texas 77381 Tel: (281) 466-1600 Fax: (281) 466-1481 Email: srash@power3medical.com