10KSB

U.S. Securities and Exchange Commission

Washington, D.C. 20549

Form 10-KSB

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to ________________

COMMISSION FILE NO. 0-24921

Power3 Medical Products, Inc.

(Exact name of small business issuer as specified in its charter)

New York	65-0565144
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3400 Research Forest Drive, Suite B2-3 Woodlands, Texas (Address of principal executive offices)	77381 (Zip Code)

Issuer’s Telephone Number: (281) 466-1600

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Common stock, $.001 par value

(Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB ¨

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act)? Yes ¨ No x

Transitional Small Business Disclosure Format (check one): Yes ¨ No x

Revenues for the issuer’s fiscal year ended December 31, 2007 were $122,224. The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, computed by reference to the closing price of such stock on the Over-the-Counter (OTC) Bulletin Board administered by the National Association of Securities Dealers (“NASDAQ”) on December 31, 2007 was $18,008,127. For purposes of this calculation, affiliates include directors, executive officers and current employees.

The number of shares outstanding of the registrant’s common stock, par value $.001 per share, as of March 19, 2007, was 121,065,289 shares.

Documents incorporated by reference: None.

TABLE OF CONTENTS

PART I
ITEM 1.	DESCRIPTION OF BUSINESS	3
ITEM 2.	DESCRIPTION OF PROPERTY	12
ITEM 3.	LEGAL PROCEEDINGS	13
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	14
PART II
ITEM 5.	MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	14
ITEM 6.	MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION	15
ITEM 7.	FINANCIAL STATEMENTS	18-42
ITEM 8.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	42
ITEM 8A.	CONTROLS AND PROCEDURES	43
ITEM 8B.	OTHER INFORMATION	44
PART III
ITEM 9.	DIRECTORS, EXECUTIVE OFFICERS PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT	45
ITEM 10.	EXECUTIVE COMPENSATION	48
ITEM 11.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	50
ITEM 12.	CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	51
ITEM 13.	EXHIBITS	52
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	57

1

FORWARD –LOOKING STATEMENT

This Report contains certain forward-looking statements of the intentions, hopes, beliefs, expectations, strategies, and predictions of Power3 Medical Products, Inc. (“Power3” or the “Company”) or its management with respect to future activities or other future events or conditions within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are usually identified by the use of words such as “believes,” “will,” “anticipates,” “estimates,” “expects,” “projects,” “plans,” “intends,” “should,” “could,” or similar expressions. These statements are based on certain assumptions and analyses made by the Company’s management in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors believed appropriate. Readers are cautioned that these forward-looking statements are only predictions and that the Company’s business is subject to significant risks and uncertainties, including, without limitation:

The Company’s history of operating losses;

The Company’s need and ability to raise significant capital and obtain adequate financing for its development efforts;

The Company’s ability to successfully develop and complete validation studies for its products;

The Company’s dependence upon and the uncertainties associated with obtaining and enforcing patents and intellectual property rights important to its business;

The uncertainties associated with the lengthy regulatory approval process, including uncertainties associated with the United States Food and Drug Administration (“FDA”) decisions and timing of product development or approval;

Development by competitors of new or competitive products or services;

The Company’s ability to retain management, implement its business strategy, assimilate and integrate any acquisitions;

The Company’s lack of operating experience and present commercial production capabilities; and

The increasing emphasis on controlling healthcare costs and potential legislation or regulation of healthcare pricing.

Although the Company believes that the assumptions underlying the forward-looking statements contained in this report are reasonable, any of the assumptions could be inaccurate, and, therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included in this report, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. Except for its ongoing obligation to disclose material information as required by the federal securities laws, the Company undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events. Accordingly, the reader should not rely on forward-looking statements, because they are subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those contemplated by the forward-looking statements.

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PART I

Except for historical information, the matters set forth in this report include forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth herein. Power3 Medical Products, Inc. refers you to cautionary information and risk factors contained elsewhere herein and in other documents filed with the Securities and Exchange Commission (“SEC”) from time to time.

Item 1. Description of Business

Overview of Corporate History

Power3 Medical Products, Inc. (the “Company” or “Power3”) was incorporated in the State of Florida on May 15, 1992 and merged into a New York Corporation in 1994, under the name of Sheffield Acres, Inc. Power3 and its wholly owned subsidiaries, C5 Health, Inc. (“C5”), which was officially dissolved in the State of Delaware and in the State of Florida effective December 31, 2003 and Power3 Medical, Inc., a Nevada Corporation, were engaged in sales, distribution and services for the healthcare industry. On September 12, 2003 Surgical Safety Products, Inc. amended its Certificate of Incorporation to (a) declare a 1:50 reverse split of its common stock; (b) increase its authorized capital to 150,000,000 shares of common stock and 50,000,000 shares of preferred stock; and (c) change its name to Power3 Medical Products, Inc.

The Company transitioned to the development stage, from previously being an operating company, as of the Company’s asset purchase transaction with Advanced BioChem on May 18, 2004. As a development stage company, Power3 is primarily engaged in commercializing its intellectual properties in the area of diagnosis and treatment of breast cancer, ALS, Alzheimer’s disease and Parkinson’s disease.

On June 20, 2007, Power3, pursuant to Rule 477 under the Securities Act of 1933, as amended, was given consent to the withdrawal by the Company of its Registration Statement on Form SB-2 filed initially with the commission on January 21, 2005 and subsequently amended on October 6, 2005 (File No. 333-122227) (the “Registration Statement”). No securities were offered or sold pursuant to the Registration Statement. The Company requested the withdrawal because it elected not to pursue the registration of the securities.

On September 6, 2007, Power3 announced that its common stock began trading on the Over-the-Counter (OTC) Bulletin Board under the symbol PWRM.OB. Previously, Power3's common stock traded through the Pink Sheets. Moving to the OTC Bulletin Board will benefit Power3 and Power3’s shareholders by increasing the visibility and liquidity of Power3’s common stock.

Series B Preferred Stock

Pursuant to two employment agreements with two officers, the Company has agreed to issue to such officers an aggregate of 3,000,000 shares of Series B Preferred Stock. On September 6, 2007, the Company filed the Certificate of Amendment necessary to designate the Series B Preferred Stock and the powers, designations and relative rights of the Series B Preferred Stock and has not issued the shares of the Series B Preferred Stock. The Company intends to issue such shares of the Series B Preferred Stock to the two officers during calendar year 2008.

Scientific Developments

On March 31, 2007, Power3 received a certification to begin offering CLIA-compliant high complexity medical testing services. CLIA (Clinical Laboratory Improvement Amendments) was passed by the U.S. Congress in 1988 to establish quality standards for all laboratory testing and to ensure accuracy, reliability and timeliness of patient test results, regardless of where the test was performed. Power3 received its two-year certification to offer high complexity tests after meeting standards for knowledge, training and experience, reagents and materials preparation, characterization of operational steps, calibration, quality control and proficiency testing, materials testing, test system troubleshooting and equipment maintenance, and results interpretation and analytical judgment. With the CLIA certification, Power3 has now begun offering the BC-SeraPro™ blood-based breast cancer test to physicians, hospitals and clinics, with analysis of samples performed by the Company in its laboratory.

Power3’s scientific team is currently headed by its CLIA Laboratory Director and Director of Biochemistry, Dr. Essam A. Sheta and its Director of Proteomics, Dr. Ira L. Goldknopf. Drs. Sheta and Goldknopf are pioneers in the science of proteomics, protein biochemistry and cancer cell signaling and have made significant biochemical and proteomic discoveries. The scientific team at Power3 has leveraged these significant insights and has made progress in the discovery of unique disease protein footprints by the use of biomarkers in breast cancer, neurodegenerative diseases, and drug resistance to chemotherapeutic agents.

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PRODUCT CANDIDATES

The Company plans to target the protein-based diagnostic and drug targeting markets utilizing the Company’s portfolio of proprietary disease biomarkers. In the area of neurodegenerative diseases and breast cancer, the Company has completed research and clinical validation studies involving over 2,000 patient samples and is utilizing biostatistical analysis to monitor appropriate panels of biomarkers for diagnostic sensitivity, specificity, positive predictive value, and negative predictive value. By testing patient body fluids and tissues, such as serum, nipple aspirate fluid, and bone marrow aspirate, the Company has discovered unique snapshots of protein patterns in over 2,000 patient samples that cover a broad range of diseases including:

· Cancers such as breast, leukemia, bladder, stomach, and esophageal; and

· Neurodegenerative diseases such as Alzheimer’s, ALS, and Parkinson’s disease.

The Company’s discovery platform uses proprietary methodologies, trade secrets, and accepted proteomic technologies that are optimized and validated for reproducible discovery and analysis of disease specific biomarkers in clinical patient samples. Following sample preparation, a 2D Gel Electrophoresis system is used for the separation of proteins. The gels are stained, digitally scanned and the digital images are analyzed with unprecedented reproducibility and sensitivity for quantitative differences of the protein biomarkers in the disease vs. control samples. The significance of these differences is evaluated using advanced biostatistical analysis to generate statistical models for the disease and control sample groups. This statistical model is then applied to new samples and used to predict their diagnosis. Biomarkers of interest are removed from the gel matrix and analyzed by fingerprinting on a liquid chromatograph - tandem mass spectrometer. This information is then cross-referenced on a worldwide database to identify the protein of origin. This process requires a great deal of proteomics experience and expertise to make the correct accurate identification. In addition, all of the procedures used in Power3’s diagnostic tests are scalable. The Company’s proteomics platform delivers significant discoveries exhibiting validated, reproducible, and reliable biomarkers over a broad quantitative range and linearity for use in diagnostic proteomic assays.

The Company has successfully identified more than 543 protein biomarkers that are differentially expressed in response to disease by employing its proprietary technologies gained from over 60 years of combined experience in protein biochemistry.

Power3 has transitioned from a company focused on research and development to one that is demonstrating “proof of concept” of its technology as it enters the commercialization stage for its technology, products and services. The Company is engaged in the process of developing a portfolio of products including BC-SeraPro™, a proteomic blood serum test for early diagnosis of breast cancer, NuroPro®, a proteomic blood serum test for detection of neurodegenerative diseases including Alzheimer’s, Parkinson’s and ALS diseases.

DEVELOPMENT OF BC-SeraPro™, A PROTEOMICS BREAST CANCER SCREENING TEST

Breast cancer is the second leading cause of cancer deaths in women and results in 40,000 deaths annually, with over $7 billion spent on breast cancer diagnosis annually. An important factor in surviving cancer is early detection and treatment. According to the American Cancer Society Surveillance Research, when breast cancer is confined to the breast, the five-year survival rate for early stages is close to 100%. Due to the limitations of the current diagnostic techniques of mammograms and self-examination, the presence of breast cancer is often missed or tests are inconclusive. The limitations and lack of accuracy of the current diagnostic tests highlight the need for a test that can detect the presence of breast cancer much earlier and more accurately.

BC-SeraPro™ is a proteomic test for the diagnosis of breast cancer. This test is designed to measure the quantitative expression level of 22 protein biomarkers in the serum that differentiate between breast cancer patients and control subjects. The level of the biomarkers from the patient’s serum sample is compared to  Power3 Medical Products’ patient database.  Statistical analysis by linear discriminant function will analyze the biomarker levels of the patient sample and assign a probability score for the diagnosis of the patient sample. The probability score is ranged from 0.0 to 1.0.  Results of the BC-SeraPro™ test should not be considered a stand alone diagnosis nor a guarantee but are intended to be used in conjunction with other breast cancer diagnostic tools.

This test was developed and its performance characteristics determined by the Power3 Medical Products laboratories.  It has not been cleared or approved by the U.S. Food and Drug Administration.  The FDA has determined that such clearance or approval is not necessary.  This test is performed solely at the Power3 Medical Products’ laboratory and is used for clinical purposes.  It should not be regarded as investigational or for research.  Power3’s laboratory is certified under the Clinical Laboratory Improvement Amendment of 1988 (“CLIA”) as qualified to perform high complexity clinical testing.

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Because early breast cancer is asymptomatic, the only way to detect it is through screening. Mammography is currently the widely accepted method for breast cancer screening. However, most women who have an abnormal mammogram do not have cancer.

Mammography often leads to identification of a “probably benign” lesion or an uninformative mammography. Clinicians may be reluctant to refer such a patient for a biopsy; they may also be reluctant to do nothing. Often such patients are referred for frequent repeat mammography examinations.

The availability of an accurate and minimally-invasive test would avoid such repeated mammogram exams, with their attendant discomfort, inconvenience, x-ray exposure, and emotional stress. In such cases, BC-SeraPro™ with 80% sensitivity and 87% specificity in study results, could exclude malignancy at higher accuracy than mammography. As well, BC-SeraPro™ is unlikely to not identify cancer in those women who have it.

BC-SeraPro™ is then an ideal diagnostic test to evaluate breast cancer abnormalities found by mammogram or breast examination. The test would distinguish women who should have a biopsy from those who can safely avoid one. BC-SeraPro™ could detect the disease at a point when treatment is more effective, less expensive, or both.

Currently, Power3 continues its blood serum breast cancer biomarker discovery program using blood serum samples collected from clinical validation sites, in collaboration with Dr. Alan Hollingsworth at the Mercy Woman’s Center in Oklahoma City, OK and Dr. Leroy Leeds at Obstetrics & Gynecological Associates, PA in Houston, TX. The Company believes that there are many advantages to a simple blood test over other types of breast cancer diagnostics, such as mammography, not the least of which is the ready acceptance by patients to having blood drawn.

Power3 has completed the development program for BC-SeraPro™ and is moving forward with a strategy of providing a test that is utilitarian, accurate, and inexpensive. Detection of a patient's protein biomarker profile can now be employed to detect abnormal and pathological states reflected in the serum proteome. Application of this test will have a future impact on how breast disease will be diagnosed, monitored, and managed and is intended to be used in conjunction with mammography, breast MRI and other diagnostic tools used in the detection of breast cancer.

How BC-SeraPro™ Works

BC-SeraPro™ is a blood serum test designed to diagnose breast cancer in individuals. The test is based on proteomic technology in which a blood serum sample drawn from a patient will monitor the concentration of each protein biomarker residing in a panel of blood serum protein biomarkers to determine if a patient has breast cancer. The biomarkers in the panel have been selected for their ability to discriminate breast cancer patients from non-cancerous patients. Power3’s statistical model evaluates the quantitative information of the protein biomarkers and automatically assigns a probability score. The probability score indicates to the physician that the patient “has cancer” or is “cancer-free.” The score reflects how strongly the patient sample fits the biostatistical model and if the patient should be recommended for further follow-up by the clinician.

Blood serum collection is a routine procedure performed by a clinician. A small sample of blood is drawn from a vein. When a blood sample is collected and stored in a tube without anticoagulant, it forms a clot after 30-60 minutes. The liquid portion remaining is the blood serum. This serum sample is then frozen and transported to the Power3 Medical CLIA certified laboratory, utilizing pre-approved carriers/delivery services, where sample preparation and analysis begins.

Financial Advisory House

On October 1, 2007, Power3 entered into a Distributor Agreement (the “Agreement”) with Financial Advisory House (“FAH”) to launch BC-SeraPro™ in twelve Middle East countries. The Agreement with FAH’s Medical Equipment Suppliers division, a Bahrain-based medical instrument distribution company, allows for the marketing and distribution of the BC-SeraPro™ breast cancer diagnostic test for resale to clinics and physicians in Saudi Arabia, Oman, Qatar, Kuwait, Syria, Jordan, Lebanon, Iraq, Bahrain, Yemen, Egypt and the United Arab Emirates before the end of 2008. The test will be analyzed in Power3’s Houston based, CLIA (Clinical Laboratory Improvement Amendment) certified proteomic laboratory.

The Agreement with Financial Advisory House is an important milestone in Power3’s development and transition from a research and development company to a diagnostic company with commercially viable products. Power3 selected the Middle East as its initial market because the healthcare systems in these particular countries are open to providing a test that offers new and innovative technologies for earlier detection of breast cancer. These markets also have a particular need for additional methods of early detection due to their high incidence rates of breast cancer. Power3 expects that the launch of the BC-SeraPro™ diagnostic test will be a major catalyst in making 2008 a significant year for the Company. Power3 is seeking other distributors for BC-SeraPro™ and is currently in discussions with several international and domestic partners as the Company implements its strategic plan to expand its geographical distribution of the test and other diagnostic tests currently in the pipeline.

5

During the third quarter, in conjunction with the Middle East BC-SeraPro™ product launch, the Company has initiated a 100 patient prospective double-blinded research/validation study. The results of this study are expected to be completed and published in the third quarter of 2008. The publishing of these results will precede the US launch of BC-SeraPro™. The Company has received study samples for the validation study and are currently being analyzed in the Company’s CLIA certified laboratory.

DEVELOPMENT OF NuroPro®, A PROTEOMIC NEURODEGENERATIVE DIAGNOSTIC SCREENING TEST

Early detection of neurodegenerative disease generally results in better patient outcomes. Three neurodegenerative diseases of particular interest are Alzheimer’s disease, Parkinson’s disease and ALS (Amyotrophic Lateral Sclerosis). The Alzheimer’s Association reports that Alzheimer’s disease is the most common form of dementia affecting over 5.1 million Americans, of which 4.9 million are 65 or older. Every 72 seconds, someone in America develops Alzheimer’s disease and by mid-century someone will develop Alzheimer’s every 33 seconds. People as young as 30 years old can contract the disease and one in ten people age 65 and over have Alzheimer’s disease. In addition, the American Parkinson’s Disease Association reports that more than 1.5 million people in the U.S. have Parkinson’s disease, affecting about 1 in 100 Americans over the age of 60 and a new case of Parkinson’s disease is diagnosed every 9 minutes. On a smaller scale, the ALS Association reports that an average of approximately 30,000 Americans are afflicted with ALS, with 5,000 new cases diagnosed annually.

The members of the Company’s scientific team have developed a method for the differential diagnosis of neurodegenerative diseases utilizing blood serum, which was co-developed with neurologist, Dr. Stan Appel, now Chair of Neurology and Co-Director of Methodist Neurological Institute in Houston. With this test, which involves monitoring the concentration of 59 differentially expressed proteins, the Company has identified groups of unique markers that appear to distinguish normal patients from those with motor neuron, cognitive, and other neurological disorders, from the analysis of over 850 blood serum samples.

Currently, selected panels of biomarkers are being employed in development of the NuroPro^® blood serum-based tests for four disease diagnostics including neurological diseases of motor control such as Parkinson’s disease, ALS and similarly presenting like disorders; ALS specific tests for ALS vs. ALS-like disorders; Alzheimer’s disease specific tests; and a Parkinson’s disease specific test. Pre-IDE applications for the first two diagnostic tests have been filed with the U.S. Food and Drug Administration (FDA).

Power3 has discovered 59 protein biomarkers in blood serum, which are being used in a panel to demonstrate Power3’s ability to identify Parkinson’s disease in its early stages through blood serum-based testing, as well as differentiate between Parkinson’s disease and Parkinson’s-like diseases. In accordance with a research agreement between the University of Thessaly School of Medicine in Larissa, Greece and Power3, 37 Parkinson’s disease patient samples as well as age and gender matched control samples have been received and analyzed and have shown greater than expected sensitivity and specificity. The blood serum samples that were collected from the patients in Greece utilized Power3’s rigid sample collection protocols and were shipped to the Company’s CLIA certified laboratory in Houston, Texas, where the analysis was performed. The consistency in the sample results from both the US and Greece, points to how robust this test is in diverse populations. The better than expected Parkinson's test results and the numerous validation studies that are underway for Alzheimer's disease, ALS, and similar neurological disorders, confirm Power3’s commitment to bringing these tests to market in 2008.

On April 24, 2007, Power3’s NuroPro® logo became a registered trademark with the United States Patent and Trademark Office.

How NuroPro®Works

The NuroPro® test has the potential to become the first diagnostic test available for the detection of neurodegenerative diseases.

NuroPro® is a series of three separate and distinct blood serum tests designed to diagnose Alzheimer’s, Parkinson’s or Lou Gehrig’s disease (ALS) in individuals. The test is based on proteomic technology, in which a blood serum sample is drawn from a patient, and monitors the concentration of selected biomarkers residing in a panel of blood serum protein biomarkers that determines if a patient has a neurodegenerative disease, such as Alzheimer’s, Parkinson’s or Lou Gehrig’s disease (ALS). The biomarkers in the panel have been selected for their ability to discriminate diseased from non-diseased patients. Power3’s statistical model evaluates the quantitative information of the protein biomarkers and automatically assigns a probability score. The probability score indicates to the physician that the patient has a neurological disease or is disease-free. The score reflects how strongly the patient sample fits the biostatistical model and if the patient should be recommended for further follow-up by the clinician.

6

Blood serum collection is a routine procedure performed by a clinician. A small sample of blood is drawn from a vein. When a blood sample is collected and stored in a tube without anticoagulant, it forms a clot after 30-60 minutes. The liquid portion remaining is the blood serum. This serum sample is then frozen and transported to the Power3 Medical CLIA certified laboratory, utilizing pre-approved carriers/delivery services, where sample preparation and analysis begins.

NEURODEGENERATIVE RESEARCH/CLINICAL VALIDATION STUDIES

University of Thessaly School of Medicine / Dr. Katerina Markopoulou

On November 11, 2006, University of Thessaly School of Medicine in Larissa, Greece signed a research agreement with Power3 focusing on the proteomic discovery of biomarkers for Parkinson’s disease. The collaboration will also extend to cover other neurodegenerative diseases including Alzheimer’s disease and ALS (Amyotrophic Lateral Sclerosis - Lou Gehrig's disease). According to the agreement, The University of Thessaly will provide Power3 with clinically confirmed samples of neurodegenerative disease, including age and gender matched controls. The Principal Investigator is Katerina Markopoulou, MD PhD with the Department of Neurology.

Power3 will use its existing proprietary and patent-pending technologies to analyze the samples, seeking new protein biomarkers for the early detection of neurodegenerative diseases to add to its portfolio. The initial shipments of Parkinson’s disease and control subject samples were received in May and October 2007 and have been analyzed in the Company’s CLIA certified laboratory.

The collaboration will also extend to cover other neurodegenerative diseases including Alzheimer's disease and ALS (Amyotrophic Lateral Sclerosis - Lou Gehrig's disease).

Discriminant analysis was used to analyze protein quantities.Discriminant analysis identifies sets of linearly independent functions that will successfully classify individuals into a well-defined collection of groups (i.e. disease groups). The statistical model assumes a multivariate normal distribution for the set of biomarkers identified from each disease group. The outcome of the discriminant analysis is a collection of linear functions that maximize the ability to separate individuals into diseased and non-diseased groups.

In general, if there are m biomarkers, there will be a maximum of (m– 1, g– 1) discriminant functions, where g is the number of disease groups. The discriminant functions themselves are linearly independent. Thus, m– 1 discriminant functions provide incremental and non-redundant discriminant ability.

Also used within discriminant analysis was stepwise discriminant analysis, which evaluates the performance of a discriminant criterion by estimating error rates (probabilities of misclassification) in the classification of future observations. These error-rate estimates include error-count estimates and posterior probability error-rate estimates.

Given a classification variable and several quantitative variables, a stepwise discriminant analysis is performed to select a subset of the quantitative variables for use in discriminating among the classes. The set of variables that make up each class is assumed to be multivariate normal with a common covariance matrix.

Results of the 37 samples received to-date from The University of Thessaly are depicted below. Additional samples have been received from The University of Thessaly and will be analyzed during the second quarter of 2008.

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Figure III:

Figure III is a canonical discriminant analysis of all samples. The canonical plot shows great separation between the Control and Parkinson’s samples.

Table III:

Using All Markers – (59 Biomarkers)

Classified into Diagnosis

From Diagnosis	Control			PD
Control		42 100	%		0 0
PD		1 1.50	%		68 98.50	%
100% Sensitivity & 100% Specificity In Triplicates

Table III reflects results using discriminant analysis with all 59 biomarkers.

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Table IV:

Markers Selected by StepDisc – (16 Biomarkers)

Classified into Diagnosis

From Diagnosis	Control			PD
Control		41 97.60	%		1 2.30	%
PD		6 8.70	%		63 91.30	%
100% Sensitivity & 100% Specificity In Triplicates

Table IV reflects results using discriminant analysis with the StepDisc. StepDisc has chosen 16 biomarkers to run discriminant analysis with the Parkinson’s samples.

Marwan N. Sabbagh / Cleo Roberts Center of Clinical Research at the Sun Health Research Institute

On October 12, 2007, Power3 appointed Dr. Marwan N. Sabbagh to the Company's Scientific Advisory Board. Dr. Sabbagh, a national leader in neurodegenerative disease, will collaborate with Power3 in a 300 patient validation study of blood serum samples using Power3's NuroPro® diagnostic screening test.

Dr. Sabbagh is currently the Director of Clinical Research at the Cleo Roberts Center of Clinical Research at the Sun Health Research Institute located in Sun City, Arizona. Power3 has a Clinical Trial Agreement pending with Sun Health. Dr. Sabbagh has been published in seventy reviews, and has written original research articles on Alzheimer's disease and dementia. Additionally, he has written a soon to be published book on Alzheimer's prevention. Dr. Sabbagh received his medical degree from the University of Arizona in Tucson, completed his residency in Neurology at Baylor College of Medicine in Houston, and completed his fellowship at the University of California, San Diego School of Medicine. He also serves as a staff physician at Sun Health Boswell Hospital where he practices general neurology and specializes in the diagnosis and treatment of Alzheimer's disease. Dr. Sabbagh is a Clinical Instructor in Neurology and provides both clinical and didactic expertise for the geriatric fellowship program.

Sun Health Research Institute is a leader, nationally and internationally, in the effort to find answers to disorders related to aging, and Dr. Sabbagh's vast experience and commitment in the field of neurodegenerative research is a tremendous asset to Power3's Scientific Advisory Board. The Cleo Roberts Center of Clinical Research has shown remarkable dedication to finding an early detection test and treatment for neurodegenerative diseases under Dr. Sabbagh's guidance.

For twenty-one years, Sun Health Research Institute has been a leader nationally and internationally in the effort to find answers to disorders of aging including Alzheimer's disease, Parkinson's disease, arthritis, and prostate cancer. The institute, together with its Arizona Alzheimer's Consortium partners, has been designated by the National Institutes of Health as one of just twenty-nine Alzheimer's disease centers in the nation. The institute's Cleo Roberts Center for Clinical Research takes laboratory discoveries into clinical trials that foster hope for new treatments. Sun Health Research Institute is affiliated with the Sun Health non-profit community healthcare network.

In February 2008, the Company commenced a 300 patient clinical validation study of its NuroPro® diagnostic test for Alzheimer’s disease, Parkinson’s disease. Power3 has received the initial samples from the clinical validation study and the samples are scheduled for analysis in March 2008.

The clinical validation study will be a blinded study of Power3’s NuroPro® diagnostic test, which is a blood test for the detection of Alzheimer’s and Parkinson’s disease, with Dr. Marwan Sabbagh as the Principle Investigator at the Cleo Roberts Center of Clinical Research at the Sun Health Research Institute. The study includes one hundred Alzheimer’s disease patients, one hundred Parkinson’s disease patients and one hundred controls.

The Parkinson’s disease patients in the clinical validation study will augment the Parkinson’s disease validation study presently ongoing with the Research Institute of Thessaly in Greece led by Katerina Markopoulou, the Principal Investigator.

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Contract Research Organization with NeoGenomics

On April 4, 2007 Power3 announced a collaboration agreement with NeoGenomics, Inc. (NGNM) of Fort Myers, Florida, to form a joint venture Contract Research Organization (CRO), whose mission will be commercialization of Power3's portfolio of Intellectual Property. The efforts will center on blood-based tests using the 543 biomarkers Power3 has discovered from a broad range of diseases including breast cancer, Alzheimer's disease, Parkinson's disease and ALS, as well as the further development of diagnostic tests and other services. In addition, NeoGenomics agreed to purchase a convertible debenture for $200,000 and acquired options to purchase common stock of the Company during 2007. Under the terms of the Agreement, Power3 agrees to issue, and NeoGenomics agrees to purchase, a convertible debenture in the principal amount of $200,000. The convertible debenture will be convertible into common shares of the Company at $0.20 per share; however, the conversion price can be reset at any time and from time to time, in accordance with paragraphs 7 and 9 of the Agreement. The debenture shall accrue interest at 6% per annum, payable quarterly, and the principal amount of the debenture shall be due and payable two years after closing.

In addition, in consideration of NeoGenomics, Inc.’s commitment to purchase the debenture and form the joint venture, Power3 signed a Letter of Intent with an expiration date of November 16, 2007 granting, to Neogenomics, Inc., an irrevocable option (the “First Option”) to purchase, in one or a series of transactions, voting convertible preferred stock that is convertible into such number of shares of common stock of Power3, after taking into account all outstanding First Option Preferred Stock, on an as-converted basis.

Further, in consideration of NeoGenomics, Inc.’s commitment to purchase the debenture and form the joint venture, the Letter of Intent granted NeoGenomics, Inc. an irrevocable option (the “Second Option”) to purchase, in one or a series of transactions, voting convertible preferred stock that is convertible into such number of shares of common shares of the Company as is necessary to increase NeoGenomics, Inc.’s ownership of the voting common stock of Power3 up to 60% of Power3’s voting common stock, after taking into consideration all outstanding First Option Preferred Stock and Second Option Preferred Stock, on an as-converted basis.

Currently, Power3 and NeoGenomics are in discussion to revise the expired Letter of Intent between the respective organizations.

Competition

The industry in which the Company operates is intensely competitive and subject to significant change with respect to technology for diagnosis and treatment of disease. Existing or future biotechnology, biomedical, pharmaceutical and other companies, government entities and universities may create developments that accomplish similar functions to the Company’s technologies in ways that are less expensive, receive faster regulatory approval or receive greater market acceptance than the Company’s potential products. The Company expects that competition in the biomarker discovery field will be based primarily on each product’s efficacy, stability, timing of entry of the product into the market, cost, and acceptance by health care providers and health care payers.

The Company’s competitors have, in general, been in existence for considerably longer than the Company has, and may have greater capital resources and access to capital, greater internal resources for activities in research and development, clinical testing and trials, production and distribution, and existing collaborative relationships with third parties.

The existing market for biomarker discovery platforms and processes for Alzheimer’s disease alone has been estimated to be in excess of $4 billion in the U.S. based on a study prepared by Frost & Sullivan. There are several other companies engaged in the research of proteomics and its application to biomarker discovery capabilities. Some of these companies include:

Celera Genomics, which is engaged in proteomics, bioinformatics and genomics to identify and develop drug targets and discover and develop new therapeutics;

Ciphergen Biosystems, which is active in biomarker discovery assay development and characterization;

Europroteome, which applies proteomics to human epithelial cancers to identify cancer specific protein expression patterns for clinical applications;

Matritech, which is a developer of proteomics-based diagnostic products for the early detection of cancer;

Myriad Genetics, which is focused on the development of therapeutic and diagnostic products using genomic and proteomic technologies;

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WITA Proteomics, which focuses on the potential role of proteins from specific cellular sources under particular conditions and analysis of the presence of modified proteins and the strategic use of this information for drug development and diagnostic use; and

Provista Life Sciences, which is developing blood serum protein biomarker diagnostic tests for breast cancer and Alzheimer’s disease.

Intellectual Property

During the year ended December 31, 2007, Power3 filed 3 Utility and 2 Provisional Patent Applications with the U.S. Patent and Trademark Office. The Company also filed one Utility patent application in the first quarter of 2008. One Provisional and one Utility application are for a number of the Company's identified blood serum protein biomarkers, part of Power3's clinically validated biomarker panel for early detection and differential diagnosis of neurodegenerative diseases, including Alzheimer’s, Parkinson’s, and Lou Gehrig’s (ALS) diseases. Two Utility patent applications are for individual biomarkers which demonstrated unique specificities for Parkinson's disease. When used in combination with other Parkinson's biomarkers in our diagnostic panel, they increase the accuracy of diagnostic specificity to distinguish Parkinson's patients from other similar neurological disorders. One Utility patent application is for a group of isoforms of a protein that demonstrated unique capabilities to indicate a drug target for and to distinguish patients with Chronic Myelogenous Leukemia who will be resistant to the chemotherapeutic drug imatinib mesylate. One Provisional patent application is for a group of biomarkers in blood serum for detection of breast cancer.

The blood serum protein biomarkers in these patent applications are identified with sufficiently detailed molecular characterization to specify which protein isoforms or variants are the actual biomarkers. With the biomarker proteins fully characterized, and with Power3’s quality controls in place, consistent and significant differences in the concentration of select groups of these protein biomarkers in the blood of patients and age matched normal and disease controls, reflect meaningful indicators of disease processes, processes that also differ between diseases with similar symptoms.

In these patent filings, utilizing the patent pending technologies specified in previous patent application filings, we have demonstrated significant differences in blood serum concentrations between patients for objective differential diagnosis that also provides a rational basis for disease specific mechanism discrimination between:

§ Similar neurodegenerative diseases: Alzheimer’s disease vs. Lou Gehrig’s disease (ALS) vs. Parkinson’s disease; Alzheimer’s disease vs. non-Alzheimer’s dementias vs. Parkinson’s disease

§ Sporadic vs. familial neurodegenerative diseases: sporadic vs. familial Lou Gehrig’s disease (ALS)

§ Early vs. more advanced neurodegenerative diseases and breast cancer;

§ Drug sensitive vs. resistant cancer: Chronic Myelogenous Leukemia (CML)

These biomarkers provide the capacity for objective blood tests for early, rapid, sensitive, and specific diagnoses of neurodegenerative diseases which will be a substantial benefit to physicians and patients who now rely on subtleties in symptoms. By the time such symptoms become clear enough to diagnose, the patient has often suffered substantial irreversible neurological damage. Differences in these highly characterized protein biomarkers also provide the types of information that can be employed in the monitoring of patients for potential drug response, disease severity and progression, as well as for potential new drug targets.

We continue to move forward in our commercialization efforts as well as strengthening our intellectual property portfolio, which currently includes fifteen patents pending and numerous other patent applications in the pipeline.

For 2007, Power3 filed 3 Utility Patents and 2 Provisional Patents. In February 2008, the neurodegenerative disease provisional patent was refiled with the United States Patent and Trademark Office as a Utility Patent.

11

Patent Application	Application Date	Type of Patent
11/897,078: A Protein as a Biomarker of Parkinson’s Disease	8/29/07	US Utility
11/899,212: A Protein as a Biomarker of Parkinson’s Disease	9/5/07	US Utility
11/731,019: Proteins as Biomarkers for Indication and Targeting of Resistance and Sensitivity to an ABL Kinase Inhibitor in Patients with Chronic Myelogenous Leukemia	3/29/07	US Utility
60/901,468: Ten (10) Protein Biomarkers for Diagnosis and Early Detection of Breast Cancer	2/14/07	US Provisional
60/901,467: Forty Seven (47) Protein Biomarkers for Neurodegenerative Diseases	2/14/07	US Provisional
12/069,807: Forty Seven (47) Protein Biomarkers for Neurodegenerative Diseases	2/13/08	US Utility

The number of pending patent applications as of the quarter ended December 31, 2007, is 14 as follows:

Qty	Type of Patent
2	Breast Cancer
8	Neurodegenerative
3	Drug Resistance
1	Biomarker Discover Process

Investor Relations/Public Relations

On June 29, 2007, Power3 Medical Products, Inc. (the “Company”) entered into a service agreement with The Investor Relations Group (“IRG”) for services related to the Company’s communications program, for corporate promotional materials and for communications with media, investors and industry personnel.

As Power3 transitions from a research and development organization to a commercialization stage company, the Company feels it is in the best interest of the Company and its shareholders to retain the services of The Investor Relations Group in order to fully communicate our message to the investing public. With such important milestones pending in the development of commercial applications for our proprietary technologies, the Company believes a strategic relationship with the right investor relations firm is pivotal in accomplishing the Company’s goals.

IRG will strive to increase investor and industry awareness of Power3 within the capital markets by introducing the Company and its management to pre-qualified fund managers, industry analysts and the media-at-large.

As compensation to IRG for services rendered, the Company shall pay to IRG a maintenance fee of $13,500 per month for a renewable term of 12 months, beginning July 1, 2007. Additionally, the Company agreed to issue to IRG personnel a total of 400,000 restricted shares of common stock.

Item 2. Description of Property

The Company does not own any real estate. The Company conducts its operations from premises with a five year escalating lease expiring August 1, 2009 consisting of approximately 7,200 square feet in The Woodlands, Texas.

At this facility the Company maintains its executive offices and conducts development and product prototyping activities. The Company expects this space will be adequate for its needs for the remainder of the lease term. The escalating rent schedule follows:

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Months	Monthly Base Rent
June 1, 2004 to August 1, 2004	$	0
September 1, 2004 to August 1, 2005	$	5,988
September 1, 2005 to August 1, 2006	$	6,587
September 1, 2006 to August 1, 2007	$	8,084
September 1, 2007 to August 1, 2008	$	8,983
September 1, 2008 to August 1, 2009	$	9,581

Item 3. Legal Proceedings

In November 2004, Chapman Spira & Carson, LLC (“Chapman Spira”), an investment banking firm, filed a lawsuit in the Supreme Court of the State of New York for the County of New York against Advanced BioChem (the Predecessor), Power3 and Steven Rash. The suit alleges that Advanced BioChem and Power3 are liable to Chapman Spira for damages allegedly are resulting from the breach of a letter agreement between Chapman Spira and Advanced BioChem relating to the performance of strategic and investment banking services. Chapman Spira is seeking damages in the amount of $1,522,000 plus interest. The Company has filed an answer in the lawsuit. On March 1, 2007, the Company received notice from its attorney that the action described above has been discontinued without prejudice and without costs to any party.

An equipment vendor filed a complaint, regarding equipment which the Company acquired in its May 18, 2004 transaction with Advanced BioChem, now known as Industrial Enterprises of America, and against Advanced BioChem in April of 2002 in a California court alleging breach of contract and seeking damages. Advanced BioChem reached a settlement agreement in April of 2003 under which Advanced BioChem would pay the vendor $40,000 in installments through August, 2003. At December 31, 2003, Advanced BioChem had a balance remaining of $20,000. In April 2005, the equipment vendor filed a lawsuit against Advanced BioChem, certain former officers of Advanced BioChem and against Power3 in order to enforce its claim for the remaining balance which is past due and may have been assumed by the Company as part of the settlement of the dispute with Advanced BioChem. Settlement negotiations have concluded and Power3 has been dismissed from the proceedings with no payments being made to the Vendor.

On May 19, 2005, Quinn Capital Consulting, Inc. filed suit against Power3 and Steven B. Rash claiming breach of contract regarding payment for services claimed to be provided to Power3, with payment to have been made by issue of 500,000 shares to Quinn Capital, which Power3 later cancelled or otherwise converted. This financial obligation is recorded in the obligations of the Company as of December 31, 2006. In February, 2007, the Company and Quinn Capital reached a settlement agreement in this matter. The company issued 500,000 common shares to Quinn Capital and agreed to pay $75,000, over time, as settlement of any and all claims in this matter. The remaining amount accrued on this settlement as of year ended December 31, 2007 is $40,000

On September 12, 2005, Focus Partners LLC filed suit against David Zazoff and Power3 alleging that Power3 breached its agreement with Focus Partners in that it failed to issue stock to the Plaintiff according to the terms of their agreement, that the stock in question was issued to Zazoff and that Zazoff later sold the stock in question for $480,000. On October 3, 2007, this case was dismissed against Power3 resulting in Power3 not paying costs to any party.

On February 15, 2006, Bowne of Dallas LP filed suit against Power3 to collect a debt for services in the amount of $17,315. The debt is recorded in accounts payable by Power3 as of December 31, 2006. In February, 2007, this debt, along with an additional $8,000 in fees, was settled and the obligation was removed from the accounts payable of the Company.

In October 2007 Winstead filed suit against the Company for approximately $17,000 in attorney fees. In March 2008 a settlement was reached. The fees have been reduced to $9,000 and a payout schedule has been agreed upon.

On October 24, 2007, the Company settled an outstanding accounts payable with a vendor. A settlement agreement and release of all claims was agreed upon. The Company’s accounts payable was reduced by $67,638. The settlement agreement and release of all claims can be found as an exhibit to the Company’s quarter ended September 30, 2007 10-QSB.

On October 28, 2005, Power3 received notice of a Petition to Enforce Foreign Judgment citation filed against the Company by KForce regarding an employment fee adjudicated in December, 2003 in the state of Florida against the Company, in the amount of $15,873, together with $4,735 in interest. Power3 does not agree with the Foreign Judgment and is attempting to resolve the issue prior to enforcement. No resolution has been achieved on this issue at this time; however the Company is endeavoring to resolve the petition. This debt is not recorded in accounts payable by the Company because it is the Company’s position that the judgment should never have been entered against Power3, but rather against a different corporate entity, not related to Power3 in any way, at this time. The Company’s attorney in this matter feels that no loss is probable, nor will the Company be obligated to pay any sums whatsoever on this matter. The Company has pled improper party and expects to be vacated from the suit since it does not apply to the Company. Power3 has counterclaimed KForce for frivolous claims, as they know that they have sued the improper party.

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On March 12, 2008, all matters involving the dispute over the taking, by an ex-employee, of certain trade secrets, defamation and tortious interference with Power3's contractual relations with other parties, and a pendent wage claim for severance pay, were resolved. The Company has agreed to pay the ex-employee $35,000 and issue to the ex-employee 325,000 shares of the Company’s common stock with restrictions.

In June, 2005, Charles Caudle et al filed a lawsuit in Harris County, Texas, against Industrial Enterprises of America, Inc. formerly Advanced BioChem, Power3 and the officers and directors of both companies. The suit alleged that against Industrial Enterprises of America, Power3 and the officers and directors of Power3, were liable to Charles Caudle et al for damages resulting from funds loaned to Industrial Enterprises of America and which were subsequently converted into common stock of Industrial Enterprises of America. On August 10, 2007 a settlement was reached between Industrial Enterprises of America, formerly Advanced BioChem, Charles Caudle et. al. and Power3 and the Company will not incur any financial obligations or loss whatsoever from this action.

In October of 2006, Trinity Financing filed a lawsuit against the Company claiming default on a promissory note dated December 9, 2005. As security for the Note, Steven Rash and Ira Goldknopf pledged their personal restricted shares of the Company’s stock. As a result of the alleged default in payment of the Note, Trinity Financing seeks to have the restrictive legend removed so the shares may be sold by Trinity Financing in satisfaction of the loan. The Company denied the material allegations and asserted three counterclaims against Trinity Financing. The company asserted that the Note, as well as a prior promissory note executed in favor of Trinity Financing, are usurious. The matter was settled February 4, 2008 with the removal of the restrictive legend, and the return by Trinity Financing to Ira Goldknopf 1,700,000 pledged shares.

On August 13, 2007, Gryphon Master Fund LP and GSFF Master Fund, LP filed a lawsuit against the Company claiming a breach of a Securities Purchase Agreement, Convertible Debentures, and Registration Rights Agreement. The plaintiffs claimed the Company failed to timely obtain an effective registration statement for the shares issued to the plaintiffs and refused to recognize anti-dilution rights of the plaintiffs. The Company denies the material allegations of the complaint and asserts numerous affirmative defenses. Power3 intends to vigorously defend this action.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to the security holders for a vote during the year ended December 31, 2007.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters

Market Information

During 2004, the Company’s common stock was traded on the OTC Bulletin Board under the symbol “PWRM.” From June 2005 to September 2007, the Company’s common stock was quoted on the Pink Sheets. On September 26, 2007 Power3 announced that its common stock began trading on the Over-the-Counter (OTC) Bulletin Board under the symbol PWRM.OB, as reported previously. The high and low bid information for each quarter for the years ended December 31, 2007 and 2006, as reported by National Quotation Bureau, Inc., are as follows:

Quarter	High Bid		Low Bid
First Quarter 2008	$	0.16	$	.08
First Quarter 2007	$	0.22	$	0.06
Second Quarter 2007	$	0.29	$	0.13
Third Quarter 2007	$	0.19	$	0.15
Fourth Quarter 2007	$	0.17	$	0.12
First Quarter 2006	$	0.42	$	0.10
Second Quarter 2006	$	0.33	$	0.14
Third Quarter 2006	$	0.16	$	0.09
Fourth Quarter 2006	$	0.13	$	0.05

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Prices listed through March 31, 2008

The quotations above reflect inter-dealer prices, without adjustment for retail markup, markdown or commissions and may not reflect actual transactions.

Holders

As of December 31, 2007, there were 1,150 shareholders of record of the Company’s common stock.

Dividends

The Company has not paid or declared any dividends on its common stock for the last three fiscal years and does not anticipate paying cash dividends in the foreseeable future. There are no limitations on the ability of the Company to declare dividends, except those set forth in § 510 of the New York Business Corporation Laws which prohibits dividends if the Company is insolvent or would be made insolvent by the declaration of a dividend and all dividends must be made out of surplus only.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

During the year ended December 31, 2007, the Company did not issue any unregistered shares of common stock.

Item 6. Management’s Discussion and Analysis or Plan of Operation

Revenues from operations for the year ended December 31, 2007 were $122,224 compared to $300,000 for the year ended December 31, 2006. The decrease in revenues was primarily a result of selling less blood serum samples to Biosite to be used, by Biosite, in the development and testing of antibodies. The Company has not incurred any cost of goods sold for the years ended December 31, 2007 or December 31, 2006.

Operating expenses were $3,008,304 for 2007 as compared to operating expenses for 2006 of $6,905,153, a decrease of $3,896,849. The decrease in operating expenses was primarily due to a significant reduction in employee stock compensation expense in 2007, compared to 2006.

Employee compensation and benefits were $1,675,495 in 2007 compared to $6,041,029 in 2006 a decrease of $4,365,534. The decrease is primarily a result of significant vesting of stock awards in 2006.

Occupancy and equipment expenses were $142,080 in 2007 as compared to $134,593 in 2006. The increase is primarily due to an increase in utilities and repairs during 2007.

Derivative loss amounted to $1,712,956 during the year ended December 31, 2007. This is a significant change from the gain of $1,194,129 during the year ended December 31, 2006. The loss is primarily due to reset provisions in the remaining instruments that were triggered by warrant exercise price reductions. Also, our common stock price has improved in this period also driving the difference. The Company generally does not use derivative financial instruments to hedge exposures to cash-flow risks or market-risks that may affect the fair values of its financial instruments. However, certain other financial instruments, such as warrants and embedded conversion features that are indexed to our common stock, are classified as liabilities when either (a) the holder possesses rights to net-cash settlement or (b) physical or net-share settlement is not within our control. In such instances, net-cash settlement is assumed for financial accounting and reporting, even when the terms of the underlying contracts do not provide for net-cash settlement. Such financial instruments are initially recorded at fair value and subsequently adjusted to fair value at the close of each reporting period. The Company has recorded fair value adjustments to our derivative financial instruments, which will result in charges or credits to our income, until we require the ability to settle these instruments with our common stock.

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Interest expense amounted to $2,185,740 and $1,008,866 for the years ended December 31, 2007 and 2006, respectively. Interest expense increased due to the interest rates increasing on overdue financial instruments and the accretion of discounts associated with our embedded derivatives.

The above matters resulted in net loss decreasing from $6,415,969 in 2006 to $5,216,288 in 2007. The decrease in net loss in 2007 was primarily due to gains on conversion of financial instruments.

Liquidity and Capital Resources

The Company’s liquidity and capital needs relate primarily to working capital, development and other general corporate requirements. The Company has not received any cash from operations, other than from the sale of blood serum samples previously gathered. The Companyhas an immediate need for capital to continue its current operations, and in addition, is seeking additional capital from research grants, collaboration agreements, and other strategic alliances.

Net cash used in operating activities amounted to $2,083,548 for the year ended December 31, 2007, compared to $1,156,147 for the year ended December 31, 2006. The change in net cash used in operating activities during 2007 was primarily due to changes in the fair value of derivative liabilities, a reduced net loss, amortization of deferred finance cost and debt discount, higher overhead and legal and consulting fees, as compared to December 31, 2006.

Net cash provided by financing activities was $2,171,694 for the year ended December 31, 2007, as compared to $1,195,350 for the year ended December 31, 2006. This change is primarily due to borrowings, capital raises through investor stock purchases, and proceeds from the exercise of warrants.

As of December 31, 2007, the Company’s principal source of liquidity was $125,679 in cash.

Other current assets for the year ended December 31, 2007 amounted to $23,247 as compared to $0 at December 31, 2006. In the past the Company has purchased items as needed. This increase is primarily due to an increase in inventory resulting from the Company making a bulk purchase.

Plan of Operation and Cash Requirements

The Company currently does not have significant operating revenues from product sales or the performance of services and it continues to experience net operating losses. The Company is actively pursuing third party licensing agreements, collaboration agreements, distribution agreements and similar business arrangements in order to establish a revenue base utilizing its capabilities in disease diagnosis based on protein and biomarker identification, and drug resistance in the areas of cancers, neurodegenerative and neuromuscular diseases. The Company has undertaken clinical validation studies to demonstrate the diagnostic capabilities of its technologies. However, there can be no assurances when revenue-generating agreements will result in continuous revenue streams.

Absent a source of revenues, the Company will require funding in order to carry out its business plan until such time as it is able to generate sustained revenues. The Company’s current cash requirements are approximately $180,000 per month and the Company anticipates that it will require approximately $2,150,000 for the twelve months ended December 31, 2008, to continue its development activities, undertake and perform clinical validation studies, continue its marketing efforts and maintain its administrative infrastructure, as follows:

Estimated Expenditures Required

During Next Twelve Months

General and administrative	$	1,800,000
Patent filings and intellectual property		100,000
Capital expenditures and research agreements		250,000
Total	$	2,150,000

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The foregoing is based upon the Company’s current estimated cash requirements. The Company has no significant capital expenditure requirements and does not plan to increase its monthly expenditure rate absent an increase in revenues or additional funding.

The Company will continue to require additional debt or equity financing for its operations, which may not be readily available. The Company’s ability to continue as a going concern is subject to its ability to generate a profit or obtain necessary funding from outside sources.

Deemed Dividend

On September 7, 2007 in consideration for consulting services provided by a certain warrant holder, the Company reduced the exercise price of warrants to acquire 3,999,999 shares of the Company’s common stock held by the warrant holder from $0.08 to $0.06.

As a result of the above reduction in warrant exercise price, the Company recorded a non-cash deemed dividend of $17,635.

The amount of the deemed dividend was estimated to be equal to the incremental fair value conveyed to the debt holders via the reduction of the exercise price of the warrants determined as provided in paragraph 51 of SFAS 123R utilizing the Black-Scholes valuation model.

Off-Balance Sheet Arrangements

At December 31, 2007, the only off balance sheet agreements in place for the Company were a lease in effect for its office space, leases in effect for phone equipment, leases in effect for lab equipment and employment agreements entered with its three principal officers.

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Item 7. Financial Statements.

POWER3 MEDICAL PRODUCTS, INC.

(A Development Stage Enterprise)

FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2007 AND 2006

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

and the period from May 18, 2004 (inception) through December 31, 2007

	Page
Reports of Independent Registered Public Accounting Firm	19
Balance Sheets as of December 31, 2007 and 2006	21
Statements of Operation for the years ended December 31, 2007 and 2006 and the period from May 18, 2004 (inception) through December 31, 2007	22
Statements of Stockholders’ Deficit for all periods since Company entered development stage	23
Statements of Cash Flows for the years ended December 31, 2007 and 2006 and the period from May 18, 2004 (inception) through December 31, 2007	27
Notes to Financial Statements	29

18

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Power3 Medical Products, Inc.

(A Development Stage Company)

The Woodlands, Texas

We have audited the accompanying balance sheet of Power3 Medical Products, Inc. as of December 31, 2007 and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for the year then ended. The financial statements for the period May 18, 2004 (inception) through December 31, 2006, were audited by other auditors whose reports expressed unqualified opinions on those statements. The financial statements for the period May 18, 2004 (inception) through December 31, 2006, include total revenues and net loss of $304,000 and $48,787,175, respectively. Our opinion on the statements of operations, stockholders' equity (deficit) and cash flows for the period May 18, 2004 (inception) through December 31, 2006, insofar as it relates to amounts for prior periods through December 31, 2006, is based solely on the reports of other auditors. These financial statements are the responsibility of Power3's management. Our responsibility is to express an opinion on these financial statements based on our audits.  

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Power3 Medical Products, Inc as of December 31, 2007 and the results of its operations and cash flows for the periods described above in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that Power3 will continue as a going concern. As discussed in Note 2 to the financial statements, Power3 has suffered recurring losses from operations which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ McElravy, Kinchen & Associates, PC

www.mkacpas.com

Houston, Texas  

April 11, 2008

19

Report of Independent Registered Public Accounting Firm

To the Board of Directors

Power3 Medical Products, Inc

(A development stage company)

The Woodlands, Texas

We have audited the accompanying balance sheet of Power3 Medical Products, Inc (the “Company”) as of December 31, 2006 and the related statements of operations, stockholders’ deficit, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company, as of December 31, 2006 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations, has negative cash flow from operations, and has an accumulated deficit, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters also are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Malone & Bailey, PC

Malone & Bailey, PC

www.malone−bailey.com

Houston, Texas

July 9, 2007

20

POWER3 MEDICAL PRODUCTS, INC.

(A Development Stage Enterprise)

BALANCE SHEETS

AS OF DECEMBER 31, 2007 AND 2006

	December 31, 2007			December 31, 2006
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	125,679		$	40,602
Other Current Assets		23,247			—
TOTAL CURRENT ASSETS		148,926			40,602
OTHER ASSETS
Deferred Finance Costs, net of amortization of $176,952 and $50,813 at December 31, 2007 and 2006, respectively		127,197			253,336
Intellectual Property		—			179,786
Furniture, Fixtures and Equipment, net of accumulated depreciation of $98,960 and $85,316 at December 31, 2007 and 2006, respectively		5,799			16,374
Deposits		21,598			5,900
TOTAL ASSETS	$	303,520		$	495,998
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts Payable	$	969,387		$	899,177
Notes Payable – in default, net of amortization of $0 and $94,678 at December 31, 2007 and 2006, respectively		451,000			777,822
Notes Payable		50,000
Notes Payable to Related Parties		1,934,816			1,428,346
Convertible Debentures-in default, net of amortization of $1,178,865 and $1,139,866 at December 31, 2007 and 2006, respectively		645,190			360,417
Other Current Liabilities		1,242,936			1,517,808
Derivative Liabilities		3,794,305			1,281,348
TOTAL LIABILITIES		9,087,634			6,264,918
STOCKHOLDERS’ DEFICIT
Preferred Stock - $0.01 par value 50,000,000 shares authorized: none issued or outstanding		—			—
Common Stock-$0.001 par value: 150,000,000 shares authorized; 108,352,636 and 71,370,955 shares issued and outstanding as of December 31, 2007 and 2006, respectively		108,353			71,370
Additional Paid-In Capital		60,191,104			58,009,358
Deficit Accumulated Before Entering Development Stage		(11,681,500	)		(11,681,500	)
Deficit Accumulated During Development Stage		(57,402,071	)		(52,168,148	)
TOTAL STOCKHOLDERS’ DEFICIT		(8,784,114	)		(5,768,920	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	303,520		$	495,998

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

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POWER3 MEDICAL PRODUCTS, INC.

(A Development Stage Enterprise)

STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2007 AND 2006

and the period from May 18, 2004 (inception) through December 31, 2007

	2007			2006			Period from May 18, 2004 through December 31,2007
REVENUES:
Sales	$	122,224		$	300,000		$	426,224
TOTAL REVENUE		122,224			300,000			426,224
OPERATING EXPENSES:
Employee compensation and benefits		1,675,495			6,041,029			30,007,990
Professional and consulting fees		723,251			562,764			9,340,827
Impairment of goodwill		—			—			13,371,776
Impairment of intangible assets		179,788			—			179,788
Occupancy and equipment		142,080			134,593			532,404
Travel and entertainment		113,995			72,872			342,492
Write off lease		—			34,243			34,243
Other selling, general and administrative expenses		173,695			59,652			461,618
TOTAL OPERATING EXPENSES		3,008,304			6,905,153			54,271,138
LOSS FROM OPERATIONS		(2,886,080	)		(6,605,153	)		(53,844,914	)
OTHER INCOME AND (EXPENSE):
Derivative gain(loss)		(1,712,956	)		1,194,129			2,607,863
Gain on legal settlement		18,889			—			18,889
Interest income		5,025			792			7,291
Mandatory prepayment penalty		—			—			(420,000	)
Other income (expense)		—			3,129			(196,176	)
Gain on conversion of financial instruments		1,544,574			—			1,544,574
Interest expense		(2,185,740	)		(1,008,866	)		(3,720,990	)
TOTAL OTHER INCOME (EXPENSE)		(2,330,208	)		189,184			(158,549	)
NET LOSS		(5,216,288	)		(6,415,969	)		(54,003,463	)
Deemed dividend		(17,635	)		—			(17,635	)
NET LOSS ATRIBUTABLE TO COMMON STOCKHOLDERS	$	(5,233,923	)	$	(6,415,969	)	$	(54,021,098	)
NET LOSS PER SHARE BASIC AND DILUTED	$	(0.06	)	$	(0.09	)
Weighted average number of shares outstanding		89,736,470			71,207,912

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

22

POWER3 MEDICAL PRODUCTS, INC.

(A Development Stage Enterprise)

STATEMENT OF STOCKHOLDERS' DEFICIT

FROM INCEPTION TO DECEMBER 31, 2007

	Common Stock						Preferred Stock						Additional Paid In			Deferred Compensation			Retained
	Shares			Par Value			Shares			Par Value			Capital			Expense			Earnings			Equity
Balances as of beginning of development stage May 17, 2004		14,407,630		$	14,407			3,870,000		$	3,870		$	14,225,974		$	—		$	(11,681,500	)	$	2,382,751
Issued shares on May 18, 2004 for compensation		27,805,000			27,805									24,996,695			(25,024,500	)
Issued shares on May 18, 2004 for services		4,550,000			4,550									4,090,450									4,095,000
Issued shares on May 18, 2004 for acquisition of equipment		15,000,000			15,000									13,485,000									13,500,000
Issued shares on June 1, 2004 for services		125,000			125									249,875			(250,000	)
Issued shares on June 11, 2004 for services		100,000			100									211,900									212,000
Stock option expense														626,100			(626,100	)
Issued shares on July 1, 2004 for compensation		140,000			140									426,860			(427,000	)
Issued shares on July 23, 2004 for services		125,000			125									284,875			(285,000	)
Issued shares on November 10, 2004 for cash		242,167			242									314,575									314,817
Issued shares on November 10, 2004 for services		10,000			10									12,990									13,000
Cancelled shares November 15, 2004 per cancellation of agreement		(160,000	)		(160	)								(71,840	)								(72,000	)
Issued shares on November 17, 2004 to convert Series A preferred shares to common shares		1,031,316			1,031			(1,331,280	)		(1,330	)		1,391,246						(1,392,277	)		(1,330	)
Issued shares on November 23, 2004 to convert Series A preferred shares to common shares		1,969,008			1,970			(2,538,720	)		(2,540	)		1,986,728						(1,988,698	)		(2,540	)
Stock based compensation																	8,311,012						8,311,012
Net reclassification of derivative liabilities														(3,347,077	)								(3,347,077	)
Net loss (from May 18, 2004 to December 31, 2004)																				(15,236,339	)		(15,056,339	)
Balances, December 31, 2004		65,345,121		$	65,345			—		$	—		$	58,884,351		$	(18,301,588	)	$	(30,298,814	)	$	10,349,294
Cancelled shares from July 1, 2004 (returned from employee)		(140,000	)		(140	)								(426,860	)								(427,000	)
Issued shares on September 14, 2005 for compensation		140,000			140									41,860									42,000
Issued shares on October 31, 2005 for services		300,000			300									65,700									66,000
Issued shares on November 11, 2005 for services		250,000			250									44,750									45,000
Issued shares on December 6, 2005 for services		300,000			300									44,700									45,000
Cancelled shares on December 31, 2005 (returned from employee)		(975,000	)		(975	)								(876,500	)								(877,475	)
Cancelled shares on December 31, 2005 (returned from employee)		(5,000	)		(5	)								(4,495	)								(4,500	)
Amortize deferred comp expense																	13,222,517						13,222,517
Net loss for year																				(27,134,865	)		(27,134,865	)
Balances, December 31, 2005 (restated)		65,215,121		$	65,215			—		$	—		$	57,773,506		$	(5,079,071	)	$	(57,433,679	)	$	(4,674,029	)

23

POWER3 MEDICAL PRODUCTS, INC.

(A Development Stage Enterprise)

STATEMENT OF STOCKHOLDERS' DEFICIT (CONTINUED)

FROM INCEPTION TO DECEMBER 31, 2007

	Common Stock				Preferred Stock				Additional Paid In			Deferred Compensation			Retained
	Shares		Par Value		Shares		Par Value		Capital			Expense			Earnings			Equity
Balances, December 31, 2005 (restated)		65,215,121	$	65,215		—	$	—	$	57,773,506		$	(5,079,071	)	$	(57,433,679	)	$	(4,674,029	)
Issued shares on January 6, 2006 for services		50,000		50						5700									5,750
Issued shares on January 6, 2006 for cash		500000		500						57000									57,500
Issued shares on January 13, 2006 for services		220,000		220						28,380									28,600
Issued shares on January 27, 2006 for compensation		451,677		452						49,233									49,685
Issued shares on February 3, 2006 for compensation		413,234		413						40,910									41,323
Issued shares on February 3, 2006 for cash		1,114,286		1,114						81,386									82,500
Issued shares on February 3, 2006 for services		297,843		297						29,488									29,785
Issued shares on February 14, 2006 for compensation		201,539		202						38,091									38,293
Issued shares on February  22, 2006 for services		150,000		150						34,350									34,500
Issued shares on March 8, 2006 for cash		400,000		400						39,600									40,000
Issued shares on March 9, 2006 for cash		400,000		400						39,600									40,000
Issued shares on March 23, 2006 for services		300,000		300						80,700									81,000
Issued shares on March 24, 2006 for compensation		186,648		187						48,529									48,716
Issued shares on May 9, 2006 for services		60,000		60						9,240									9,300
Issued shares on May 25, 2006 for services		172,147		172						22,207									22,379
Issued shares on June 8, 2006 for cash		38,460		38						4,962									5,000
Issued shares on June 16, 2006 for services		300,000		300						32,700									33,000
Issued shares on September 15, 2006 for services		400,000		400						39,600									40,000
Issued shares on October 31, 2006 for services		500,000		500						29,500									30,000
Adoption of 123R										(475,324	)		475,324
Amortize deferred comp expense													4,603,747						4,603,747
Net loss for year																(6,415,969	)		(6,415,969	)
Balances, December 31, 2006		71,370,955	$	71,370		—	$	—	$	58,009,358		$	—		$	(63,849,648	)	$	(5,768,920	)

24

POWER3 MEDICAL PRODUCTS, INC.

(A Development Stage Enterprise)

STATEMENT OF STOCKHOLDERS' DEFICIT (CONTINUED)

FROM INCEPTION TO DECEMBER 31, 2007

	Common Stock				Preferred Stock				Additional Paid In			Deferred Compensation		Retained
	Shares		Par Value		Shares		Par Value		Capital			Expense		Earnings			Equity
Balances, December 31, 2006		71,370,955	$	71,370		—	$	—	$	58,009,358		$	—	$	(63,849,648	)	$	(5,768,920	)
Issued shares on January 2, 2007 for services		100,000		100						7,900								8,000
Issued shares on January 23, 2007 for conversion		1,000,000		1,000						59,000								60,000
Issued shares on January 30, 2007 for services		500,000		500						42,000								42,500
Issued shares on March 14, 2007 for conversion		3,000,000		3,000						157,000								160,000
Issued shares on April 13, 2007 for services		160,000		160						35,040								35,200
Issued shares on April 13, 2007 for services		300,000		300						65,700								66,000
Issued shares on April 30, 2007 for conversion		713,708		714						(119,866	)							(119,152	)
Issued shares on May 11, 2007 for conversion		157,895		158						(53,974	)							(53,816	)
Issued shares on May 16, 2007 for warrants exercised		833,333		834						65,834								66,668
Issued shares on May 16, 2007 for conversion		833,333		833						49,167								50,000
Issued shares on May 16, 2007 for conversion		713,708		714						(119,894	)							(119,180	)
Issued shares on May 16, 2007 for conversion		4,127,000		4,127						243,332								247,459
Issued shares on May 16, 2007 for conversion		359,595		360						(111,235	)							(110,875	)
Issued shares on May 16, 2007 for conversion		178,427		178						(29,973	)							(29,795	)
Issued shares on May 17, 2007 for conversion		11,970		12						(1,531	)							(1,519	)
Issued shares on May 17, 2007 for conversion		71,370		71						(9,130	)							(9,059	)
Issued shares on June 1, 2007 for conversion		200,000		200						11,800								12,000
Issued shares on June 7, 2007 for conversion		5,900,231		5,900						346,662								352,562
Issued shares on June 13, 2007 for services		400,000		400						79,600								80,000
Issued shares on June 13, 2007 for cash		1,750,000		1,750						298,250								300,000
Issued shares on June 13, 2007 for cash		1,500,000		1,500						348,500								350,000
Placement agent fees										(58,500	)							(58,500	)
Stock received										100								100
Unreturned shares		5,000		5						4,495								4,500
Issued shares on August 3, 2007 for conversion		3,793,301		3,793						115,202								118,995
Issued shares on August 23, 2007 for conversion		174,035		174						10,212								10,386
Issued shares on August 23, 2007 for conversion		588,235		588						22,451								23,039
Issued shares on September 7, 2007 for warrants exercised		3,999,999		4,000						236,000								240,000
Issued shares on October 31, 2007 for warrants exercised		437,500		438						34,562								35,000
Issued shares on November 9, 2007 for conversion		442,416		442						37,189								37,631
Issued shares on November 15, 2007 for cash		700,000		700						55,300								56,000
Issued shares on November 19, 2007 for cash		250,000		250						19,750								20,000
Issued shares on November 20, 2007 for cash		100,000		100						7,900								8,000

25

Issued shares on November 20, 2007 for cash	62,500		63					4,937							5,000
Issued shares on November 20, 2007 for cash	15,000		15					1,185							1,200
Issued shares on November 26, 2007 for cash	12,500		13					987							1,000
Issued shares on November 27, 2007 for cash	12,500		13					987							1,000
Issued shares on November 27, 2007 for cash	12,500		13					987							1,000
Issued shares on November 27, 2007 for cash	6,250		6					494							500
Issued shares on November 27, 2007 for cash	37,500		38					2,962							3,000
Issued shares on November 27, 2007 for cash	300,000		300					23,700							24,000
Issued shares on November 27, 2007 for cash	300,000		300					23,700							24,000
Issued shares on November 27, 2007 for cash	100,000		100					7,900							8,000
Issued shares on November 30, 2007 for cash	200,000		200					15,800							16,000
Issued shares on November 30, 2007 for cash	100,000		100					7,900							8,000
Issued shares on November 30, 2007 for cash	300,000		300					23,700							24,000
Issued shares on December 5, 2007 for cash	150,000		150					11,850							12,000
Issued shares on December 5, 2007 for cash	100,000		100					7,900							8,000
Issued shares on December 5, 2007 for cash	100,000		100					7,900							8,000
Issued shares on December 5, 2007 for cash	250,000		250					19,750							20,000
Issued shares on December 5, 2007 for cash	3,750		4					296							300
Issued shares on December 6, 2007 for services	350,000		350					52,150							52,500
Issued shares on December 14, 2007 for cash	6,250		6					494							500
Issued shares on December 14, 2007 for cash	3,750		4					296							300
Issued shares on December 14, 2007 for cash	28,750		29					2,271							2,300
Issued shares on December 14, 2007 for cash	4,375		4					346							350
Issued shares on December 18, 2007 for cash	6,250		6					494							500
Issued shares on December 18, 2007 for cash	6,250		6					494							500
Issued shares on December 18, 2007 for cash	6,250		6					494							500
Issued shares on December 18, 2007 for cash	100,000		100					7,900							8,000
Issued shares on December 31, 2007 for cash	1,000,000		1,000					79,000							80,000
Issued shares on December 31, 2007 for cash	100,000		100					7,900							8,000
Deemed dividend								17,635				(17,635	)
Net loss for year												(5,216,288	)		(5,216,288	)
Balances , December 31, 2007	108,352,636	$	108,353	—	$	—	$	60,191,104	$	—	$	(69,083,571	)	$	(8,784,114	)

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

26

POWER3 MEDICAL PRODUCTS, INC.

(A Development Stage Enterprise)

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2007 AND 2006

and the period from May 18, 2004 (inception) through December 31, 2007

	2007			2006			Period from May 18, 2004 through December 31,2007
Operating activities:
Net loss	$	(5,216,288	)	$	(6,415,969	)	$	(54,003,463	)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on conversion of financial instruments		(1,544,574	)		—			(1,544,574	)
Impairment of goodwill		—			—			13,371,776
Impairment of intangible assets		179,788			—			179,788
Loss on previously capitalized lease		—			34,243			34,243
Amortization of debt discounts and deferred finance costs		2,112,288			271,908			2,526,742
Change in derivative liability, net of bifurcation		1,712,956			(637,129	)		(1,453,962	)
Stock based compensation		288,700			5,096,078			32,656,045
Depreciation expense		13,644			20,134			98,960
Other non cash items		—			—			(34,933	)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(38,845	)		1,845			169,937
Accounts payable and other liabilities		408,783			472,743			2,614,808
Net cash used in operating activities		(2,083,548	)		(1,156,147	)		(5,384,633	)
Investing Activities:
Capital expenditures, net		(3,069	)		—			(139,002	)
Increase in other assets		—			—			(179,786	)
Net cash used in investing activities		(3,069	)		—			(318,788	)
Financing Activities:
Proceeds from borrowings under notes payable, net		875,000			970,350			3,028,430
Proceeds from sale of common stock		941,950			225,000			1,616,767
Principal payments on long term debt		—			—			(32,478	)
Borrowing on debt related party		30,376			—			30,376
Principal payments on notes payable related party		(17,300	)		—			(17,300	)
Proceeds from CD, warrants and rights net of issuance cost		341,668			—			1,200,709
Net cash provided by financing activities		2,171,694			1,195,350			5,826,504
Net change in cash and cash equivalents		85,077			39,203			123,083
Cash and cash equivalents, beginning of period		40,602			1,399			2,596
Cash and cash equivalents, end of period	$	125,679		$	40,602		$	125,679

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

27

POWER3 MEDICAL PRODUCTS, INC.

(A Development Stage Enterprise)

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2007 AND 2006

and the period from May 18, 2004 (inception) through December 31, 2007

	2007		2006		Period from May 18, 2004 through December 31, 2007
Supplemental disclosures of cash flow information
Cash paid for:
Interest		—		—		59,840
Income taxes		—		—		—
Non-cash transactions:
Restatement of notes payable to notes payable related parties		—		1,201,346		1,393,346
Exchange of convertible notes for stock		1,559,804				1,559,804
Stock Issued for Settlement of Payables		—		—		6,697
Deemed dividend		17,635		—		17,635
Exchange of convertible preferred stock for common stock 3,000,324 shares		—		—		3,380,975

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

28

POWER3 MEDICAL PRODUCTS, INC.

(A Development Stage Enterprise)

NOTES TO FINANCIAL STATEMENTS

Note 1. ORGANIZATION, PRINCIPLE ACTIVITIES AND BASIS OF PRESENTATION

Power3 Medical Products, Inc. (the “Company” or “Power3”) was incorporated in the State of Florida on May 15, 1992 and merged into a New York Corporation in 1994, under the name Sheffield Acres, Inc. Power3 and its wholly owned subsidiaries, C5 Health, Inc. (C5), which was officially dissolved in the State of Delaware and the State of Florida effective December 31, 2003 and Power3 Medical, Inc., a Nevada Corporation, now known as Tenthgate, Inc., were engaged in product development, sales, distribution and services for the healthcare industry. On September 12, 2003, Surgical Safety Products, Inc. amended its Certificate of Incorporation to (a) declare a 1:50 reverse split of its common stock; (b) increase its authorized capital to 150,000,000 shares of common stock and 50,000,000 shares of preferred stock; and (c) change its name to Power3 Medical Products, Inc. All references to the number of shares in the accompanying financial statements and notes thereto have been adjusted to reflect the stock split as if it occurred on January 1, 2004.

Prior to May 17, 2004, the Company had one direct subsidiary, Tenthgate, Inc. (“Tenthgate”), a Nevada corporation formerly known as Power3 Medical, Inc. Prior to this date, Tenthgate was accounted for, by Power3, as a wholly-owned subsidiary, operating as a “development stage company”, under the cost method. As part of the transaction which involved the acquisition of substantially all the assets and certain liabilities from Advanced BioChem, now known as Industrial Enterprises of America, it was agreed that Power3 would distribute the shares of its subsidiary, Tenthgate, to its then existing shareholders . To fulfill this obligation, the shares of Tenthgate were transferred to a trustee for distribution to the shareholders of Power3 as of May 17, 2004. Tenthgate was spun off because the management of Power3, in place prior to May 17, 2004, desired to continue to own and eventually operate this subsidiary. At the time of the spin-off, Tenthgate was granted the rights to market a product line that had previously been marketed by Power3, but which the company had decided to abandon. Tenthgate had not been an operating company, and their management has apparently abandoned any plans to market the product as evidenced by their SEC filings, specifically their amended 10-QSB filed for the quarterly period ending January 31, 2005, wherein they specifically state that they are a “development stage company.” The prior operations of the company, which are reflected in the Company’s previous financial statements, prior to May 18, 2004, i.e. occurring prior to reentering the development stage, were the operations the Company had decided to abandon and which were transferred to the prior shareholders under the control of prior management. Any activities since May 17, 2004, are not consolidated with Power3 because Power3 does not now own or control the operations or activities of Tenthgate, nor are their activities associated with Power3 in any manner whatsoever.

In 2003, Power3 was an operating company, marketing devices to aid surgical procedures. Prior to May 18, 2004, the products had received only minor market acceptance and sales had slowed to the point that Power3 was searching for other products and markets to increase its presence in the healthcare industry. In early 2004, Power3 became aware of a biotech company that appeared to have a set of assets and intellectual properties that it required to more effectively pursue its business model. That company, named Advanced BioChem, doing business as ProteEx, provided contract-for-fee lab services analyzing protein biomarkers. At the conclusion of negotiations with Advanced BioChem, Power3 entered into an Asset Purchase Agreement dated May 18, 2004, whereby it purchased substantially all the assets and intellectual properties of Advanced BioChem, and assumed certain liabilities, as scheduled in the agreement, from Advanced BioChem. After the transaction, certain employees from Advanced BioChem became employees of Power3 and were later issued employment agreements by Power3. As consideration in the Asset Purchase Agreement, Power3 issued 15,000,000 shares of common stock to Advanced BioChem.

Power3 Medical Products, Inc. did not continue the business activity of Advanced BioChem and never conducted any contract-for-fee lab service work. Subsequent to the asset purchase, the business model of Power3 was significantly changed, the Company entered into the development stage and began to commercialize the intellectual property it acquired in the transaction, with its focus in the early detection, monitoring and targeting of diseases through the analysis of proteins. Power3’s new developmental stage objective, and activity, is to develop its intellectual properties by focusing on disease diagnosis, protein and biomarker identification and early detection indicators in the areas of cancers, neurodegenerative and neuromuscular diseases, as well as other scientific areas of interest associated with protein biomarkers.

29

Coincident with the asset purchase transaction on May 18, 2004, the previous management of Power3 resigned and left the employ of the Company. Immediately thereafter, two employees of Advanced BioChem were granted employment agreements by Power3. These two employees were Steven B. Rash as President and CEO and Dr. Ira Goldknopf as Chief Scientific Officer.

As a development stage company, Power3 is primarily engaged in commercializing its intellectual properties in the area of diagnosis and treatment of breast cancer, ALS, Alzheimer’s disease and Parkinson’s disease.

The accompanying financial statements of Power3 at December 31, 2007, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.

Note 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements of Power3 Medical Products have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP). Certain prior period amounts have been reclassified to conform to the December 31, 2007 presentation. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein.

Fair Value of Financial Instruments

Statement of Financial Accounting Standards (SFAS) 107, "Disclosures About Fair Value of Financial Instruments,"requires disclosure of fair value information about financial instruments when it is practicable to estimate that value. The carrying amount of Power3’s cash, accounts payables, and accrued expenses approximates their estimated fair values due to the short term maturities of those financial instruments. The fair value of related party transactions is not determinable due to their related party nature.

Credit Risk

Power3 does not require collateral from its customers with respect to accounts receivable but performs periodic credit evaluations of such customer's financial conditions. Power3 determines any required allowance by considering a number of factors including lengths of time accounts receivable are past due and Power3's previous loss history. Power3 provides reserves for accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts.

Power3’s cash may exceed FDIC protection levels at different points throughout the year; management believes the risk associated with this possible exposure is minimal. Power3 was within FDIC protection limits at December 31, 2007 and 2006, respectively.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as certain financial statement disclosures. While management believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from these estimates.

30

Furniture, Fixtures and Lab Equipment

Furniture, fixtures and lab equipment are stated at cost. Major additions are capitalized, while minor additions and maintenance and repairs, which do not extend the useful life of an asset, are expensed as incurred. Depreciation and amortization are accounted for using the straight-line method over the assets’ estimated useful lives.

Debt Discounts and Deferred Finance Costs

Debt discounts and deferred finance costs are being amortized through periodic charges to interest expense over the maximum term of the related financial instrument using the effective interest method. Total amortization of debt discounts and deferred financing costs amounted to $2,112,288 and $271,908 during the years ended December 31, 2007 and 2006, respectively.

Patents

Costs incurred for patent applications are capitalized and will be expensed over the life of the patent upon approval of the patent. If patent applications are unsuccessful, cost associated with these patents is expensed immediately.

Long-Lived Assets

Statement of Financial Accounting Standards (SFAS) 144, "Accounting for the Impairment or Disposal of Long-Lived Assets” requires that long-lived assets, including certain identifiable intangibles, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the assets in question may not be recoverable.

Statement of Financial Accounting Standards (SFAS) 142 “Accounting for Intangible Assets” provides that some intangible assets are not subject to periodic amortization, but are evaluated at least annually for impairments. During March 2008 management had reassessed the future cash flow and concluded that the prior expectations do not appear to be obtainable. This updated analysis resulted in management’s decision to impair intangible assets completely, as of December 31, 2007, resulting in impairment losses of $179,788 during the year ended December 31, 2007.

Accounting for Derivative Instruments

Statement of Financial Accounting Standards (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, requires all derivatives to be recorded on the balance sheet at fair value. These derivatives, including embedded derivatives in Power3's structured borrowings, are separately valued and accounted for on Power3's balance sheet. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market based pricing models incorporating readily observable market data and requiring judgment and estimates.

Lattice Valuation Model

Power3 valued the conversion features in their convertible notes using a lattice valuation model, with the assistance of a valuation consultant. The lattice model values the embedded derivatives based on a probability weighted discounted cash flow model. This model is based on future projections of the five primary alternatives possible for settlement of the features included within the embedded derivative, including: (1) payments are made in cash, (2) payments are made in stock, (3) the holder exercises its right to convert the debentures, (4) Power3 exercises its right to convert the debentures and (5) Power3 defaults on the debentures. Power3 uses the model to analyze (a) the underlying economic factors that influence which of these events will occur, (b) when they are likely to occur, and (c) the common stock price and specific terms of the debentures such as interest rate and conversion price that will be in effect when they occur. Based on the analysis of these factors, Power3 uses the model to develop a set of potential scenarios. Probabilities of each scenario occurring during the remaining term of the debentures are determined based on management's projections. These probabilities are used to create a cash flow projection over the term of the debentures and determine the probability that the projected cash flow will be achieved. A discounted weighted average cash flow for each scenario is then calculated and compared to the discounted cash flow of the debentures without the compound embedded derivative in order to determine a value for the compound embedded derivative.

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Black−Scholes Valuation Model

Power3 uses the Black−Scholes pricing model to determine the fair values of its warrants. The model uses market sourced inputs such as interest rates, stock prices, and option volatilities, the selection of which requires management's judgment, and which may impact net income or loss. In particular, Power3 uses volatility rates based upon the closing stock price of Power3’s common stock. Power3 uses a risk free interest rate which is the U.S. Treasury bill rate for a security with a maturity that approximates the estimated expected life of the derivative or security.

Net Loss Per Share

Basic and diluted net loss per share calculations are calculated on the basis of the weighted average number of common shares outstanding during the year. The per share amounts include the dilutive effect of common stock equivalents in years with net income. Power3 had losses in 2007 and 2006. Basic and diluted loss per share is the same as the effect of our potential common stock equivalents would be anti-dilutive.

Stock Based Compensation

Effective January 1, 2006, Power3 began recording compensation expense associated with stock options and other forms of equity compensation in accordance with Statement of Financial Accounting Standards (SFAS) 123R, “Share−Based Payment”, as interpreted by SEC Staff Accounting Bulletin No. 107. Prior to January 1, 2006, Power3 had accounted for stock options according to the provisions of APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and related interpretations, and therefore no related compensation expense was recorded for awards granted with no intrinsic value. Power3 adopted the modified prospective transition method provided for under SFAS 123R, and, consequently, has not retroactively adjusted results from prior periods.

Stock issued to employees is recorded at the fair value of the shares granted based upon the closing market price of Power3’s stock at the measurement date and recognized as compensation expense over the applicable requisite service period. Warrants granted to non-employees are recorded at the estimated fair value of the options granted using the Black-Scholes pricing model and recognized as general and administrative expense over the applicable requisite service period.

As of December 31, 2007, the Company has not granted options to employees.

Income Taxes

Power3 utilizes the asset and liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that the value of such assets will be realized.

Research and Development

Research and development costs, which approximated $109,899 and $40,867 for the years ended December 31, 2007 and 2006, respectively, are expensed as incurred.

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Cash Equivalents

For purposes of the statements of cash flows, Power3 considers all highly liquid debt instruments purchased with an original maturity of 90 days or less to be cash equivalents. As of December 31, 2007 and 2006 there were no cash equivalents.

Revenue Recognition

Power3’s revenue recognition policy is consistent with the criteria set forth in Staff Accounting Bulletin 104-Revenue Recognition in Financial Statements (SAB 104) for determining when revenue is realized or realizable and earned. In accordance with the requirements of SAB 104 the Company recognizes revenue when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred, (3) the seller’s price is fixed or determinable, and (4) collectability is reasonably assured.

Recently Issued Accounting Pronouncements

Power3 does not expect the adoption of recently issued accounting pronouncements to have a significant impact on its results of operations, financial position or cash flow.

Note 3. GOING CONCERN

As shown in the accompanying financial statements, Power3 incurred net losses chargeable to common shareholders of $5,233,923 and $6,415,969 in fiscal 2007 and 2006, respectively, and has an accumulated deficit of $8,784,114 as of December 31, 2007. These conditions create an uncertainty as to Power3's ability to continue as a going concern. Management is trying to raise additional capital through various funding arrangements. The financial statements do not include any adjustment that might be necessary if Power3 is unable to continue as a going concern.

Note 4. EQUIPMENT

Equipment consisted of the following at December 31, 2007 and 2006:

Description	Life		2007			2006
Computers & Related Devices		5 years	$	12,377		$	11,294
Less: Accumulated Depreciation				(9,113	)		(6,248	)
			$	3,264		$	5,046
Lab Equipment		5 years	$	92,382		$	90,396
Less: Accumulated Depreciation				(89,847	)	$	(79,068	)
				2,535			11,328
Total Equipment Net of Depreciation			$	5,799		$	16,374

Note 5. OTHER CURRENT LIABILITIES

Other liabilities and accrued expenses consisted of the following at December 31, 2007 and 2006:

	2007		2006
Accrued rent	$	49,103	$	60,054
Accrued interest		447,647		733,274
Liquidated damages		—		24,000
Prepayment penalty		145,000		420,000
Accrued payroll taxes		6,021		58,408
Accrued liabilities		9,516		111,999
Salaries payable		56,899		110,073
Common stock payable		48,750		—
Preferred stock payable		480,000		—
	$	1,242,936	$	1,517,808

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Note 6. INCOME TAXES

During 2007 and 2006, Power3 incurred net losses and, therefore, had no tax liability. The net deferred tax asset generated by the loss carry forward has been fully reserved. The cumulative net operating loss carry forward is approximately $16,812,667 and $14,165,749 at December 31, 2007 and 2006, respectively and will expire in the years 2019 through 2027.

At December 31, 2007 the deferred tax assets consisted of the following:

Net Operating loss	$	5,716,307
Less: Valuation allowance	$	(5,716,307	)
Net Deferred tax asset	$	—

Note 7. RELATED PARTY TRANSACTIONS

In order to obtain bridge loan financing for the Company, Steven B. Rash, Chief Executive Officer of Power3, and Dr. Ira Goldknopf, Director of Proteomics of Power3, have both pledged 9,914,500 and 8,753,000 shares of Power3 common stock they owned personally, as collateral for the bridge loans obtained. In certain instances, these bridge loan providers have sold pledged shares they were holding as collateral for the notes to pay back the notes payable. The amounts obtained from the sale of pledged shares have been reported to the Company by the lenders. The Company owed Steven B. Rash notes payable, for the amounts of his pledged shares that have been sold, in the amount of $924,456 and $608,342 at December 31, 2007 and 2006, respectively. The Company owed Dr. Ira Goldknopf notes payable, for the amounts of his pledged shares that have been sold, in the amount of $975,360 and $785,004 at December 31, 2007 and 2006, respectively.

During 2007 and 2006, the following notes were issued to Steven B. Rash: $90,682 on January 2, 2007, maturing on July 2, 2007, at 6% interest; $242,732 on May 8, 2007, maturing on November 8, 2007, at 6% interest; $40,515 on January 20, 2006, maturing on June 19, 2006, at 6% interest; 50,000 on March 1, 2006, maturing on June 1, 2006, at 6% interest; $11,500 on September 5, 2006, maturing on September 5, 2007, at 6% interest; $315,010 on September 30, 2006, maturing on March 30, 2007, at 6% interest; $5,800 on October 27, 2006, maturing on October 26, 2007, at 6% interest; and $94,341 on December 31, 2006, maturing on June 30, 2007, at 6% interest.

During 2007 and 2006, the following notes were issued to Dr. Ira Goldknopf: $18,135 on September 30, 2006, maturing on March 30, 2007, at 6% interest; $5,387 on September 30, 2006, maturing on March 30, 2007, at 6% interest; $304,734 on September 30, 2006, maturing on June 30, 2007 at 6% interest; $89,400 on March 2, 2006, maturing on June 2, 2006, at 6% interest; $106,117 on December 31, 2006, maturing on December 31, 2007, at 6% interest; $4,180 on January 2, 2007 maturing on July 2, 2008, at 6% interest; $36,176 on May 8, 2007, maturing on November 8, 2008, at 6% interest; $150,000 on December 28, 2007, maturing on December 27, 2008 at 6% interest.

During 2005, Michael Rosinski, a previous employee of the Company, loaned the Company $35,000 at 6% interest. The loan remains outstanding, is in default and is carried on the balance sheet.

Amounts owed to Steven B. Rash, Dr. Ira Goldknopf and Michael Rosinski total $1,934,816 and $1,428,346 at December 31, 2007 and 2006, respectively.

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Note 8. OTHER COMMITMENTS AND CONTINGENCIES

On October 28, 2005, Power3 received notice of a Petition to Enforce Foreign Judgment citation filed against the Company by KForce regarding an employment fee adjudicated in December 2003 in the state of Florida against the Company, in the amount of $15,873, together with $4,735 in interest. Power3 does not agree with the Foreign Judgment and is attempting to resolve the issue prior to enforcement. No resolution has been achieved on this issue at this time; however, the Company is endeavoring to resolve the petition. This debt is not recorded in accounts payable by the Company because it is the Company’s position that the judgment should never have been entered against Power3, but rather against a different corporate entity, not related to Power3 in any way. The Company’s attorney in this matter feels that no loss is probable, nor will the Company be obligated to pay any sums whatsoever on this matter. The Company has pled improper party and expects to be vacated from the suit since it does not apply to the Company. Power3 has counterclaimed KForce given that their suit is frivolous.

On March 12, 2008, all matters involving an ex-employee, of certain trade secrets, defamation and tortious interference with Power3's contractual relations with other parties, and a pendent wage claim for severance pay, were resolved. In settlement of this lawsuit, 325,000 shares were issued on March 26, 2008 and payment of $35,000 will be made to the ex-employee no later than April 30, 2008. As of December 31, 2007 the Company has accrued $35,000 salaries payable and $48,750 stock payable.

Warrants:

Warrants have been issued to various investors and others in connection with financing arrangements and for services. A summary table of the warrants outstanding is as follows:

	2007				2006
			Weighted				Weighted
			Average				Average
			Exercise				Exercise
	Warrants		Price		Warrants		Price
Outstanding at beginning of year		14,499,996	$	.40		5,383,333	$	.95
Cancelled		550,000	$	.20		—	$	—
Granted		20,213,955	$	.10		9,116,663	$	.08
Exercised		5,270,832	$	.08		—	$	—
Outstanding at end of year		28,893,119	$	.12		14,499,996	$	.40
Exercisable at the end of the year		28,893,119	$	.12		14,499,996	$	.40

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The following table summarizes information about the Company’s warrants outstanding at December 31, 2007:

Exercise Price	Number Outstanding		Weighted Average Remaining Contractual Life (in years)
$        .08		15,179,162		3
$        .10		9,713,958		2
$        .14		1,666,666		5
$        .20		833,333		2
$        .25		1,000,000		5
$        .98		300,000		1
$        1.00		100,000		Ind
$        3.00		100,000		2
		28,893,119		3

Note 9. FINANCING ARRANGEMENTS

Securities Purchase Agreement—Convertible Debentures

The Company entered into a Securities Purchase Agreement, dated October 28, 2004 (the “Agreement”) with certain accredited investors (the “Purchasers”). Pursuant to the Agreement, the Purchasers agreed to purchase convertible debentures due three (3) years from the date of issuance in the aggregate principal amount of $3,000,000. The Agreement also provides warrants to purchase shares of the Company's common stock and additional investment rights to purchase additional convertible debentures. In connection with the Agreement, the Company also entered into a Registration Rights Agreement with the Purchasers that requires the Company to (i) file a registration statement with the SEC registering the resale of the shares of common stock issuable upon conversion of the debentures and the exercise of the warrants, (ii) achieve effectiveness within a stated period and (iii) maintain effectiveness of the registration statement. Failure to meet these requirements will require the Company to incur liquidating damages amounting to 2.0% for each month.

On October 28, 2004, the Company issued the Purchasers the first $1,000,000 in aggregate principal amount of such debentures at the initial closing under the Agreement. Effective January 26, 2005, the Company issued and sold, to a sub-group of the original investors, a second tranche of $400,000 aggregate principal amount of debentures. Subject to the conditions set forth in the Agreement, all purchasers are required to purchase the remaining $1,600,000 in aggregate principal amount of such debentures at the final closing, which is to occur on or before the fifth trading day after the effective date of the registration statement. The Company is currently in default under the Agreement and the previously issued debentures and related registration rights agreement, and therefore the conditions of the Agreement will not be satisfied or otherwise met on a timely basis. Consequently, there are no assurances that the Purchasers will purchase all or any portion of the remaining $1,600,000 aggregate principal amount of debentures. The $1,400,000 aggregate principal amount of debentures that were issued October 28, 2004 and January 26, 2005 are due and payable in accordance with their original terms in full three years after the date of issuance and bear interest at a default rate of 18%. The debentures are convertible into shares of common stock at the following conversion price, which varies relative to the Company’s trading stock price, as follows: $0.90 per share, provided however if the lesser of (i) 75% of the average of the 5 consecutive Closing Prices immediately prior to the Effective Date, as defined in the Securities Purchase Agreement, and (ii) the Closing Price on the Effective Date (the lesser of (i) and (ii) being referred to as the “Effective Date Price”) is less than the Conversion Price, the Conversion Price shall be reduced to equal the Effective Date Price.

Under the Agreements, the Purchasers also received warrants to purchase an aggregate of up to 2,500,000 and 333,333 shares of common stock for tranche one and two, respectively, and additional investment rights to purchase up to an additional $2,500,000 of convertible debentures. The warrants are exercisable at a price of $0.08 per share, subject to adjustment, including anti-dilution protection. The additional investment rights are exercisable at a price equal to the principal amount of the debentures to be purchased, for (1) a period of nine months following the effective date of the registration statement to be filed pursuant to the Registration Rights Agreement, or (2) a period of 18 months from the date of issuance of the additional investment rights, whichever is shorter. The rights debentures will have the same terms as the debentures described above, except that the conversion price will be equal to $1.08.

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The Company is in default under the provisions of the Agreement, Registration Rights Agreement and previously issued debentures. The aggregate amount payable upon an acceleration by reason of an event of default is equal to the greater of 130% of the principal amount of the debentures to be prepaid or the principal amount of the debentures to be prepaid, divided by the conversion price on the date specified in the debenture, multiplied by the closing price on the date set forth in the debenture. As a result of this default Power3 recorded $420,000 during the 12 month period ended December 31, 2005 in penalties as described above.

Of the $1,400,000 Convertible Debentures mentioned above the Company settled $884,990 and $0 at December 31, 2007 and 2006, respectively, resulting in a balance of $515,010 and $1,400,000 at December 31, 2007 and 2006, respectively. As a result of negotiations with the purchasers the default penalty has been reduced to $145,000 as of December 31, 2007.

On April 3, 2007, the Company entered into a joint venture agreement with NeoGenomics to form a Contract Research Organization (CRO) and collaborate on research work in the future. In addition, NeoGenomics agreed to purchase a convertible debenture for $200,000 and acquired options to purchase common stock of the Company during 2007. Under the terms of the agreement, Power3 agreed to issue, and NeoGenomics agreed to purchase, a convertible debenture in the principal amount of $200,000. The convertible debenture will be convertible into common shares of the Company at $.20 per share; however the conversion price can be reset at any time and from time to time, in accordance with paragraphs 7 and 9 of the Agreement. The debenture shall accrue interest at 6% per annum, payable quarterly, and the principal amount of the debenture shall be due and payable two years after closing.

In addition, in consideration of NeoGenomics, Inc.’s commitment to purchase the debenture and form the joint venture, Power3 signed a Letter of Intent with an expiration date of November 16, 2007 granting, to Neogenomics, Inc., an irrevocable option (the “First Option”) to purchase, in one or a series of transactions, voting convertible preferred stock that is convertible into such number of shares of common stock of Power3, after taking into account all outstanding First Option Preferred Stock, on an as-converted basis.

Further, in consideration of NeoGenomics, Inc.’s commitment to purchase the debenture and form the joint venture, the Letter of Intent granted NeoGenomics, Inc. an irrevocable option (the “Second Option”) to purchase, in one or a series of transactions, voting convertible preferred stock that is convertible into such number of shares of common shares of the Company as is necessary to increase NeoGenomics, Inc.’s ownership of the voting common stock of Power3 up to 60% of Power3’s voting common stock, after taking into consideration all outstanding First Option Preferred Stock and Second Option Preferred Stock, on an as-converted basis.

Currently, Power3 and NeoGenomics are in discussion to revise the expired Letter of Intent between the respective organizations.

Power3 has converted several notes and plans to continue doing so. In some instances, Power3 has offered terms of conversion lower than the original agreement including raising the strike price of warrants attached to these instruments. As a result of this additional consideration, upon conversion the Company has recorded a $1,544,574 gain on the conversion of notes during the year ended December 31, 2007. The change in the conversion terms represented greater than 10% of the principal value of the notes and as a result extinguishment accounting has been applied consistent with EITF 96-19.

As a result of the above notes, Power3 has determined that the conversion feature of the convertible debentures and the warrants issued with the convertible debentures are embedded derivative instruments pursuant to Statement of Financial Accounting Standards (SFAS) 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended. Under the provisions of EITF Issue No. 00−19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock,” the accounting treatment of these derivative financial instruments requires that the Company record the derivatives at their fair values as of the inception date of the note agreements and at fair value as of each subsequent balance sheet date as a liability. Any change in fair value is recorded as non-operating, non-cash income or expense at each balance sheet date. The Company estimates fair value of warrants using the Black-Scholes option pricing model and the conversion feature of their notes using the binomial lattice model. The estimates inherent within these models directly affect the reported amounts of the derivative instrument liabilities.

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Deemed Dividend

As part of Power3’s attempt to induce exercise the strike price of several warrants was reduced resulting in a deemed dividend of $17,635 consistent with EITF 98-5. The deemed dividend was valued using the Black-Scholes model immediately beforeand after the inducement consistent with paragraph 51 of SFAS 123R.

Convertible Debentures, Warrants and Additional Investment Rights:

The carrying values of the Company’s convertible debentures amounted to $645,190 and $360,417, at December 31, 2007 and December 31, 2006, respectively.

The following tabular presentation reflects the components of derivative financial instruments on the Company’s balance sheet at December 31, 2007 and December 31, 2006:

Derivative Liabilities:	2007		2006
Common stock warrants	$	1,563,183	$	875,783
Embedded conversion feature		1,205,719		186,480
Additional investment rights		642,792		183,056
Other derivative instruments		382,611		36,029
	$	3,794,305	$	1,281,348

The fair values of certain other derivative financial instruments (warrants) that existed at the time of the initial Debenture Financing were re-classed from stockholders’ equity to liabilities when, in connection with the Debenture Financing, the Company no longer controlled its ability to share-settle these instruments.

Other Notes, Preferred Stock and Warrants:

During November and December 2005, the Company issued $300,000 (2 tranches of $150,000) face value, 11% notes and detachable warrants to purchase 2,000,000 shares of common stock to Trinity Financing Investments Corporation. The warrants have eight-year terms and strike prices of $0.25 for 1,000,000 shares and $0.14 for 1,000,000 shares.

The proceeds from the Trinity financing were allocated first to the warrants, based upon their fair values, with the balance of $103,100 allocated to the notes. The allocation of proceeds to the fair value to the warrants was performed because, as discussed in the previous section, share settlement is not within management’s control. Such amount was initially classified as a derivative liability. The resulting note discount is being amortized through periodic charges to interest expense using the effective method over the life of the notes. Amortization of note discount amounted to $60,522 and $68,499 during the year ended December 31, 2007 and December 31, 2006, respectively. The Company did not make its required debt service payments in March and April 2006. The first Trinity note was paid in full during 2006. On October 3, 2007 a settlement agreement was reached with Trinity to pay off the second Trinity note. The agreement states that Trinity is to retain 1,300,000 shares from which the legend will be removed. The shares are to be sold in payment of the outstanding debt. If the sale of the 1,300,000 shares yields less than $150,000, Power3 is to pay the difference in cash. The value of the shares is in excess of the amount owed; therefore, Power3 has not accrued any additional liability.

Other derivative financial instruments consist of various warrants that were issued prior to and subsequent to the debenture financing and were reclassified from stockholders’ equity or initially accounted for as liabilities, at fair values, since share-settlement was not within the Company’s control after the debenture financing.

Notes Payable in Default and to Related Parties

The Company is in default under the provisions of its October 2004 Securities Purchase Agreement, and accompanying registration rights agreement and debentures. The default stems from the Company’s inability to obtain effectiveness of the registration statement on Form SB-2, as amended (File No. 333-122227) filed pursuant to the registration rights agreement. The registration statement was withdrawn on June 20, 2007. During the year ended December 31, 2007, the Company has settled with a number of its Convertible Debenture Holders as previously mentioned above.

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During January and February, 2006, the Company received an aggregate of $89,400 from a consulting firm in the form of short-term bridge loans. The loans were collateralized by pledged stock. The pledged stock was pledged by officers of the Company and later sold by the consulting firm to pay back the short-term bridge loans.

On March 28, 2006, the Company received a bridge loan in the amount of $400,000, which, after discounts and fees, amounted to a net amount of $300,000. This bridge loan was payable on the sooner of June 28, 2006 or the fifth day following the effective date of the Company’s proposed registration statement on Form SB-2. The note was secured by a Stock Pledge Agreement wherein Steven B. Rash, Chairman and CEO of the Company and Dr. Ira Goldknopf, Director of Proteomics of the Company, pledged personally-owned shares of the Company’s stock. This note was paid off during 2006 by sale of pledged shares by the note holder and is no longer due and payable to the lender.

On June 1, 2006, the Company received a bridge loan in the amount of $266,000, which, after discounts and fees, amounted to a net amount of $200,000. This bridge loan was payable on the sooner of August 12, 2006, or the fifth day following the effective date of the Company’s proposed registration statement on Form SB-2. The note was secured by a Stock Pledge Agreement wherein Steven B. Rash, Chairman and CEO of the Company, and Dr. Ira Goldknopf, Director of Proteomics of the Company, pledged personally-owned shares of the Company’s stock. This note was in default as of December 31, 2006. However, in February, 2007, this note was paid off by sale of pledged shares and a transfer of the remaining principal balance to a new note holder.

During 2006, the payoff of Company notes payable from the sale of personally pledged shares resulted in the Company entering into Notes Payable with Steven B. Rash, Chairman and CEO of the Company and Dr. Ira Goldknopf, Director of Proteomics of the Company, in the amount of $517,166 and $523,773 respectively. At the end of the year 2006, the total Notes Payable due Mr. Rash for all such transactions were $608,342 and the total Notes Payable due Dr. Goldknopf for such transactions were $785,004. These notes, along with the note payable to Mike Rosinski in the amount of $35,000, brings the total Notes Payable to related parties, as of December 31, 2006, to $1,428,346.

During 2007, the payoff of Company notes payable from the sale of personally pledged shares, resulted in the Company entering into Notes Payable with Steven B. Rash, Chairman and CEO of the Company and Dr. Ira Goldknopf, Director of Proteomics of the Company, in the amount of $333,414 and $190,356 respectively. At the end of the year 2007, the total Notes Payable due Mr. Rash for all such transactions were $924,456 and the total Notes Payable due Dr. Goldknopf for such transactions were $975,360. These notes, along with the note payable to Mike Rosinski in the amount of $35,000, brings the total Notes Payable to related parties, as of December 31, 2007, to $1,934,816 as follows:

	2007		2006
Notes payable in default:
Cordillera I	$	251,000	$	251,000
Cordillera II	$	200,000	$	200,000
Trinity	$	—	$	155,500
Discount on Trinity Note	$	—	$	(94,678	)
Fife	$	—	$	266,000
Totals	$	451,000	$	777,822
Notes payable:
Kazanowski	$	50,000	$	—
	$	50,000	$	—
Notes payable - related parties:
Rash	$	924,456	$	608,342
Goldknopf	$	975,360	$	785,004
Rosinski	$	35,000	$	35,000
Totals	$	1,934,816	$	1,428,346

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Note 10. OTHER SIGNIFICANT EQUITY TRANSACTIONS

Deemed distribution:

During the 2^nd Quarter of 2004, the Company issued 15,000,000 shares of common stock as consideration for a set of assets and liabilities purchased from Advanced BioChem in the asset purchase transaction of May 18, 2004.  Because this transaction was between individuals and entities considered to be related parties, under the rules of the SEC, the assets are recorded at historical cost and the amount in excess of historical cost is considered to be a deemed distribution to the shareholders. As part of that transaction, the Company recorded a deemed distribution of $ 13,371,776 as the difference between the market value of the stock at $0.90 per share on the date of the agreement ($13,500,000) and $128,224, debt in excess of the assets received in the transaction.

During the 4^th Quarter of 2004, the Company converted Series A Preferred Stock owned by former management of the Company to common shares, per the terms of the Series A Preferred Stock held by these individuals (Novak, Gray and Leonard).  As part of that transaction the Company recorded a deemed distribution of $3,380,975, the market value of the common shares issued at the date of issue of the common shares.  Since both of these deemed distributions occurred after May 18, 2004, the date the Company entered the development stage, the total of these two deemed distributions ($16,752,751) is included in the deficit accumulated during the development stage in the balance sheet of the Company.

Deemed dividend:

As part of Power3’s attempt to induce exercise the strike price of several warrants was reduced resulting in a deemed dividend of $17,635 consistent with EITF 98-5. The deemed dividend was valued using the Black-Scholes model immediately beforeand after the inducement consistent with paragraph 51 of SFAS 123R.

Sales of common stock during 2004:

The Company did not sell any common stock for cash during 2004.

Sales of common stock during 2005:

The Company did not sell any common stock for cash during 2005.

Sales of common stock during 2006:

On January 6, 2006, 500,000 shares of common stock were sold to a private investor to raise $57,500.

On February 3, 2006, 1,114,286 shares of common stock were sold to private investors to raise $82,500.

On March 8, 2006, 400,000 shares of common stock were sold to private investors to raise $40,000.

On March 9, 2006, 400,000 shares of common stock were sold to private investors to raise $40,000.

On June 8, 2006, 38,460 shares of common stock were sold to a private investor to raise $5,000.

Stock Issued during 2006 under the 2004 Stock Compensation Plan:

During 2006, 2,449,990 shares of common stock of the Company were issued to attorneys and consultants as compensation for services rendered. The estimated fair value of these shares was recorded as general and administrative expense of $314,314 based upon the closing price of Power3’s stock at the measurement date.

During 2005, 140,000 shares of common stock were returned from a former employee and those shares were re-issued to a new employee. In addition, 850,000 shares were issued, under the 2004 Stock Compensation Plan, to attorneys for legal services.

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Sales of common stock during the year ended December 31, 2007:

On June 13, 2007, 1,750,000 shares of common stock were sold to a private investor to raise $300,000. There were no warrants associated with this transaction.

On June 13, 2007, 1,500,000 shares of common stock were sold to a private investor to raise $350,000. There were no warrants associated with this transaction.

On June 13, 2007, $58,500 was paid to placement agents in connection with the two sales above. These costs were deducted from the proceeds of this transaction and resulted in a reduction of additional paid in capital.

On November 15, 2007 700,000 shares of common stock were sold to private investors to raise $56,000.

On November 19, 2007 250,000 shares of common stock were sold to private investors to raise $20,000.

On November 20, 2007 177,500 shares of common stock were sold to private investors to raise $14,200.

On November 26, 2007 12,500 shares of common stock were sold to private investors to raise $1,000.

On November 27, 2007 768,750 shares of common stock were sold to private investors to raise $61,500.

On November 30, 2007 600,000 shares of common stock were sold to private investors to raise $48,000.

On December 5, 2007 603,750 shares of common stock were sold to private investors to raise $48,300.

On December 14, 2007 49,375 shares of common stock were sold to private investors to raise $3,950.

On December 18, 2007 118,750 shares of common stock were sold to private investors to raise $9,500.

On December 31, 2007 1,100,000 shares of common stock were sold to private investors to raise $88,000.

Shares issued for services during the year ended December 31, 2007:

5,000 shares of common stock issued to an employee for services were added to the books to reflect shares issued but not recorded.

On January 2, 2007, 100,000 shares were issued for services. The Company estimated the fair value of this transaction to be $8,000 based upon the closing stock price of the Company’s stock at the measurement date.

On January 30, 2007, 500,000 shares were issued for services. The Company estimated the fair value of this transaction to be $42,500 based upon the closing stock price of the Company’s stock at the measurement date.

On June 13, 2007, 400,000 shares were issued for services. The Company estimated the fair value of this transaction to be $80,000 based upon the closing stock price of the Company’s stock at the measurement date.

Shares issued for debt during the year ended December 31, 2007:

On April 13, 2007, 460,000 shares were issued for debt. The Company estimated the fair value of this transaction to be $101,200 based upon the closing stock price of the Company’s stock at the measurement date.

On December 6, 2007, 350,000 shares were issued for debt. The Company estimated the fair value of this transaction to be $52,500 based upon the closing stock price of the Company’s stock at the measurement date.

Shares issued for conversion of debt during the year ended December 31, 2007:

26,265,224 shares of common stock were issued for the conversion of convertible notes as discussed in Note 9 above resulting in a gain on extinguishment of debt of $1,544,574.

Shares issued for exercise of warrants during the year ended December 31, 2007:

5,270,832 shares of common stock were issued for the exercise of warrants resulting in cash receipts of $341,667.

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Note 11. SUBSEQUENT EVENTS

On January 7, 2008, a total of 2,000 shares of common stock were issued to four employees in recognition of receiving the 3^rd Annual Chairman’s Circle of Excellence Award.

On January 16, 2008, 231,250 shares of common stock were issued for cash to private investors in the amount of $18,500.

Two executive level employees were hired with the following compensation: 500,000 options convertible into common stock vesting January 18, 2008 (have not been issued to-date); 20,000 options convertible into common stock based on performance; 10,000 options convertible into common stock based on performance; commission on revenues; and commission on equity capital raised.

On February 8, 2008, 5,706,667 shares of common stock were issued for conversion of debt in the amount of $342,400.

On February 12, 2008, 3,612,625 shares of common stock were issued for cash to private investors in the amount of $289,010.

On February 14, 2008, 200,000 shares of common stock were issued for cash to private investors in the amount of $20,000.

On February 25, 2008, 1,150,000 shares of common stock were issued for cash to private investors in the amount of $115,000.

On March 12, 2008, 374.000 shares of common stock were issued for cash to private investors in the amount of $37,400.

On March 26, 2008, 325,000 shares of common stock were issued in settlement of a dispute with a former employee as mentioned above.

On April 3, 2008, 1,250,000 shares of common stock were issued for cash to private investors in the amount of $100,000.

Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

On August 10, 2007, Malone & Bailey, P.C. was dismissed as the independent auditor for Power3 Medical Products, Inc. Malone & Bailey, P.C. has served as the independent auditor of Power3's annual financial statements since the audit of the calendar year ended December 31, 2005. From the date on which Malone & Bailey, P.C. was engaged until the date they were dismissed, there were no disagreements with Malone & Bailey, P.C. on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Malone & Bailey, P.C., would have caused Malone & Bailey, P.C. to make reference to the subject matter of the disagreements in connection with any reports it would have issued, and there were no "reportable events" as that term is defined in Item 304(a) (1) (iv) of Regulation S-B.

Power3 provided Malone & Bailey, P.C. with a copy of the foregoing disclosure, and requested that Malone & Bailey, P.C. furnish Power3 with a letter addressed to the Securities and Exchange Commission stating whether or not it agreed with such disclosure. Power3 filed as an Exhibit to the Form 8-K, a copy of the letter from Malone & Bailey, P.C. as required by Item 304 of Regulation S-B. On August 28, 2007, Malone & Bailey, P.C. provided a letter agreeing with the foregoing disclosure in Power3’s Form 8K-A filing.

On August 10, 2007, Power3 executed an engagement letter with McElravy, Kinchen & Associates, P.C. ("MKA") to assume the role of its new certifying accountant. MKA has been asked to perform the quarterly reviews of Power3 for the quarters ended June 30, 2007 and September 30, 2007 and the audit for the year ended December 31, 2007.

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During the periods ended December 31, 2005 through 2006 and the subsequent interim period ended March 31, 2007, and through the date of the firm's engagement, Power3 did not consult with MKA with regard to:

(i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on Power3's financial statements; or

(ii) any matter that was either the subject of a disagreement or a reportable event (as described in Item 304(a) (1) (iv) of Regulation S-B.

The engagement of the new principal auditor was recommended and approved by the Board of Directors of Power3.

Other than the changes described above, there were no changes in the Company’s internal control over financial reporting that occurred during the Company’s fiscal year ended December 31, 2007 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

Item 8A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Accounting Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the fiscal period ending December 31, 2007 covered by this Annual Report on Form 10-KSB. Based upon such evaluation, the Chief Executive Officer and Chief Accounting Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective as required under Rules 13a-15(e) and 15d-15(e) under the Exchange Act. This conclusion is based upon the number and magnitude of the year end adjusting entries.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) of the Company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management, under the supervision of the Company’s Chief Executive Officer and Chief Accounting Officer, conducted an evaluation of the effectiveness of internal control over financial reporting. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2007. For quarter ended September 30, 2007 deficiencies related to expense recognition and disclosure control deficiencies related to transactions involving equity issuances and derivatives were identified. The adjustment to expense and the footnote disclosure deficiencies were detected by our independent auditors during the review process and were appropriately corrected, recorded and disclosed on Form 10-QSB for the three and nine month period ended September 30, 2007. Following a review of the deficiencies, management determined that we had incorrectly accounted for equity issuances and derivative valuations during such period. As a result, management concluded that our disclosure controls and procedures were not effective. Management concluded that the following three deficiencies were identified in our control process:

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· We did not have adequate transaction controls over the accounting, review and processing of certain unusual or complex accounting transactions.

· We did not have a systematic and documented program of internal controls and procedures over our accounting and financial reporting process to ensure that unusual or complex transactions are recorded, processed, summarized and reported on a timely basis in our financial disclosures.

· There is a need for the improved supervision and training of our accounting staff.

· There is deficiency in segregation of duties due to the small size of the Company.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this Annual Report on Form 10-KSB.

Additional effort is needed to fully remedy our identified deficiencies as discussed below and we are continuing our efforts to improve and strengthen our control processes and procedures. Our management intends to continue to work with our auditors and other outside advisors, as appropriate, to develop and then apply our controls and procedures with the goal of achieving adequate and effective disclosure controls. We believe that with a properly planned, designed and implemented system of internal controls over financial reporting, our disclosure controls and procedures are expected to become effective.

There have been no significant changes in internal controls, or in factors that could significantly affect internal controls, subsequent to the date the Chief Executive Officer and Chief Accounting Officer completed their evaluation.

Changes in Internal Control Over Financial Reporting

No change in the Company’s internal control over financial reporting occurred during the quarter ended December 31, 2007, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 8B. Other Information

None.

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PART III

Item 9. Directors, Executive Officers, Promoters, and Control Persons; Compliance with Section 16(a) of the Exchange Act

Directors, Executive Officers, Promoters and Control Persons

Set forth below is certain information concerning each of the Company’s directors, executive officers and significant employees. All directors of the Company hold office until the next annual meeting of shareholders or until their successors have been elected and qualified. The officers of the Company are appointed by the board of directors and hold office until their death, resignation or removal from office. The Company’s directors, executive officers, significant employees, and their ages, positions held and duration as such is as follows:

Name	Position Held with the Company	Age	Date First Elected or Appointed
Steven B. Rash	Chief Executive Officer and Director	60	May 18, 2004
Ira L. Goldknopf	Director of Proteomics and Director	62	May 18, 2004
Marion J. McCormick	Chief Accounting Officer	44	July 27, 2007

Certain additional information concerning the individuals named above is set forth below. This information is based on information furnished by each director, executive officer and significant employee.

Steven B. Rash joined the Company in May 2004 as Chairman of the Board of Directors and Chief Executive Officer. Mr. Rash served as Chairman of the Board of Directors and Chief Executive Officer of Advanced BioChem, Inc. from September 2003 to May 2004. Prior to that time he was an independent consultant from February 2003 until September 2003. In April 2001, Mr. Rash was employed as a consultant to Global Water Technologies, Inc. and was hired as President and interim CFO of the Company in January 2002 and retained that position until February 2003. From April 2000 until April 2001, he was an independent consultant. From June 1995 until March 2000, Mr. Rash was employed as President and CEO of American BioMed, Inc., a publicly traded medical device company. Mr. Rash has a B.S. in Business Administration from the University of Delaware and an M.B.A. from Southern Illinois University.

Ira L. Goldknopf, Ph.D. joined the Company in May 2004 as Chief Scientific Officer and Director. From August 2000 until May 2004, Dr. Goldknopf was Chief Scientific Officer of Advanced BioChem, which he co-founded in 2000. From August 1997 until August 2000, Dr. Goldknopf was a biotechnology consultant. Dr. Goldknopf has a B.A. in Chemistry from Hunter College and a Ph.D. in Biochemistry from Kansas State University. Dr. Goldknopf spent ten years on the faculty of Baylor College of Medicine and is the author of over 70 publications and a principal inventor of the Company’s intellectual property. Dr. Goldknopf also serves on the Company’s Scientific Advisory Board.

Marion J. McCormick joined the Company in July 2007 as Chief Accounting Officer. Mrs. McCormick was a staff auditor for Malone & Bailey, PC from September of 2006 to April of 2007. Prior to that time Mrs. McCormick established and ran the accounting department for MRSB, Ltd. from October 2005 until September 2006. Mrs. McCormick has a B.S.B Accounting from the University of Phoenix.

There are no family relationships among any of the directors or executive officers of the Company. Except as disclosed below with respect to the amended and restated employment agreements of Messrs. Rash and Goldknopf, no arrangement or understanding exists between any director or executive officer and any other person pursuant to which any director or executive officer was elected to serve.

None of the Company’s directors, executive officers, promoters or control persons has been involved in any of the following events during the past five years:

· any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

· any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

· being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

· being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

The board of directors has not established an audit committee or any committee performing similar functions. Consequently, the Company does not have an audit committee financial expert as defined in Item 401(3) of Regulation S-B. Management believes that in light of the Company’s current size and its status as a company with no operations, the establishment of an audit committee and the retention of an audit committee financial expert is not necessary at this time and is cost-prohibitive. The Company also does not have a standing nominating committee of its board of directors or any committee performing a similar function.

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Scientific Advisory Board 

The Company’s Scientific Advisory Board provides assistance in the research and development of the Company’s products. Unlike members of the Company’s Board of Directors, members of the Scientific Advisory Board, other than Dr. Goldknopf, are not involved in the management or operations of the Company. As of December 31, 2007, the members of the Scientific Advisory Board are as follows:

Dr. Stanley H. Appel, M. D. is Professor and Chair of Neurology at the Methodist Hospital Neurological Institute, Professor of Neurology at Baylor College of Medicine, Director of the Vicki Appel MDA/ALS Clinic, and past-Director of the Alzheimer’s disease Research Center at Baylor College of Medicine in Houston, Texas. He also serves as the Director of the Jerry Lewis Neuromuscular Research Center. Dr. Appel is a leading authority on degenerative neurological diseases, such as Parkinson’s, Alzheimer’s and ALS. Specifically, Dr. Appel focuses on the importance of neurotrophic factors and immune mechanisms, including the role of inflammatory cytokines in these diseases. He has served as an Advisory Board member of the Alzheimer’s disease and Related Disorders Association and as a Council member of the American Society of Neurochemistry.

Dr. Zouhair Atassi, Ph. D. is the current Robert A. Welch Chair of Chemistry and the Professor of Biochemistry and Molecular Biology at Baylor College of Medicine, Houston, Texas. After completing his Ph.D. in Chemistry, University of Birmingham, England, Dr. Atassi started his career in 1960 as Postdoctoral Research Fellow in Chemistry at the University of Birmingham. Dr. Atassi was the 2003 President of the Institute of Immunobiology and he is the current Editor-in-Chief for The Protein Journal, Protein Reviews and Critical Reviews in Immunology. Dr. Atassi has published 14 books and several volumes in Immunochemistry of Proteins and Immunobiology of Proteins and Peptides. He has given more than 150 lectures in national and international conferences and more than 180 invited seminars in U.S. and foreign universities and research institutions. In addition Dr. Atassi has more than several hundred scientific publications and has been awarded five United States patents between 1996 and 2000.

Dr. Ira L. Goldknopf, Ph. D. began his scientific career over 30 years ago, pioneering the field that is now known as Proteomics. More than a decade before the start of the Human Genome Project, Dr. Goldknopf made the earliest proteomic discovery at Baylor College of Medicine with Harris Busch, the isolation, identification, and sequencing of a new protein from a two-dimensional gel, Protein A24. During the course of these investigations, he discovered that protein A24 was the first known conjugate of two very important proteins, Histone H2A, a part of the subunit structure that packages DNA in the cell nucleus, and Ubiquitin. Through the work of Dr. Goldknopf and many others (over 9,000 publications in the ensuing years) - including Drs. Avram Hershko, Aaron Ciechanover, and Alex Varshavsky, who shared the 2000 Lasker Award for their achievements - the Ubiquitin Conjugation System is now known to play a major role in the management of the inventories of proteins in the cell, cell proliferation, programmed cell death, and most, if not all, major regulatory functions in health and disease at the cellular level.

Dr. Thomas E. Watts, M. D. received his M.D. in 1975 from Baylor College of Medicine. Dr. Watts is board certified, from American Board of Family Practice since 1972 and practiced medicine at Blue Earth Medical Center in Minnesota from 1975 to 1996 and is now practicing at the Kelsey-Seybold Clinic, The Woodlands, Texas. As a physician with more than 30 years of practice experience, Dr. Watts provides the Company with insights from the perspective of the end user of the Company’s products.

Dr. Alan B. Hollingsworth, M. D. received his M.D. with Distinction from the University of Oklahoma, College of Medicine in 1975 where he served as First Vice-President of Alpha Omega Alpha Honor Medical Society. In addition to his general surgery residency at the University of Oklahoma, he completed a one-year fellowship in surgical pathology at U.C.L.A. In the 1980s, he joined the first wave of surgeons who chose to limit their practices to breast cancer. He was the Founding Medical Director of the University of Oklahoma Institute for Breast Health in 1993 where he held the G. Rainey Williams Chair of Surgical Breast Oncology. Currently, he serves as Medical Director of Mercy Women’s Center (Mercy Health Center, Oklahoma City) and Medical Director, Breast MRI of Oklahoma. His interest in breast cancer risk assessment led to the publication of the first lay book on the subject, The Truth About Breast Cancer Risk Assessment, and he served as lead author for the multi-institutional consensus paper published in the American Journal of Surgery by the national breast cancer risk assessment working group.

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Marwan Sabbagh M.D. is the founding director of the Cleo Roberts Center for Clinical Research under the umbrella of the Sun Health Research Institute. Opened in 2000, the Center, with Dr. Sabbagh as the principle investigator, has conducted more than 50 Clinical trials and studies on Alzheimer’s and Parkinson’s diseases, as well as prostate cancer and Fibromyalgia. Dr. Sabbagh, a board-certified neurologist, received his undergraduate degree from the University of California Berkeley and his medical degree from the University of Arizona in Tucson. He is also the Associate Director of the Arizona Alzheimer’s Disease Core Center, a clinical instructor in the Sun Health St. Joseph’s Hospital’s Geriatric Fellowship Program, and a visiting scientist in the Department of Neurology at Mayo Clinic Scottsdale. He is also a staff physician at Boswell Memorial Hospital where he specializes in the diagnosis and treatment of Alzheimer’s disease. Dr. Sabbagh served his residency in neurology at Baylor College of medicine and a fellowship in geriatric neurology and dementia at the UCSD School of Medicine where he was on the faculty prior to joining Sun Health Research Institute. Dr. Sabbagh has authored or co-authored almost 70 chapter, reviews, and original papers on Alzheimer’s disease as well as authored a book on Alzheimer’s prevention entitled “The Alzheimer’s Answer: Reduce Your Risk and Keep Your Brain Healthy.”

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s directors, executive officers, and the persons who beneficially own more than ten percent (10%) of the Company’s common stock to file reports of ownership and changes in ownership with the SEC. Copies of all filed reports are required to be furnished to the Company. Based solely on the reports received by the Company and on representations of the reporting persons, the Company determined that there were a number of transactions that were not timely reported. With respect to its current directors, executive officers, and persons beneficially owning more than ten percent (10%) of the Company’s common stock, the Company undertook to file forms throughout the year. The Company has implemented new procedures to ensure improved compliance with the reporting requirements on an on-going basis. To the Company’s knowledge, based solely on its review of the reports received and on representations of the reporting persons, the Company believes that these persons have complied with all applicable filing requirements during the fiscal year ended December 31, 2007.

Code of Ethics

The Company has adopted a code of ethics applicable to its principal executive officer and principal financial officer which is incorporated by reference with this Annual Report.

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Item 10. Executive Compensation

The following table sets forth information concerning the compensation for services in all capacities rendered to us for the four fiscal years ended December 31, 2007 of our Chief Executive Officer and our other executive officers:

Summary Compensation Table 

								Long Term Compensation
			Annual Compensation(1)					Awards
Name and Principal Position	Year		Salary ($)			Bonus ($)		Restricted Stock Award(s)(2) ($)		Securities Underlying Options/SARs (#)		All Other Compe-nsation ($)		Total ($)
Steven B. Rash,		2007		260,425			0		0		0		(3)(4)(5)		260,425
Chairman of the Board /		2006		282,301			0		0		0		0		282,301
Chief Executive Officer		2005		248,426			0		0		0		0		248,426
Dr. Ira L. Goldknopf,		2007		104,167			0		0		0		(7)		104,167
Director of Proteomics (6)		2006		98,207			0		0		0		0		98,207
		2005		78,948			0		0		0		0		78,948
John P. Burton, Former		2007		59,103	(8)		0		0		0		0		59,103
Chief Financial Officer		2006		112,936			0		0		0		0		112,936
		2005		57,138			0		42,000		0		0		99,138
Marion J. McCormick,		2007		30,329	(8)		0		0		0		0		30,329
Chief Accounting Officer

(1) Other annual compensation provided to the named executive officers did not exceed the applicable disclosure requirements.

(2) At December 31, 2004 the aggregate number and value of all restricted shares held by each of the named executive officers was as follows: Mr. Rash - 13,250,000 restricted shares, $11,925,000 value and Dr. Goldknopf - 13,250,000 restricted shares, $11,925,000 value. The values are based on the closing price of $0.90 of the Company’s common stock on May 18, 2004. Although the Company does not expect to pay dividends on its common stock, any dividends which may be paid on its common stock will not be paid on the restricted stock unless and until such time as the restricted stock becomes nonforfeitable.

(3) Mr. Rash joined the Company in May 2004 with the completion of the acquisition of assets from Advanced BioChem. Mr. Rash was the Chairman of the Board and Chief Executive Officer of Advanced BioChem. Mr. Rash has entered into an employment agreement with the Company which is described below.

(4) Pursuant to Mr. Rash’s employment agreement, he was awarded 13,250,000 shares of restricted common stock. The value is based upon a closing price of $0.90 of the Company’s common stock on May 18, 2004. All of the shares are restricted stock and vested on May 18, 2006. In addition, Mr. Rash is entitled to receive 1,500,000 shares of restricted Series B preferred stock to be designated by the Company.

(5) In 2003, Mr. Rash was granted by Advanced BioChem pursuant to his employment agreement 825,000 shares of Advanced BioChem’s common stock and the option to purchase 200,000 shares of common stock at $0.80 per share. At the time the 825,000 shares were granted, the fair market value of such stock was $0.80 per share for a total of $660,000. Mr. Rash continues to hold such shares. Advanced BioChem was to enter into an option agreement with Mr. Rash; however, no such option agreement has been executed nor is it expected since Mr. Rash is no longer an officer of Advanced BioChem.

(6) Dr. Goldknopf joined the Company in May 2004 with the completion of the acquisition of the assets of Advanced BioChem. Dr. Goldknopf was the Chief Scientific Officer of Advanced BioChem. Dr. Goldknopf has entered into an employment agreement with the Company as described below.

(7)

Pursuant to Dr. Goldknopf’s employment agreement, he was awarded 13,250,000 shares of restricted common stock. The value is based upon a closing price of $0.90 of the Company’s common stock on May 18, 2004. All of the shares are restricted stock and vested on May 18, 2006. In addition, Dr. Goldknopf is entitled to receive 1,500,000 shares of restricted Series B preferred stock to be designated by the Company.

(8)

Salary for John Burton reflects amount earned from January to end of employment in July 2007. Salary for Marion McCormick reflects amount earned from August to December 2007.

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Director Compensation

Mr. Rash and Dr. Goldknopf are the Company’s directors at this time. Except for the compensation to which each is entitled pursuant to the terms of their respective employment agreements, neither Mr. Rash nor Dr. Goldknopf receive any further compensation for service as directors. The Company has no formal plan for compensating outside directors at this time. However, at such time as the Company has outside directors, the Company expects to compensate its outside directors and to reimburse them for reasonable travel and other out-of-pocket expenses incurred in connection with the attendance at meetings.

Option Grants in Last Fiscal Year

No options were granted to the above named officers in 2006 or 2007.

Employment Agreements

The Company has entered into an amended and restated employment agreement with Mr. Rash. The employment agreement is effective as of May 18, 2004 and has an initial term of five years, subject to each party’s termination rights. The agreement provides for a base salary of $250,000 per year and the opportunity to receive cash bonuses based on performance upon the discretion of the Company’s board of directors. The agreement also includes participation in employee benefit plans offered by the Company to its employees, as well as a grant of 13,250,000 shares of restricted common stock and 1,500,000 shares of restricted Series B preferred stock. The agreement contains a covenant not to compete with the Company during the period of employment and for a period of two years following the termination or expiration of his employment. The employment agreement also contains a non-disclosure and non-use of proprietary information clause and a non-interference clause covering the period of employment and for a period of five (5) years thereafter. Either party may terminate Mr. Rash’s employment under the contract, either with or without cause upon giving the other party at least thirty days notice. If the Company terminates Mr. Rash’s employment at any time during the initial term without cause, Mr. Rash will be entitled to receive compensation provided under the agreement for the remaining initial term of employment. In addition, in the event of a change in control as defined in the agreement, the Company may waive, in whole or in part, any and all remaining restrictions on the restricted shares of common stock and Series B preferred stock granted to Mr. Rash.

The Company has entered into an amended and restated employment agreement with Dr. Goldknopf. The employment agreement is effective as of May 18, 2004 and has an initial term of five years, subject to each party’s termination rights. The agreement provides for a base salary of $125,000 per year through December 18, 2004 and $100,000 per year thereafter, with an opportunity to receive cash bonuses based on performance upon the discretion of the Company’s board of directors. The agreement also includes participation in employee benefit plans offered by the Company to its employees, as well as a grant of 13,250,000 shares of restricted common stock and 1,500,000 shares of restricted Series B preferred stock. The agreement contains a covenant not to compete with the Company during the period of employment and for a period of two years following the termination or expiration of his employment. The employment agreement also contains a non-disclosure and non-use of proprietary information clause and a non-interference clause covering the period of employment and for a period of five (5) years thereafter. Either party may terminate Dr. Goldknopf’s employment under the contract, either with or without cause upon giving the other party at least thirty days notice. If the Company terminates Dr. Goldknopf’s employment at any time during the initial term without cause, Dr. Goldknopf will be entitled to receive compensation provided under the agreement for the remaining initial term of employment. In addition, in the event of a change in control as defined in the agreement, the Company may waive, in whole or in part, any and all remaining restrictions on the restricted shares of common stock and Series B preferred stock granted to Dr. Goldknopf.

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Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth information as of December 31, 2007, the most recent practicable date, regarding beneficial ownership of the Company’s common stock by the following persons: (i) each person who is known to the Company to beneficially own more than 5% of the outstanding shares of common stock; (ii) each of the Company’s directors; (iii) each of the Company’s executive officers named in the executive compensation table; and (iv) all of the Company’s directors and executive officers as a group. The data shown in the table immediately below is based on the stock transfer agent report as of December 31, 2007. To the Company’s knowledge, there has been no change to any of the amounts reported in the table below, as of the date of filing this report.

Unless otherwise indicated below, to the Company’s knowledge, all persons listed below have sole voting and investment power with respect to their shares of common stock, except to the extent authority is shared by spouses under applicable law. Beneficial ownership is determined in accordance with the rules of the SEC based on factors including voting and investment power with respect to shares, subject to applicable community property laws. Shares of common stock subject to options or warrants exercisable within 60 days of December 31, 2007 are deemed outstanding for the purpose of computing the percentage ownership of the person holding such options or warrants, but are not deemed outstanding for computing the percentage ownership of any other person.

Name of Beneficial Owner	Number of Shares of Common Stock		Percent of Class
Steven B. Rash 3400 Research Forest Dr., Suite B2-3 The Woodlands, Texas 77381		3,335,500		3.11	%
Ira L. Goldknopf 3400 Research Forest Dr., Suite B2-3 The Woodlands, Texas 77381		3,121,403		1.01	%
Marion McCormick 3400 Research Forest Dr., Suite B2-3 The Woodlands, Texas 77381		9,750		*
All current directors and executive officers as a group (3 persons)		6,446,653		6.03	%

*Indicates less than one percent.

Changes of Control

In addition to the shares of the Company’s common stock beneficially owned by Mr. Rash and Dr. Goldknopf described above, the Company has entered into amended and restated employment agreements with Mr. Rash and Dr. Goldknopf which require the Company to issue 1,500,000 shares of restricted Series B preferred stock to each of Mr. Rash and Dr. Goldknopf. On September 6, 2007, the Company filed the certificate of amendment necessary to designate the Series B preferred stock and the powers, designations and relative rights of the Series B preferred stock but has not issued the shares of the Series B preferred stock. The Company intends to issue such shares of the Series B preferred stock to the two officers during calendar year 2008.

The terms of the Series B preferred stock agreed upon by the Company provide that while the shares of Series B preferred stock are held by Mr. Rash and Dr. Goldknopf, they will have the right to vote that number of votes equal to the number of outstanding shares of the Company’s common stock plus one additional vote such that they will hold a majority of the voting rights of the Company. In the event of the death or termination of employment of either Mr. Rash or Dr. Goldknopf, the remaining holder of the Series B preferred stock will continue to hold such voting rights. The issuance of such shares of Series B preferred stock will result in a change of control of the Company.

50

Employee Stock Option Plans

Securities Authorized for Issuance Under Equity Compensation Plans

	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders		0		0		0
Equity compensation plans enacted by management and approved by the Board of Directors, but not submitted for a vote or approved by all holders of the Company’s securities		0		0		3,318,340
Total		0		0		3,318,340

The 1,318,340 securities that remain available for future issuance under equity compensation plans arise from the Company’s 2004 Directors, Officers and Consultants Stock Option, Stock Warrant, and Stock Award Plan (“2004 Plan”). The Company has issued 4,681,660 shares of common stock under the 2004 Plan. The 2004 Plan initially authorized the issuance of 6,000,000 shares of the Company’s common stock and 2,000,000 warrants pursuant to the Plan; however, the number of shares available under the 2004 Plan shall increase so that immediately following any grant of securities under the 2004 Plan, the total number of shares issuable under the 2004 Plan and reserved for issuance upon exercise of options, warrants, or conversion of shares of preferred stock will equal 15% of the total number of the Company’s issued and outstanding shares of common stock.

Item 12. Certain Relationships and Related Transactions.

On May 18, 2004, the Company acquired a set of assets from Advanced BioChem and assumed certain of its liabilities in exchange for the issuance of 15,000,000 shares of the Company’s common stock to Advanced BioChem. At the time of the acquisition, Mr. Rash owned approximately 3.92% of the common stock of Advanced BioChem, thus resulting in indirect beneficial ownership at the time of the transaction of approximately 588,000 shares of the Company’s common stock through Advanced BioChem. Additionally, Dr. Goldknopf held approximately 8.23% of the common stock of Advanced BioChem at the time of the transactions, thus resulting in his indirect beneficial ownership at the time of the transaction of approximately 1,234,500 shares of the Company’s common stock through Advanced BioChem.

In March, 2005, Mr. Rosinski loaned the Company $35,000. The loan, due to be repaid on or before April 30, 2005, is to be repaid with proceeds from later issue of permanent financing and is payable, with interest at rate of 6% per annum, The loan remains outstanding, is in default and is carried on the Balance Sheet.

In order to obtain bridge loan financing for the Company, Steven B. Rash, Chief Executive Officer of Power3, and Dr. Ira Goldknopf, Director of Proteomics of Power3, have both pledged a number of shares of stock they owned personally, as collateral for the bridge loans obtained. In the case of three of these bridge loan providers, pledged shares have been sold to pay back the notes payable due to the lenders. The amounts obtained from the sale of pledged shares have been reported to the Company by the lenders. As of December 31, 2007, the Company owed Steven B. Rash notes payable, in the amounts of his pledged shares that have been sold, in the amount of $924,456.  As of December 31, 2007, the Company owed Dr. Ira Goldknopf notes payable, in the amounts of his pledged shares that have been sold, in the amount of $975,360.

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Item 13. Exhibits

Exhibit No.	INDEX
2.1	Asset Purchase Agreement dated as of May 11, 2004 by and among Power3 Medical Products, Inc., Advanced BioChem, Inc. d/b/a ProteEx, Steven B. Rash and Ira Goldknopf(incorporated by reference to Exhibit 2.1 to the Company’s Registration State on Form SB-2 (File No. 333-122227).
3.1	Certificate of Incorporation (incorporated by reference to Exhibit 2.5 to the Company’s Form 10-SB filed on September 28, 1998).
3.2	Certificate of Merger (incorporated by reference to Exhibit 2.7 to the Company’s Form 10-SB filed on September 28, 1998).
3.3	Certificate of Amendment of the Certificate of Incorporation (incorporated by reference to Exhibit 2.9 to the Company’s Form 10-SB filed on September 28, 1998).
3.4	Certificate of Amendment of the Certificate of Incorporation (incorporated by reference to Exhibit 3. (I).10 to the Company’s Form S-3 filed on March 2, 2000).
3.5	Certificate of Amendment to the Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on November 5, 2004).
3.6	Certificate of Amendment to the Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Form 10-KSB filed on November 14, 2007).
3.7	Bylaws (incorporated by reference to Exhibit 2.10 to the Company’s Form 10-SB filed on September 28, 1998).
4.1	Form of Convertible Debenture Due October 28, 2007 (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on November 3, 2004).
4.2	Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K filed on November 3, 2004).
4.3	Form of Additional Investment Right (incorporated by reference to Exhibit 4.3 to the Company’s Form 8-K filed on November 3, 2004).
10.1	Amended and Restated Employment Agreementfor Steven B. Rash (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed January 5, 2005).
10.2	Amended and Restated Employment Agreement for Ira L. Goldknopf, Ph.D. (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed January 5, 2005).
10.3	Exclusive License Agreement dated effective as of June 28, 2004 by and between Baylor College of Medicine and Power3 Medical Products, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-QSB/A for the quarter ended September 30, 2004).
10.4	Research Agreement signed August 17, 2004 by and between Baylor College of Medicine and Power3 Medical Products, Inc. (incorporated by reference to Exhibit 10.13 to the Company’s Form 10-KSB for the year ended December 31, 2005).

52

10.5	Patent and Technology License Agreement dated August 1, 2004 by and between The Board of Regents of The University of Texas System, on behalf of The University of Texas M.D. Anderson Cancer Center, and Power3 Medical Products, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-QSB/A for the quarter ended September 30, 2004).
10.6	Patent and Technology License Agreement dated September 1, 2003 by and between The Board of Regents of The University of Texas System, on behalf of The University of Texas M.D. Anderson Cancer Center, and Advanced BioChem, Inc. (d/b/a ProteEx) (incorporated by reference to Exhibit 10.3 to the Company’s Form 10-QSB/A for the quarter ended September 30, 2004).
10.7	Securities Purchase Agreement dated as of October 28, 2004, among the Company and each purchaser identified therein (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on November 3, 2004).
10.8	Amendment to Securities Purchase Agreement dated January 19, 2005 among the Company and each purchaser identified therein (incorporated by reference to Exhibit 10.8 of the Company’s Registration Statement on Form SB-2 (File No.333-122227)).
10.9	Registration Rights Agreement dated as of October 28, 2004, among the Company and each purchaser identified therein (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on November 3, 2004).
10.10	2004 Directors, Officers and Consultants Stock Option, Stock Warrant and Stock Award Plan (incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-8 filed January 20, 2004).
10.11	Collaborative Research Agreement, dated March 21, 2005, by and between New Horizons Diagnostics and Power3 (incorporated by reference to Exhibit 16.1 of the Company’s Registration Statement on Form 10-KSB filed September 9, 2005).
10.12	Collaborative Research and Licensing Agreement, dated May 17, 2005, by and between BioSite Incorporated and Power3 for collaborative research and worldwide licensing to BioSite Incorporated (incorporated by reference to Exhibit 16.1 of the Company’s Registration Statement on Form 10-KSB filed September 9, 2005).
10.13	Research Agreement, dated October 13, 2005, between Power3 and Pfizer, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed October 19, 2005).
10.14	Promissory Note executed by Power3 and Cordillera Fund LP in the amount of $251,000, dated April 5, 2005 (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-QSB filed August 22, 2005).
10.15	Promissory Note, dated May 31, 2005, executed by Power3 and Steven B. Rash in the amount of $55,000 (incorporated by reference to Exhibit 26.4 to the Company’s Form SB-2/A filed on October 6, 2005).
10.16	Promissory Note, dated June 3, 2005, executed by Power3 and Dr. Ira Goldknopf in the amount of $50,000 (incorporated by reference to Exhibit 26.5 to the Company’s Form SB-2/A filed on October 6, 2005).
10.17	Promissory Note, dated June 13, 2005, executed June 17, 2005 between Power3 and John Fife in the amount of $396,500 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on June 22, 2005).

53

10.18	Promissory Note (Amended version), dated August 29, 2005, executed by Power3 and John Fife in the amended amount of $446,500 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on September 9, 2005).
10.19	Promissory Note executed by Power3 and Cordillera Fund LP in the amount of $200,000, dated September 5, 2005 (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed on September 9, 2005).
10.20	Promissory Note, dated October 17, 2005, between Power3 and Dr. Ira Goldknopf in the amount of $39,231 (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed October 19, 2005).
10.21	Promissory Note, dated September 6, 2005, between Power3 and Dr. Ira Goldknopf in the amount of $80,000 (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed September 9, 2005).
10.22	Promissory Note, dated November 23, 2005, between Power3 and Dr. Ira Goldknopf in the amount of $52,000 (incorporated by reference to Exhibit 10.35 to the Company’s Form 10-KSB for the year ended December 31, 2005).
10.23	Promissory Note executed on December 12, 2005 between Power3 and Trinity Financing (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed December 12, 2005).
10.24	Promissory Note executed on August 7, 2006, between Power3 and Rich Kraniak in the amount of $20,000 (incorporated by reference to Exhibit 10.39 to the Company’s Form 10-KSB for December 2006).
10.25	Promissory Note executed on August 7, 2006, between Power3 and Rich Kraniak in the amount of $100,000 (incorporated by reference to Exhibit 10.23 to the Company’s Form 10-QSB for March 31, 2007).
10.26	Promissory Note executed on October 27, 2006, between Power3 and Rich Kraniak in the amount of $100,000 (incorporated by reference to Exhibit 10.27 to the Company’s Form 10-QSB for March 31, 2007).
10.27	Promissory Note executed on October 27, 2006, between Power3 and Rich Kraniak in the amount of $30,000 (incorporated by reference to Exhibit 10.39 to the Company’s Form 10-KSB for December 2006).
10.28	Promissory Note executed on October 27, 2006, between Power3 and Steven B. Rash in the amount of $5,800 (incorporated by reference to Exhibit 10.39 to the Company’s Form 10-KSB for December 2006).
10.29	Promissory Note executed on September 30, 2006, between Power3 and Steven B. Rash in the amount of $315,010 (incorporated by reference to Exhibit 10.39 to the Company’s Form 10-KSB for December 2006).
10.30	Promissory Note executed on January 20, 2006, between Power3 and Steven B. Rash in the amount of $40,515 (incorporated by reference to Exhibit 10.39 to the Company’s Form 10-KSB for December 2006).
10.31	Promissory Note executed on May 31, 2005, between Power3 and Steven B. Rash in the amount of $55,000 (incorporated by reference to Exhibit 26.4 to the Company’s Form SB-2/A as filed on October 6, 2005).

54

10.32	Promissory Note executed on March 1, 2006, between Power3 and Steven B. Rash in the amount of $50,000 (incorporated by reference to Exhibit 10.17 to the Company’s Form 10-QSB for March 31, 2007).
10.33	Promissory Note executed on December 31, 2006, between Power3 and Steven B. Rash in the amount of $ 94,341 (incorporated by reference to Exhibit 10.39 to the Company’s Form 10-KSB for December 2006).
10.34	Promissory Note executed on September 30, 2006, between Power3 and Dr. Ira Goldknopf in the amount of $18,135 (incorporated by reference to Exhibit 10.39 to the Company’s Form 10-KSB for December 2006).
10.35	Promissory Note executed on September 30, 2006, between Power3 and Dr. Ira Goldknopf in the amount of $5,387 (incorporated by reference to Exhibit 10.39 to the Company’s Form 10-KSB for December 2006).
10.36	Promissory Note executed on September 30, 2006, between Power3 and Dr. Ira Goldknopf in the amount of $304,734 (incorporated by reference to Exhibit 10.39 to the Company’s Form 10-KSB for December 2006).
10.37	Promissory Note executed on March 2, 2006, between Power3 and Dr. Ira Goldknopf in the amount of $89,400 (incorporated by reference to Exhibit 10.19 to the Company’s Form 10-QSB for March 31, 2006).
10.38	Promissory Note executed on December 31, 2006, between Power3 and Dr. Ira Goldknopf in the amount of $106,117 (incorporated by reference to Exhibit 10.39 to the Company’s Form 10-KSB for December 2006).
10.39	Promissory Note executed on September 6, 2005 between Power3 and Dr. Ira Goldknopf in the amount of $80,000 (incorporated by reference to Exhibit 10.2 to the Company Form 8-K filed on September 9, 2005).
10.40	Promissory Note executed on October 27, 2006, between Power3 and Roger Kazanowski in the amount of $150,000 (incorporated by reference to Exhibit 10.25 to the Company’s Form 10-QSB for March 31, 2007).
10.41	Promissory Note executed on October 31, 2006, between Power3 and Andrew Dahl in the amount of $12,000 (incorporated by reference to Exhibit 10.29 to the Company’s Form 10-QSB for March 31, 2007).
10.42	Promissory Note executed on October 27, 2006, between Power3 and Steve Scott in the amount of $25,000 (incorporated by reference to Exhibit 10.28 to the Company’s Form 10-QSB for March 31, 2007).
10.43	Promissory Note executed on November 30, 2006, between Power3 and Jeffrey Hyde in the amount of $10,000 (incorporated by reference to Exhibit 10.30 to the Company’s Form 10-QSB for March 31, 2007).
10.44	Promissory Note executed on September 14, 2006, between Power3 and Magic Arts & Entertainment in the amount of $50,000 (incorporated by reference to Exhibit 10.21 to the Company’s Form 10-QSB for March 31, 2007).

55

10.45	Promissory Note, dated May 31, 2006, between Power3 and John Fife in the amount of $266,000 (incorporated by reference to Exhibit 10.6 to the Company’s Form 10-QSB for June 30, 2006).
10.46	Consulting Agreement signed with Noble Investments, dated March 1, 2007 (incorporated by reference to Exhibit 10.43 to the Company’s Form 10-QSB for March 31, 2007).
10.47	Joint Venture Agreement signed with NeoGenomics (incorporated by reference to Exhibit 10.44 to the Company’s Form 10-QSB for March 31, 2007).
10.48	Code of Ethics for Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer (incorporated by reference to Exhibit 14.1 to the Company’s Form 10-KSB filed September 9, 2005).
10.49	Distributor Agreement and Release between Power3 Medical Products, Inc. and Financial Advisory House (incorporated by reference to Exhibit 10.10 to the Company’s Form 10-QSB for September 30, 2007).
10.50	Settlement Agreement and Release of All Claims between Accounts Payable Vendor and Power3 Medical Products, Inc. (incorporated by reference to Exhibit 10.10 to the Company’s Form 10-QSB for September 30, 2007).
10.51*	Stock Purchase Agreement signed by and between shareholders and Power3 Medical Products, Inc.
10.52*	Share Purchase Agreement signed by and between investors and Power3 Medical Products, Inc.
10.53*	Clinical Trial Agreement effective August 24, 2007 by and between Sun Health Research Institute and Power3 Medical Products, Inc. signed 11/6/07.
14.1	Statement of Company Policy and Policy Regarding Confidentiality and Securities Trades by Company Personnel (incorporated by reference to Exhibit 10.10 to the Company’s Form 10-QSB for September 30, 2007).
31.1*	Certification of Power3 Medical Products, Inc. Chief Executive Officer, Steven B. Rash, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Power3 Medical Products, Inc. Chief Accounting Officer, Marion J. McCormick, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Power3 Medical Products, Inc. Chief Executive Officer, Steven B. Rash, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Power3 Medical Products, Inc. Chief Accounting Officer, Marion J. McCormick, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Press Release dated September 6, 2007 (incorporated by reference to Exhibit 99.1 to the Company’s Form 8-K filed September 10, 2007).
99.2	Press Release dated October 15, 2007 (incorporated by reference to Exhibit 99.1 to the Company’s Form 8k filed October 16, 2007).
	* Furnished with this report

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Item 14. Principal Accountant Fees and Services

The following table sets forth the aggregate amount of fees billed by the Company’s independent accountants for the year ended December 31, 2007 and the year ended December 31, 2006:

	2007		2006
Audit Fees:	$	47,821	$	113,614
Audit Related Fees:	$	-	$	-
Tax Fees:	$	2,835	$	6,519
All Other Fees:	$	-	$	-
Total Fees:	$	50,656	$	120,133

The Company does not have an Audit Committee of the Board of Directors. All activities of the Company’s independent accountants are reviewed and approved prior to the engagement by the Board of Directors, who considers whether such activities could affect the independence of such accountants.

57

SIGNATURES

Pursuant to the requirements of the Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Steven B. Rash	Chairman and	April 15, 2008
Steven B. Rash	Chief Executive Officer
/s/ Ira L. Goldknopf	Secretary and Director of	April 15, 2008
Ira L. Goldknopf	Proteomics
/s/ Marion J. McCormick	Chief Accounting Officer	April 15, 2008
Marion J. McCormick

58

EX-10.51

STOCK PURCHASE AGREEMENT

AGREEMENT dated as of the ______ day of _________ 2008 (this “Agreement”), by and between ____________________________________, (the “Purchaser”), with an address at _____________________________________________________and Power3 Medical Products, Inc. (the “Company”), a New York Corporation, with principal offices at 3400 Research Forest Drive, Suite B2-3, The Woodlands, Texas, 77381.

WITNESSETH:

WHEREAS, the Purchaser desires to buy and the Company desires to sell ______________________________________________ shares (the “Shares”) of common stock, par value $0.001 (“Common Stock”) of the Company.

NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledge,

IT IS AGREED:

1.Recitals. The parties hereby adopt as part of this Agreement, the Company shall issue and deliver the Shares to the Purchaser, receipt of which is hereby acknowledged by the Company.

2.Shares.

A. Simultaneously with the execution of this Agreement, the Company shall issue and deliver the Shares to the Purchaser, receipt of which is hereby acknowledged by the Company.

3.Purchase Price.

A.The total purchase price for the Shares (the “Purchase Price”) shall be __________________________________________________ dollars, receipt of which is hereby acknowledged by the Company.

4.The Company’s Representations, Warranties and Covenants. The Company represents, warrants and covenants that:

A.Company Status. The Company is duly organized, validly existing and in good standing pursuant to the laws of the State of New York, with all requisite power and authority to carry on its business as presently conducted in all jurisdictions where presently conducted, to enter into this Agreement and to consummate the transactions set froth in this Agreement.

B. Authority. The Company has the full right, power and legal capacity to enter into this Agreement and to consummate the transactions contemplated hereby. This Agreement constitutes the valid and legally binding obligation of the Company, enforceable in accordance with its terms and conditions. The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly approved and authorized by all necessary action of the Board of Directors of the Company, and no further authorization shall be necessary on the part of the Company for the performance and consummation by the Company of the transactions contemplated hereby. The execution, delivery and performance of this Agreement in accordance with its terms does not and shall not require approval, consent or authorization of any third party, including any governmental agency or authority or any political subdivision thereof.

C.Compliance with the Law and Other Instruments. The business and operations of the Company have been and are being conducted in accordance with all applicable laws, rules and regulations of all authorities which affect the Company or its properties, assets, businesses or prospects. The performance of this Agreement shall not result in any breach of, or constitute a default under, or result in the imposition of any lien or encumbrance upon any property of the Company or cause an acceleration under any arrangement, agreement or other instrument to which the Company is a party or by which any of its assets are bound. The Company has performed all of its obligations which are required to be performed by it pursuant to the terms of any such agreement, contract, or commitment.

D.No Broker. The Company has not had any dealings with respect to this transaction with any business broker, firm or salesman, or any person or corporation, investment banker or financial advisor who is or shall be entitled to any broker’s or finder’s fee or any other commission or similar fee with respect to the transactions set forth in this Agreement. The Company represents that it has not dealt with any person, firm or corporation and agrees to indemnify and hold harmless the Purchaser from and against any and all claims for brokerage commissions by any person, firm or corporation on the basis of any act or statement alleged to have been made by the Company or its affiliates or agents.

E. No approval. No approval of any third party including, but not limited to, any governmental authority is required in connection with the consummation of the transactions set forth in this Agreement.

F. Survival. The covenants, representations and warranties made by the Company in or in connection with this Agreement shall survive the execution and delivery of this Agreement and the consummation of the transactions described herein, it being agreed and understood that each of such covenants, representations and warranties is of the essence to this Agreement and the same shall be binding upon the Company and inure to the Company, its successors and assignees.

G.Complete Disclosure. The Company has no knowledge that any covenant, representation or warranty of the Company which is contained in this Agreement or in a writing furnished or to be furnished pursuant to this Agreement or in the Company’s filings with the Securities and Exchange Commission contains or shall contain any untrue statement of a material fact, omits or shall omit to state any material fact which is required to make the statement which are contained herein or therein, not misleading.

H.Notification of an Event. If, any event occurs or any event known to the Company relating to or affecting the Company shall occur as a result of which (i) any provision of this Article “4” of this Agreement at that time shall include an untrue statement of a fact, or (ii) this Article “4” of this Agreement shall omit to state any fact necessary to make the statements herein, in light of the circumstances under which they were made, not misleading, the Company shall immediately notify the Purchaser pursuant to Paragraph “C” of Article “8” of this Agreement.

I.No Defense. It shall not be a defense to a suit for damages for any misrepresentation or breach of a covenant, representation or warranty that the Purchaser knew or had reason to know that any covenant, representation or warranty in this Agreement contained untrue statements.

5.The Purchaser’s Representations, Warranties and Covenants. The Purchaser represents warrants and covenants that:

A. Not-for Profit Status. The Purchaser is a not-for profit organization duly organized, validly existing and in good standing pursuant to the laws of the State of New York, with all requisite power and authority to carry on its business as presently conducted in all jurisdictions where presently conducted, to enter into this Agreement and to consummate the transactions set forth in this Agreement.

B. Authority. The Purchaser has the full right, power and legal capacity to enter into this Agreement and to consummate the transactions contemplated hereby. This Agreement constitutes the valid and legally binding obligation of the Purchaser, enforceable in accordance with its terms and conditions. The execution and delivery of this Agreement by the Purchaser and the consummation by it of the transactions contemplated herby have been duly approved and authorized by all necessary action of the President of the Purchaser, and no further authorization shall be necessary on the part o the Purchaser for the performance and consummation by the Purchaser of the transactions contemplated hereby. The execution, delivery and performance of this Agreement in accordance with its terms does not and shall not require approval, consent or authorization of any third party, including any governmental agency or authority or any political subdivision thereof.

C.Compliance with the Law and Other Instruments. The business and operations of the Purchaser have been and are being conducted in accordance with all applicable laws, rules, and regulations of all authorities which affect the Purchaser or its properties, assets, businesses or prospects. The performance of his Agreement shall not result in any breach of, or constitute a default under, or result in the imposition of any lien or encumbrance upon any property of the Purchaser or cause an acceleration under any arrangement, agreement or other instrument to which the Purchaser is a party or by which any of its assets are bound. The Purchase has performed all of its obligations which are required to be performed by it pursuant to the terms of any such agreement, contract, or commitment.

D. Accredited Investors. The Purchaser is an “accredited investor” as that term is defined in Rule 501 (a) of Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”).

E.Securities. The Purchaser acknowledges that the receipt of the Shares by the Purchaser is for its own account, is for investment purposes only, and is not with a view to, nor for offer or sale in connection with, the distribution of the Securities. The Purchaser understands that none of the Shares have been registered under the Act or the securities laws of any state and, therefore, cannot be sold unless they are subsequently registered under the Act and any applicable state securities laws or exemptions from registration thereunder are available. The Purchaser further understands that only the Company can take action to register the Shares.

F.Restrictive Legend. The Purchaser understands that the Shares shall bear the following restrictive legend:

“These Shares have not been registered under the Securities Act of 1933 as Amended, having been acquired for investment purposes only and not with a view to distribute. They may not be sold or offered for in absence of an effective registration statement as to the Shares under the Securities Act of 1933 as Amended, or an opinion of counsel satisfactory to the corporation and an exemption from the Securities Act of 1963 as Amended, is available and that such registration is not required, or in the alternative that such Shares may be sold under Rule 144 as promulgated by the Securities and Exchange Commission of the United States.”

G.No Broker. The Purchaser has not had any dealings with respect to this transaction with any business broker, firm or salesman, or any person or corporation, investment banker or financial advisor who is or shall be entitled to any broker’s or finder’s fee or any other commission or similar fee with respect to the transactions set forth in this Agreement. The Purchaser represents that it has not dealt with any person, firm or corporation and agrees to indemnify and hold harmless the Company from and against any and all claims for brokerage commissions by any person, firm or corporation on the basis of any act or statement alleged to have been made by the Purchaser or its affiliates or agents.

H.No Approvals. No approval of any third party including, but not limited to, any governmental authority is required in connection with the consummation of the transactions set forth in this Agreement.

I.Survival. The covenants, representations and warranties made by the Purchaser in or in connection with this Agreement shall survive the execution and delivery of this Agreement and the consummation of the transactions described herein, it being agreed and understood that each of such covenants, representations and warranties is of the essence to this Agreement and the same shall be binding upon the Purchaser and inure to the Purchaser, its successors and assigns.

J. Complete Disclosure. The Purchaser has no knowledge that any covenant, representation or warranty of the Purchaser which is contained in this Agreement or in a writing furnished or to be furnished pursuant to this Agreement contains or shall contain any untrue statement of a material fact, omits or shall omit to state any material fact which is required to make the statements which are contained herein or therein, not misleading.

K.Notification of an Event. If, any event occurs or any event known to the Purchaser relating to or affecting the Purchaser shall occur as a result of which (i) any provision of this Article “5” of this Agreement at that time shall include an untrue statement o f a fact, or (ii) this Article “5” of this Agreement shall omit to state any fact necessary to make the statements herein, in light of the circumstances under which they were made, not misleading , the Purchaser will immediately notify the Company pursuant to Paragraph “C” of Article “8” of this Agreement.

L.No Defense. It shall not be a defense to a suit for damages for any misrepresentation, or breach of, a covenant, representation or warranty that the Company knew or had reason to know that any covenant, representation or warranty in this Agreement contained untrue statements.

6.Registration.

A.If the Company shall at any time seek to register or qualify any of its common stock or the securities holdings of any of its controlling shareholders, on each such occasion it shall, without cost or expense, include all of the Purchaser’s Shares in such registration or qualification. The Company shall keep the registration effective until such time as the Purchaser has sold its Shares or the Shares are eligible to be transferred without restriction pursuant to the provisions of Rule 144(k) which was promulgated by the Securities and Exchange Commission pursuant to §4(1) of the Securities Act of 1933, as amended. The Purchaser agrees to provide an opinion of counsel with respect to any sales of the Shares by the Purchaser if such sale is permissible under Rule 144(k).

B.All expenses in connection with preparing and filing any registration statement under Paragraph “A” of this Article “6” of this Agreement shall be borne in full by the Company; provided, however, that the Purchaser shall pay any and all underwriting commissions and expenses and the fees and expenses of any legal counsel selected by the Purchaser to represent it with respect to the sale of the Securities.

7.Covenants of the Company. The Company covenants and agrees as follows:

A.The Company shall continuously remain a reporting company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and will file with the SEC on a timely basis all reports, statements and other materials required to be filed by the Company to remain a reporting company under the Exchange Act.

B.The Common Stock of the Company shall continuously be listed on the Over the Counter Bulletin Board (the “OTCBB) or on the NASDAQ stock market.

C.The Company shall, at its cost, provide the appropriate opinion letters to be issued by the Company’s counsel in compliance with the provisions of rule 144 which was promulgated by the Securities and Exchange Commission pursuant to §4(1) of the Securities Act of 1933, as amended, with respect to the transfer or sale of the securities of the Company owned by the Purchaser, if such transfer or sale is permissible under Rule 144. Furthermore, the Company shall notify its transfer agent that Sichenzia Ross Friedman Ference LLP is authorized to issue said opinion letters.

8.Miscellaneous.

A. Headings. Headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

B.Enforceability. If any provision which is contained in this Agreement should, for any reason, be held to be invalid or unenforceable shall not affect any other provision of this Agreement and this Agreement shall be construed as if such invalid or unenforceable provision has not been contained herein.

C.Notices. Any notice or other communication required or permitted hereunder shall be sufficiently given if sent by (i) mail by (a) certified mail, postage prepaid, return receipt requested and (b) first class mail, postage prepaid (ii) overnight delivery with confirmation of delivery or (iii) facsimile transmission with an original mailed by first class mail, postage prepaid, addressed as follows:

	Address:
To
Name
	Attn:
		Name of Purchaser
To Power3:	Power3 Medical Products, Inc.
	3400 Research Forest Drive, Suite B2-3
	The Woodlands, Texas 77381
	Attn: Steven B. Rash
	Fax No.: 281-466-1481

or in each case to such other address and facsimile number as shall have last been furnished by like notice. If all of the methods of notice set forth in this Paragraph “C” of this Article “8” of this Agreement are impossible for any reason, notice shall be in writing and personally delivered to the aforesaid addresses. Each notice or communication shall be deemed to have been given as of the date so mailed or delivered as the case may be; provided, however, that any notice sent by facsimile shall be deemed to have been given as of the date so sent if a copy thereof is also mailed by first class mail on the date sent by facsimile. If the date of mailing is not the same as the date of sending by facsimile, then the date of mailing by first class mail shall be deemed to be the date upon which notice is given; provided further, however, that any notice sent by overnight delivery shall be deemed to have been given as of the date of delivery.

D.Governing Law; Disputes. This Agreement shall in al respects be construed, governed, applied and enforced in accordance with the laws of the State of New York applicable to contracts made and to be performed therein, without giving effect to the principles of conflicts of law. The parties hereby consent to and irrevocably and exclusively submit to personal jurisdiction over each of the by the Courts of the State of New York in any action or proceeding, irrevocably waive trial by jury and personal service of any and all process and effectuated upon any of them be certified mail, return receipt requested, in accordance with Paragraph “C” of this Article “8” of this Agreement. In the event the Purchaser commences legal action to enforce any of the terms of this Agreement, the Company shall pay all legal fees and costs incurred by the Purchaser with respect to this Agreement.

E.Construction. Each of the parties hereto hereby further acknowledges and agrees that (i) each has been advised by counsel during the course of negotiations; (ii) each counsel has had significant input in the development of this Agreement and (iii) this Agreement shall not, therefore, be construed more strictly against any party responsible for its drafting regardless of any presumption or rule requiring construction against the party whose attorney drafted this agreement.

F.Entire Agreement. This Agreement and all documents and instruments referred to herein (i) constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and thereof, and (ii) are not intended to confer upon any person other than the parties hereto any rights or remedies hereunder. Each party hereto agrees that, except for the representations and warranties contained in this Agreement, neither party makes any other representations or warranties, and each herby disclaims any other representations and warranties made by itself or any of its officers, directors, employees, agents, financial and legal advisors or other representatives, with respect to the execution and delivery of this Agreement or the transactions contemplated hereby, notwithstanding the delivery or disclosure of any documentation or other information with respect to any one or more of the foregoing.

G.Further Assurances. The parties agree to execute any and all such other further instruments and documents, and to take any and all such further actions which are reasonably required to effectuate this Agreement and the intents and purposes hereof.

H.Binding Agreement. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, personal representatives, successors and assigns.

I.Non-Waiver. Except as otherwise expressly provided herein, no waiver of any covenant, condition, or provision of this Agreement shall be deemed to have been made unless expressly in writing and signed by the party against whom such waiver is charged; and (i) the failure of any party to insist in any one or more cases upon the performance of any of the provisions, covenants or conditions of this Agreement or to exercise any option herein contained shall not construed as a waiver or relinquishment for the future of any such provisions, covenants or conditions, (ii) the acceptance of performance of anything required by this Agreement to be performed with knowledge of the breach or failure of a covenant, condition or provision hereof shall not be deemed a waiver of such breach or failure, and (iii) no waiver by any party of one breach by another party shall be construed as a waiver of any other or subsequent breach.

J.Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

K.Facsimile Signatures. Any signature which is delivered via facsimile shall be deemed to be an original and have the same force and effect as if such facsimile signature were the original thereof.

L. Modifications. This Agreement may not be changed, modified, extended, terminated or discharged orally, except by a written agreement specifically referring to this Agreement which is signed by all of the parties to this Agreement.

M.Exhibits. All Exhibits annexed or attached to this Agreement are incorporated into this Agreement by reference thereto and constitute an integral part of this Agreement.

N.Severability. The provisions of this Agreement shall be deemed separable. Therefore, if any part of this Agreement is rendered void, invalid or unenforceable, such rendering shall not affect the validity or enforceability of the remainder of this Agreement; provided, however, that if the part or parts which are void, invalid or unenforceable as aforesaid shall substantially impair the value of this whole Agreement to any party, that party may cancel, and terminate this Agreement by giving written notice to the other party.

IN WITNESS WHEROF, the parties hereto have executed this Agreement as of the date first above written.

Name of Purchaser
By:
Title:
Steven B. Rash
Power3 Medical Products, Inc.
By:	//:Steven B. Rash
	Title: Chairman and CEO

SCHEDULE TO

STOCK PURCHASE AGREEMENT

The Company has issued a Stock Purchase Agreement to the following listed shareholders. The terms of the Stock Purchase Agreement issued by the Company to each of the following shareholders are identical except for the date agreement signed, name of the shareholder, address of shareholder and the number of shares purchase.

Date Agreement Signed	Name of Shareholder	Address of Shareholder	Shares Purchased
1/28/2008	Aubuchan, Stacey	46 Tanager Trail, The Woodlands, TX 77381	625
1/25/2008	Boyle, Kevin	908 Randall Street, Reinbeck, IA 50669	100,000
1/15/2008	Brown, Alan	155 County Road 779, Devine, Texas 78016	95,825
1/15/2008	Brown, Carl	1015 Texas Hwy. 132 South, Devine, Texas 78016	64,575
1/23/2008	Brown, Carl	1015 Texas Hwy. 132 South, Devine, Texas 78016	42,500
1/15/2008	Brown, John	P.O. Box 327, Devine, Texas 78016	33,350
1/23/2008	Brown, John	P.O. Box 327, Devine, Texas 78016	62,500
2/7/2008	Capps, Brian	2890 Harber Refuge, South Lake, TX 76092	37,500
1/28/2008	Colter, Les	9243 Deepwater, Dr. Montgomery, TX 77356	12,500
1/28/2008	Colter, Ryan	9297 Fathom Dr., Montgomery, TX 77356	6,250
11/30/2007	Derrick, Thomas	35 Biscay Place, The Woodlands, TX 77381	100,000
12/31/2007	Don Wiest	103 Robin Hood Place, San Antonio, TX 78209	100,000
11/27/2007	Engelstad, Derek	1518 Washington Ave. Unit D, Houston, TX 77007	15,000
1/29/2008	Ernst, Russell	1549 141st Lane NW, Andover, MN 55304	62,500
1/28/2008	Fether, Curt	3207 Barkers Forest Ln., Houston, TX 77084	6,250
1/28/2008	Fether, Eugene	14714 Sandalfoot, Houston TX 77095	12,500
1/28/2008	Fether, Patricia	14714 Sandalfoot, Houston TX 77095	12,500
1/25/2008	Fulmer, Larry	11409 Prestige, Frisco, Texas 75034	40,000
11/27/2007	Fulmer, Richard	43 Bayou Springs Ct., The Woodlands, TX 77382	12,500
12/5/2007	Gattuso, Antoinette	Shady Oak Lane, Conroe, TX 77304	3,750
12/5/2007	Hallett, Craig	4165 White Oak Lane, Excelsior, MN 55331	250,000
1/15/2008	Harrell, Ronald	945 County Road 768, Devine, Texas 78016	37,500
11/27/2007	Heller, Andrew	114 East Placid Hill, The Woodlands, TX 77381	6,250
11/27/2007	Heller, Christina	114 East Placid Hill, The Woodlands, TX 77381	12,500
1/28/2008	Heller, Christina	114 East Placid Hill, The Woodlands, TX 77381	17,000
11/30/2007	Heller, David	9476 McGee Way, Eden Prairie, MN 55347	200,000
11/27/2007	Heller, Lyndsey	114 East Placid Hill, The Woodlands, TX 77381	12,500
11/15/2007	Heller, Mike	114 East Placid Hill, The Woodlands, TX 77381	700,000
11/27/2007	Heller, Mike	114 East Placid Hill, The Woodlands, TX 77381	300,000
12/31/2007	Heller, Mike	114 East Placid Hill, The Woodlands, TX 77381	1,000,000
12/5/2007	Heller, Stephen	3436 Deer Creek Trail, St. Cloud, MN 56301	100,000
11/20/2007	Hess, Adam	2 Aristis Path, The Woodlands, TX 77382	62,500
11/27/2007	Hess, Adam	2 Aristis Path, The Woodlands, TX 77382	37,500
1/29/2008	Hux, Randy	1423 Alice Dr., Lafayette, LA 70503	250,000
1/29/2008	Jasik, Steven	1210 Hillcrest Dr., New Braunsfels, TX 78130	5,000
1/29/2008	Jones, Bart	25630 Cliff Crossing, Spicewood, TX 78669	250,000
1/31/2008	Jones, Paul	21 Huntsman Horn, The Woodlands, TX 77380	1,250

12/18/2007	Khalil, Nicholas	9146 Shetland Rd., Eden Prairie, MN 55347	100,000
12/18/2007	Kiphart, Miles	18027 Rosemont Estates Ln., Cypress, TX 77429	6,250
11/30/2007	Kiphart, Orel	20914 Ruby Valley Court, Cypress, Texas 77433	300,000
1/28/2008	Kronsage, Todd	3 Chancery Place, The Woodlands 77381	2,000,000
12/14/2007	McCormick, Donald	301 E 26th St. Houston, TX 77008	6,250
12/14/2007	McCormick, John	3711 Fern View Dr., Kingwood, Texas 77345	6,250
12/5/2007	McDaniel, Bill	1318 Buschong, Houston, TX 77039	150,000
12/18/2007	Meier, Teresa	7026 Foxwick Lane, Humble, TX 77338	6,250
11/20/2007	Mitchel, Jim	5708 N. Shepherd Suite C3, Houston, TX 77091	100,000
12/14/2007	Moncivais, Gus	16 Tanager Trail, The Woodlands, TX 77381	28,750
12/14/2007	Moncivais, Matthew	16 Tanager Trail, The Woodlands, TX 77381	4,375
1/28/2008	Norris, Windell D. III	3403 Edmonson Ct., Missouri City, TX 77459	62,500
11/20/2007	Obrant, Joseph	318 Ingeborg Road, Wynnewod, PA 19096	300,000
1/25/2008	Obrant, Joseph	318 Ingeborg Road, Wynnewod, PA 19096	187,500
11/19/2007	Paulsen Premier Properties, LL	17 Linnet Chase PL, The Woodlands, TX 77381	250,000
11/27/2007	Paulsen, John	P.O. Box 132432, Spring, TX 77363	100,000
12/18/2007	Perez, Barbara	964 Birnham Woods Blvd., Pasadena, TX 77503	6,250
1/29/2008	Pessina, Paul	224 Yosef Dr. Apt D, Boone, NC 28607	37,500
12/14/2007	Rivera, Linh	3431 Dawnwood Dr., Spring, TX 77380	3,750
12/5/2007	Robb, Richard	3601 Normandy Ridge, Austin, TX 78738	100,000
1/29/2008	Roerick, Mark	17351 121st Ave, Kimball, MN 55353	300,000
1/28/2008	Stromsness, Dustin	11763 Park Ridge Ct. Montgomery, TX 77356	62,500
1/28/2008	Wakefield, Kirk	342 Old Aqua Landing West, Montgomery, TX 77356	62,500

EX-10.52

SHARE PURCHASE AGREEMENT

And PURCHASER QUESTIONAIRE

POWER3 MEDICAL PRODUCTS, INC.

DATE

POWER3 MEDICAL PRODUCTS, INC.

SHARE PURCHASE AGREEMENT

THIS SHARE PURCHASE AGREEMENT (the “Agreement”) is entered into as of DATE by and among Power3 Medical Products, Inc., a New York Corporation (the “Company”) and the purchasers identified on Exhibit A on the date hereof (which entities are hereinafter collectively referred to as the “ Purchasers” and each individually as, a “ Purchaser”).  The Company is issuing investment shares (“Shares”) each consisting of one (1) Common stock share (the “Common Shares”) of the Corporation. The investors shall be issued common stock purchase warrants (the “Warrants”) in an amount equal to Forty percent (40%) of the number of common shares issued at Closing together with the Common Shares (the “Units”) on the following terms (the “Offering”):

The purchase price for each Share shall be Ten Cents ($0.10).

The exercise price of the Warrants shall be Fifteen Cents ($0.15)

The Warrants shall have a term of three (3) years from Closing.

The Shares may also be referred to as the “Securities”

RISK FACTORS

The Purchaser acknowledges and understands that, because of the speculative nature of this investment, he can lose the entire value of his investment. The purchaser also understands that the Shares will not be registered and therefore not freely tradable. Further, the Purchaser understands that the Company is in default upon certain of its debts, if not resolved, could have material adverse effects on the going concern status of the Company. For additional Risk Factors, see SEC Form 10-KSB, as of 12/31/06. The Company represents and warrants that the Risk Factors that will appear in its 12/31/07, when filed with the SEC, will be the same as those that are in the attached 12/31/06 Form 10-KSB, and further, that, as of the date of this Agreement, no additional Risk Factors would need to be added.

BACKGROUND

A.The Company engages in the early detection, monitoring and targeting of diseases through the analysis of proteins. Proteomics is the study and analysis of proteins. The Company’s business objective is to commercialize its intellectual property by focusing on disease diagnosis, protein and biomarkers identification and drug resistance in the areas of cancers, neurodegenerative and neuromuscular diseases (collectively, the “Business”). For a further description of the business, see SEC Form 10-KSB attached.

BThe Company has authorized 35,000,000 Common Shares for sale and issuance to the Purchasers pursuant to this Agreement.

C.Each Purchaser desires to purchase the Shares set forth opposite its name on Exhibit A attached hereto on the terms and conditions set forth herein.

DThe Company desires to issue and sell the Shares to each Purchaser on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

1.AGREEMENT TO SELL AND PURCHASE.

1.1.Authorization of Shares. On or prior to the Closing (as defined in Section 2.1 below), the Company shall have authorized the sale and issuance of up to 35,000,000 Common Shares.

1.2.Sale and Purchase. Subject to the terms and conditions hereof without any adjustment to the Purchase Price or delivery of any additional consideration, and in reliance upon the representations, warranties and covenants contained herein, at the Closing, the Company hereby agrees to issue and sell to each Purchaser ,and each Purchaser, subject to the terms and conditions hereof and in reliance upon the representations, warranties and covenants contained herein, agrees to purchase from the Company, the number of Shares set forth opposite such Purchaser’s name.

1.3.Placement Agent Compensation. Upon the occurrence of each Closing (as hereinafter defined), the Company shall pay to the Placement Agent: (i) a placement agent fee in cash in an amount equal to 8.0% of the total gross proceeds received by the Company from the sale of the Securities, (ii) Warrants to purchase a number of shares of common stock of the Company equal to twelve and a half percent (12.5%) of the number of Securities sold by the Company in the offering at an exercise price equal to the sale price of the Shares and for a term of five years (the “Placement Agent Warrants”), and (iii) a 1% non-accountable expense allowance.

2.CLOSING, DELIVERY AND PAYMENT.

2.1.Closing. The closing of the sale and purchase of the number of shares (the “Closing”), shall take place at the Company’s office.

2.2.Delivery; Payment. At the Closing, subject to the terms and conditions hereof, the Company will deliver to the Purchasers certificates representing the number of Shares to be purchased at the Closing by the Purchasers, against payment of the full amount of the Purchase Price therefore in cash by wire transfer of immediately available funds made payable to the order of the Company or as it shall direct. Unless otherwise requested by any Purchaser, each Purchaser will receive at the Closing, as applicable, one (1) certificate registered in its name, for the (restricted) Common Shares purchased by it.

2.3.Use of Proceeds. The proceeds received by the Company at the Closing shall be used for general corporate purposes.

3.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to each of the Purchasers that the statements made in this Section 3 are true and correct. As used herein, the term “Knowledge” means the knowledge of any officer of the Company, following such inquiries and investigations as would be deemed appropriate by a reasonable businessperson in the software industry in the prudent management of his or her business affairs.

3.1.Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the Securities Exchange Act of 1934. The Company has all requisite corporate power and authority to own and operate its properties and assets, to execute and deliver this Agreement, and, to the extent applicable, to issue and sell the Securities, and to carry out the provisions of this Agreement and the Certificate and to carry on its business as currently conducted and as currently proposed to be conducted.

3.2.Subsidiaries. The Company does not have any Subsidiaries (as defined herein) other than those identified on Schedule 3.2. The Company does not own any ownership interest or profits interest in any other corporation, limited liability company, limited partnership or similar entity. Except as set forth on Schedule 3.2, the Company is not a participant in any joint venture, partnership or similar arrangement. For the purpose of this Agreement, “Subsidiaries” means, with respect to any Person (as defined below) (including the Company), any corporation, partnership, association or other business entity of which more than 50% of the issued and outstanding stock or equivalent thereof having ordinary voting power is owned or controlled by such Person, by one or more Subsidiaries or by such Person and one or more Subsidiaries of such Person. For purposes of this Agreement, “Person” means any individual, corporation, partnership, firm, joint venture, association, limited liability company, limited liability partnership, joint-stock company, trust, unincorporated organization or governmental entity.

3.3.Capitalization; Voting Rights. The authorized capital stock of the Company, immediately prior to the Closing, consists of: (i) 108,491,470 Class A Common Shares outstanding, plus (ii) 10,960,526 additional shares upon conversion of convertible debentures and notes, which would reduce the Company’s debt by $0.4 million (plus another 4,705,882 that could be issued, subject to a dispute with two convertible debenture holders) , plus (iii) 29,174,369 additional shares upon exercise of warrants and options, plus (iv) approximately 16,000,000 additional shares if management elects to covert its $1,899,816 of debt to the Company. Upon consummation of the purchase and sale of the Securities contemplated by this Agreement, all issued and outstanding shares of the Company’s Common Shares issued pursuant to this Agreement will be: (a) duly authorized, validly issued, fully paid and nonassessable, (b) issued in compliance with all applicable state and federal laws concerning the issuance of securities, and (c) free of any liens or encumbrances other than liens and encumbrances created by or imposed upon the Purchasers. The issuance and sale of the Securities will not obligate the Company to issue shares of Common Shares or other securities to any Person (other than the Securities and the Company’s obligation to issue to the Placement Agent warrants representing the right to purchase an aggregate of 12.5% of the number of Shares issued pursuant to this Agreement) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors of the Company or others is required for the issuance and sale of the Securities. Except as described in the SEC Reports, there are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders. A complete list of stockholders of the Company that are officers, directors and individuals holding more than 5% of the outstanding Common Shares is included in the SEC Reports.

3.4.Authorization; Binding Obligations. All corporate actions by or on behalf of the Company necessary for the authorization of this Agreement, the performance of all obligations of the Company hereunder and thereunder at the Closing and the authorization, sale, issuance and delivery of the Securities and the authorization and reservation of the Underlying Securities pursuant to the Certificate have been taken or will be taken prior to the Closing. This Agreement (assuming due execution and delivery by the Purchasers), when executed and delivered, will be valid and binding obligations of the Company enforceable against the Company in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws related to or affecting creditors rights generally. The sale of Securities is not subject to any preemptive rights or rights of first refusal that have not been properly waived. The execution, delivery and performance of, and the consummation of the transactions contemplated by, this Agreement, including without limitation the sale, issuance and delivery of the Securities, have not resulted and will not result in (a) any violation of, or default under, or conflict with, or constitute, with or without the passage of time or the giving of notice or both, any violation of, or default under or give rise to any right of termination, cancellation or acceleration under (i) any term or provision of (A) the Certificate or bylaws, (B) any written contract, agreement, instrument, arrangement or understanding of the Company or any oral contract, agreement, instrument, arrangement or understanding that is legally binding on the Company, or (C) any judgment, order, writ, injunction or decree or any court, government agency or instrumentality of any arbitrator, in each case, to which the Company is a party or by which it or any of its properties or assets are bound or (ii) any statute, rule or regulation applicable to the Company or any of its properties or assets or (b) the creation of any mortgage, lien, pledge, encumbrance or charge upon any of the properties or assets of the Company.

3.5.Financial Statements. The Company has filed all reports required to be filed by it under the Securities Act and the Securities Exchange Act of 1934, as amended (“Exchange Act”), including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the foregoing materials being collectively referred to herein as the “SEC Reports”) in accordance with the time requirements of the Securities Act and the Exchange Act. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated hereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company has advised the Purchasers that a correct and complete copy of each of the SEC Reports (together with all exhibits and schedules thereto and as amended to date) is available at http://www.sec.gov, a website maintained by the Commission where Investor may view the SEC Reports. The financial statements of the Company included in the SEC Reports (the "Financial Statements") comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in all material respects in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended.

3.6.Liabilities. The Company does not have any debts, obligations or liabilities individually in excess of $25,000 or in excess of $250,000 in the aggregate (contingent or otherwise) required to be disclosed in the Financial Statements under GAAP that are not disclosed in the Financial Statements, except for debts, obligations, or liabilities arising in the ordinary course of business since September 30, 2007 (the "Statement Date"). The Company is not a guarantor or indemnitor of any indebtedness of any other Person.

3.7.Agreements; Action.

(a) There are no oral or written agreements, understandings, instruments, contracts, proposed transactions (for which term sheets have been issued), judgments, orders, writs or decrees to which the Company is a party or by which it is bound which may relate to (i) obligations (contingent or otherwise) of, or payments to, the Company in excess of $25,000 (other than obligations of, or payments to, the Company arising from purchase or sale agreements (including subscription arrangements) entered into in the ordinary course of business), (ii) provisions materially adversely affecting or restricting the development, presentation or delivery of the Company’s products or services, including all agreements relating to the receipt or provision of substantive content or other information by the Company, or (iii) indemnification by the Company with respect to infringements of proprietary rights.

(b) Since the Statement Date, the Company has not (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital stock, (ii) incurred any indebtedness for money borrowed or any other liabilities (other than with respect to accounts payable and other obligations incurred in the ordinary course of business) individually in excess of $25,000 or, in the case of indebtedness and/or liabilities individually less than $25,000, in excess of $50,000 in the aggregate, (iii) made any loans or advances to any person, other than ordinary advances for travel expenses and similar reimbursable business expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or rights having a fair market value in excess of $25,000.

(c) For the purposes of subsections (a) and (b) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities that, to the Company’s Knowledge are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections.

3.8.Obligations to Related Parties. There are written agreements, understandings or proposed transactions between the Company, on the one hand, and the Company’s officers and directors, Steven B. Rash and Ira L. Goldknopf, for pledging their respective shares directly attributable to ongoing corporate finance activities. The total owed to Messrs Rash and Goldknopf is $1,899,816 or approximately 16,000,000 shares. Mr. Rash intends to convert his debt, approximately one half of the $1.9 million, into 9,914,500 of these shares by June 30, 2008. Mr. Goldknopf has the option through 2008 to decide upon conversion or repayment. Other customary arrangements include reimbursement for reasonable expenses incurred on behalf of the Company; and for other standard employee benefits made generally available to all Employees (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company). None of the officers, directors or stockholders of the Company or any members of their immediate families are indebted to the Company or, to the Company’s Knowledge, have any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company. To the Company’s Knowledge, no officer or director or any stockholder of the Company or any member of their respective immediate families, has, directly or indirectly, an interest in any contract with the Company (other than such contracts as relate to any such person’s ownership of capital stock or other securities of the Company). To the Company’s Knowledge, there is no familial or other significant business relationship that exists between or among any Employee of the Company and any customer, supplier, vendor or contractor of the Company. For purposes of this Agreement, “Employee” shall mean any person employed by the Company, whether directly or indirectly, by lease or co-employment arrangement with a third-party or otherwise.

3.9.Changes. Since the September 30, 2007 (the “Statement Date”), there has not been:

(a) Any change in the assets, liabilities, financial condition, operations or, to the Knowledge of the Company, any prospects of the Company, which individually or in the aggregate has had or is reasonably likely to have a material adverse effect on the assets, liabilities, financial condition, operations or prospects of the Company;

(b) The Company has not received notification of any impending resignation of employment from any such officer;

(c) Any material change in the contingent obligations of the Company by way of guaranty, endorsement, indemnity, warranty or otherwise;

(d) Any damage, destruction or loss adversely affecting the properties, Business or financial condition of the Company, or to the Company’s Knowledge, its prospects, whether or not covered by insurance, with a fair market value of at least $25,000, in each instance, or more than $50,000 in the aggregate;

(e) Any waiver by the Company of a valuable right or of a debt in excess of $25,000 owed to it;

(f) Any change in any compensation arrangement or agreement with any Employee, officer, director or stockholder of the Company that would increase the cost of any such agreement or arrangement to the Company by more than $10,000 in each instance;

(g) To the Company’s Knowledge, any labor organization activity of the Employees of the company,

(h) Any change in any agreement to which the Company is a party or by which it is bound that materially adversely affects the business, assets, liabilities, financial condition or operations of the Company or, to the Company’s Knowledge, its prospects; or

(i) Any other event or condition of any character that, either individually or cumulatively, has materially and adversely affected the business, assets, liabilities, financial condition or operations of the Company or, to the Company’s Knowledge, its prospects.

3.10.Title to Properties and Assets; Liens, etc. The Company has good and marketable title to its properties and assets, including the properties and assets reflected in the most recent balance sheet included in the Financial Statements, and good title to its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than (a) those resulting from taxes which have not yet become delinquent, (b) minor liens and encumbrances which do not detract from the value of the property subject thereto or impair the operations of the Company, and (c) those that have otherwise arisen in the ordinary course of business. All facilities, machinery, equipment, fixtures, vehicles and other properties owned, leased or used by the Company are in good operating condition and repair and are fit and usable for the purposes for which they are being used. The Company is in material compliance with all terms of each lease to which it is a party or is otherwise bound.

3.11.Intellectual Property.

(a) The Company owns or possesses sufficient legal rights to use all patents, applications for patents, trademarks, trademark registrations, applications for trademark registrations, service marks, trade names, copyrights, trade secrets, computer software and applications, product related artwork and know-how (including any registrations and applications for registration thereof), licenses, information and other proprietary rights and processes (collectively, “Intellectual Property”), necessary for the Business, and Company’s use of the Company Intellectual Property has not and, to the Company’s Knowledge, will not constitute any infringement of the rights of any other person or entity. All registrations and applications for registration of Company Intellectual Property and applications in process for Company Intellectual Property are identified and constitute all of the Intellectual Property used in connection with the Business. There is a licensing agreement with Biosite, where as Biosite has paid and licensed four (4) of the Company’s proprietary proteomic biomarkers. The Company is also in discussion with Neogenomics concerning a possible extension to an agreement that expired November 16, 2007 and there can be no assurance that Power3 will agree to an extension of the agreement. The agreement would provide for Neogenomics, Inc. to have the right to purchase 20% of the Company for $0.20 per share or $20,000,000.00 USD on a fully-diluted basis, whichever is less, and up to another 40% of the Company (a total of 60%) to purchase from November 16, 2007 through May 16, 2008 for $0.40 per share or $40,000,000.00 USD on a fully-diluted basis, whichever is less, or between May 17, 2008 and November 15, 2008 for $0.50 per share or $50,000,000.00 USD on a fully-diluted basis, whichever is less, to license on a non-exclusive basis select proteomic biomarkers from the Company. Both the Company and Neogenomics, Inc. will subsequently establish a joint-ventured (JV) Contract Research Organization (CRO) upon option execution of Neogenomics, Inc. to purchase 20% of the Company. The JV will license the technology. The Company will own up to 40% of the joint ventured CRO. The Company continues to explore further licensing opportunities with both diagnostic and therapeutic companies to generate revenues from their intellectual property. The Company has not received any communications alleging that it has violated or, by conducting its Business, would violate any of the patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity.

(b) To the Company’s Knowledge, it is not necessary to the Business to utilize any inventions, trade secrets or proprietary information of any of its Employees made prior to their employment by the Company, except for inventions, trade secrets or proprietary information that have been assigned to the Company.

(c) Since the Statement Date, there has not been any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets of the Company.

3.12.Compliance with Other Instruments. The Company is not in violation or default of any term of the Certificate or its Bylaws (in each case, as amended to date), or of any provision of any mortgage, indenture, contract, agreement, instrument or contract to which it is party or by which it is bound or of any judgment, decree, order, writ or any statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof applicable to the Company which individually or in the aggregate is reasonably likely to materially and adversely affect the business, assets, liabilities, financial condition, operations or prospects of the Company, other than approximately $423,000 USD of convertible debentures which is disclosed in the Company’s most recent 10-QSB filing.

3.13.Litigation. There is no action, suit or proceeding pending or, to the Company’s Knowledge, any threatened action, suit or proceeding against the Company or any investigation of the Company nor is the Company aware that there is any basis for any of the foregoing that, individually or in the aggregate, if determined adversely to the Company, would reasonably be expected to have a Material Adverse Effect or materially and adversely affect the ability of the Company to perform its obligations. There is however on going litigation that is defined and contained within the Company’s most recent 10- QSB dated September 30, 2007. The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or that the Company intends to initiate.

3.14.Tax Returns and Payments. (a) the Company has timely filed or caused to be filed all tax returns (federal, state and local) required to be filed by it (“Tax Returns”) and (b) all taxes shown to be due and payable on such Tax Returns, and any written assessments imposed on the Company in respect of any taxable period ending on or before the Closing have been paid or will be paid prior to the time they become delinquent or are being contested in good faith. The Company has not been advised in writing and has no Knowledge of any deficiency, assessment or proposed adjustment to its federal, state or local taxes.

3.15.Real Property Holding Corporation. The Company is not, and has never been, a “United States real property holding corporation” as that term is defined in Section 897 of the Internal Revenue Code of 1986, as amended (the “Code”).

3.16.Employees.

(a) (i) the Company has no, and never has had any, collective bargaining agreements with any of its employees; (ii) there is no labor union organizing activity pending or, to the Company’s Knowledge, threatened with respect to the Company; (iii) no employee has or is subject to any agreement or contract (including, without limitation, licenses, covenants or commitments of any nature) regarding his employment; (iv) to the Company’s Knowledge, none of its Employees is subject to any judgment, decree or order of any court or governmental agency, that would interfere with his or her duties to the Company or that would conflict with the Business as currently conducted; (v) to the Company’s Knowledge, no employee, nor any consultant with whom the Company has contracted, is in violation of any term of any employment contract, proprietary information agreement or any other agreement relating to the right of any such individual to be employed by, or to contract with, the Company; (vi) to the Company’s Knowledge, the continued employment by the Company of its present employees, and the

performance of the Company’s contracts with any independent contractors, will not result in any violation of any term of any employment contract, proprietary information agreement or any other agreement relating to the right of any such individual to be employed by, or to contract with, the Company, and the Company has not received any written notice alleging that such violation has occurred; and (vii) the Company does not have any present intention to terminate the employment of any officer or key employee.

(b) The Company has not received written notice and has no Knowledge of any outstanding or threatened claims against the Company or any affiliate (whether under federal or state law, under any employment agreement, or otherwise) asserted by any present or former Employee of the Company that, individually or in the aggregate, if determined adversely to the Company, would reasonably be expected to have a Material Adverse Effect or materially and adversely affect the ability of the Company to perform its obligations. To the Company’s Knowledge it is not in material violation of any law, ordinance or governmental rule or regulation concerning immigration or the employment of persons other than U.S. citizens.

3.17.Designation of Intellectual Property Rights. Each current employee, officer and director of the Company have executed a proprietary information and inventions agreement (the

“Designation of Intellectual Property Rights”). No current employee, officer and director of the Company has excluded works or inventions made prior to his or her employment with the Company from his or her assignment of inventions pursuant to such employee, officer or director’s Proprietary Information and Inventions Agreement.

3.18.Obligations of Management. Each officer of the Company is a full-time employee of the Company and is currently devoting one hundred percent (100%) of his or her business time to the conduct of the business of the Company. The Company has not received notice that any officer or key employee of the Company is planning to work less than full time at the Company in the future.

3.19.Real Property. The Company has no interest in any real estate, except that the Company leases the property at its office in The Woodlands, TX (the “Leased Real Property”). The Leased Real Property is adequate for the operations of the Business as currently conducted and as contemplated to be conducted as of the Closing. The Company has paid all amounts due and has not received written notice and has no Knowledge that it is in default under the Real Property Lease and there exists no condition or event, which, with the passage of time, giving of notice or both, could reasonably be expected to give rise to a default under or breach of the Real Property Lease.

3.20.Offering Valid. Assuming the accuracy of the representations and warranties of the Purchasers contained in Section 4.2 hereof, the offer, sale and issuance of the Securities pursuant to this Agreement will be exempt from the registration requirements of the Securities Act of 1933 (the “Securities Act”) will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws. As to the states where the purchasers reside, the Company will file all applicable blue sky forms and subsequently file FORM D with the states and the SEC.

3.21.Full Disclosure. The representations, warranties and other statements contained in this Agreement, the Schedules and Exhibits hereto do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein not misleading.

3.22.Insurance, The Company’s insurance policies and binders are valid and in full force and effect. The Company is not in default with respect to any provision contained in any such policy or binder and has not failed to give any notice or present any claim of which it has notice under any such policy or binder in a timely fashion. Except in the ordinary course of business, the Company has not received or given a notice of cancellation or non renewal with respect to any such policy or binder. None of the applications for such policies or binders contain any material inaccuracy, and all premiums for such policies and binders have been paid when due. The Company has no Knowledge of any state of facts or the occurrence of any event that is reasonably likely to form the basis for any claim against it not fully covered by its policies

3.23.Investment Company Act. The Company is not an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.

3.24.Foreign Payments; Undisclosed Contract Terms.

(a) The Company has not, with respect to the Business, made any offer, payment, promise to pay or authorization for the payment of money or an offer, gift, promise to give, or authorization for the giving of anything of value to any person in violation of the Foreign Corrupt Practices Act of 1977, as amended and the rules and regulations promulgated thereunder.

(b) There are no understandings, arrangements, agreements, provisions, conditions or terms relating to, and there have been no payments made to any person or entity in connection with any agreement, contract, commitment, lease or other contractual undertaking of the Company which are not expressly set forth in such contractual undertaking.

3.25.No Broker. The Company has not employed any broker or finder, or incurred any liability for any brokerage or finders fees or any similar fees or commissions in connection with the transactions contemplated by this Agreement.

4.REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.

Each Purchaser hereby severally, and not jointly, represents and warrants to the Company as follows:

4.1.Requisite Power and Authority. Such Purchaser has all necessary power and authority under all applicable provisions of law to execute and deliver this Agreement, to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. All actions on such Purchaser’s part required for the lawful execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and thereby and the performance of all obligations of such Purchaser hereunder and thereunder, have been or will be effectively taken prior to the Closing. Upon its execution and delivery, this Agreement will be valid and binding obligations of such Purchaser, enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights, (b) general principles of equity that restrict the availability of equitable remedies, and (c) to the extent that the enforceability of the indemnification provisions of this Agreement may be limited by applicable laws.

4.2. Investment Representations. Such Purchaser understands that the Securities have not been registered under the Securities Act, under any state securities laws or under securities laws of any other jurisdiction. Such Purchaser also understands that the Securities are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon such Purchaser’s representations contained in this Agreement. Such Purchaser hereby represents and warrants as follows:

(a) Purchasers Bear Economic Risk. Such Purchaser has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. Such Purchaser is capable of bearing the economic risk of this investment indefinitely and is able to bear a complete loss of its investment in the Company. Such Purchaser also represents it has not been organized for the purpose of acquiring the Securities.

(b) Acquisition for Own Account. Such Purchaser is acquiring the Securities for its own account, not as nominee or agent, for investment only, and not with a view towards their resale or distribution or any part thereof, and such Purchaser has no present intention of selling, granting any participation in or otherwise distributing the same. By executing this Agreement, such Purchaser further represents that such Purchaser does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Securities.

(c) Purchasers Can Protect Its Interest. Such Purchaser represents that by reason of its, or of its management’s, business or financial experience, such Purchaser has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement. Further, such Purchaser is aware of no publication of any advertisement in connection with the transactions contemplated in the

(d) Accredited Investor. Such Purchaser is an “accredited investor” within the meaning of Regulation D under the Securities Act. and within the meaning of National Instrument 45-106 Prospectus and Registration Exemptions and has executed and delivered to the Company the Accredited Investor Form attached herewith as Exhibit B.

(e) Rule 144. Such Purchaser acknowledges and agrees that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Such Purchaser has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act as in effect from time to time, which permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions, including, among other things: the availability of certain current public information about the Company, the resale

4.2.Investment Representations. Such Purchaser understands that the Securities have not been registered under the Securities Act, under any state securities laws or under securities laws of any other jurisdiction. Such Purchaser also understands that the Securities are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon such Purchaser’s representations contained in this Agreement. Such Purchaser hereby represents and warrants as follows:

(a) Purchasers Bear Economic Risk. Such Purchaser has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. Such Purchaser is capable of bearing the economic risk of this investment indefinitely and is able to bear a complete loss of its investment in the Company. Such Purchaser also represents it has not been organized for the purpose of acquiring the Securities.

(b) Acquisition for Own Account. Such Purchaser is acquiring the Securities for its own account, not as nominee or agent, for investment only, and not with a view towards their resale or distribution or any part thereof, and such Purchaser has no present intention of selling, granting any participation in or otherwise distributing the same. By executing this Agreement, such Purchaser further represents that such Purchaser does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Securities.

(c) Purchasers Can Protect Its Interest. Such Purchaser represents that by reason of its, or of its management’s, business or financial experience, such Purchaser has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement. Further, such Purchaser is aware of no publication of any advertisement in connection with the transactions contemplated in the Agreement.

(d) Accredited Investor. Such Purchaser is an “accredited investor” within the meaning of Regulation D under the Securities Act. and within the meaning of National Instrument 45-106 Prospectus and Registration Exemptions and has executed and delivered to the Company the Accredited Investor Form attached herewith as Exhibit B.

(e) Rule 144. Such Purchaser acknowledges and agrees that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Such Purchaser has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act as in effect from time to time, which permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions, including, among other things: the availability of certain current public information about the Company, the resale

occurring following the required holding period under Rule 144 and the number of shares being sold during any three-month period not exceeding specified limitations.

(f) Residence. The office or offices of such Purchaser in which its investment decision was made is located at the address or addresses of such Purchaser set forth on Exhibit A.

(g) Discussions with the Company. Such Purchaser has had an opportunity to discuss the Company’s business, management and financial affairs with the Company’s management. Such Purchaser has had an opportunity to ask questions of and receive answers from, officers of the Company. Purchaser received from the Company all information requested by such Purchaser in connection with this Agreement, and the transactions contemplated hereby.

(h) Money Laundering. The funds which will be advanced by the Purchaser to the Agent hereunder and the Purchaser acknowledges that the Company may in the future be required by law to disclose the Purchaser's name and other information relating to this Subscription Agreement and the Purchaser's subscription hereunder, on a confidential basis. To the best of its knowledge (a) none of the subscription funds to be provided by the Purchaser (i) have been or will be derived from or related to any activity that is deemed criminal under the laws of the United States, or any other jurisdiction, or (ii) are being tendered on behalf of a person or entity who has not been identified to the Purchaser, and (b) the Purchaser shall promptly notify the Company if the Purchaser discovers that any of such representations ceases to be true, and to provide the Company with appropriate information in connection therewith.

4.3.Transfer Restrictions. Such Purchaser acknowledges and agrees that the Securities are subject to restrictions on transfer as set forth in state and federal securities laws and that appropriate legends will be place on certificates representing such shares.

4.4.Litigation. There is no action, suit, proceeding or investigation pending, or to each Purchaser’s knowledge, currently threatened against such Purchaser which, if adversely determined, would, individually or in the aggregate, have a material adverse effect on the ability of such Purchaser to perform its obligations under this Agreement and to consummate the transactions contemplated hereby and thereby.

4.5.No Broker. No Purchaser has employed any broker or finder, or incurred any liability for any brokerage or finders fees or any similar fees or commissions in connection with the transactions contemplated by this Agreement.

4.6.No Conflict. The execution, delivery and performance of, and the consummation of the transactions contemplated by this Agreement have not resulted in any violation of, or default under, or conflict with, or constitute, with or without the passage of time, the giving of notice or both, any violation of, or default under (i) any term or provision of (A) the Purchaser’s organizational documents or (B) any judgment, order, writ, injunction or decree of any court, government agency or instrumentality of any arbitrator, in each case, to which the Purchaser is a party or by which it or its properties or assets are bound or (ii) any statute, rule or regulation applicable to the Purchaser in the context of the types of transactions contemplated by this Agreement.

4.7.Consents and Approvals. No consent, approval, waiver or authorization of, or designation, declaration or filing with, any court, governmental authority or instrumentality or arbitrator or any other person or entity is required in connection with the valid execution, delivery and performance of, and the consummation of the transactions contemplated by, this Agreement by or on behalf of the Purchasers, including without limitation, the purchase of the Shares, except such consents as have been obtained and such filings as have been made prior to the Closing and any notices of sale required to be filed with the Securities and Exchange Commission under the Securities Act or such post-closing filings as may be required under applicable state securities laws.

5. CONDITIONS TO CLOSING

5.1.Conditions to Purchasers’ Obligations at the Closings. The obligation of the Purchasers to consummate the transactions contemplated herein to be consummated on the Closing Date is subject to the satisfaction, on or prior to the Closing Date of the conditions set forth below and applicable thereto, any of which may be waived in writing by that Purchaser:

(a) Representations and Warranties; Performance of Obligations. Each of the representations and warranties of the Company contained herein shall be true and correct on and as of the Closing Date. The Company shall have performed and complied with the covenants and provisions of this Agreement required to be performed or complied with by it at or prior to the Closing Date. The Purchasers shall have received certificates of the Company dated as of the Closing Date signed by an officer of the Company, certifying as to the fulfillment of the conditions set forth in this Section 5.1 and the truth and accuracy of the representations and warranties as of the Closing Date.

(b) Issuance in Compliance with Laws. On the Closing Date, the sale and issuance of the Securities shall be legally permitted by all laws and regulations to which any of the Purchasers and the Company are subject.

(c) Filings, Consents, Permits, and Waivers. The Company and the Purchasers shall have made all filings and obtained any and all, permits and waivers necessary for consummation of the transactions contemplated by the Agreement

(d) Reservation of Certain Shares. The Shares shall have been duly authorized and reserved for issuance.

(e) Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at the Closings and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Purchasers and its counsel, and the Purchasers and their counsel shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request.

(f) Proceedings and Litigation. No action, suit or proceeding shall have been commenced by any governmental authority against any party hereto seeking to restrain or delay the purchase and sale of Shares or the other transactions contemplated by this Agreement.

(g) Due Diligence. The Purchasers shall have completed, to their satisfaction, a due diligence investigation of the Company and its properties and assets.

(h) No Material Adverse Change. There shall have been no material adverse change to the business, financial condition or prospects of the Company.

(i) Payment of Purchase Price. Each Purchaser shall have delivered to the Company the portion of the Purchase Price allocated to such Purchaser’s Shares, in the amount set forth opposite such Purchaser’s name on Exhibit A.

(j) Delivery of Documents at the Closing. The Company shall have executed and delivered to the Purchasers the following documents, to be held in escrow pending the Closing, on or prior to the Closing Date:

(i)Certificates. Certificates representing the Securities to be purchased and sold on the Closing Date bearing the legends required to be placed on such certificates;

(ii)Secretary’s Certificate. (A) Copies of resolutions by the Board of Directors authorizing and approving this Agreement, the issuance and delivery of the Shares and copies of resolutions by the stockholders of the Company authorizing and approving the transactions contemplated by this Agreement; and (B) certifying as to the incumbency of the officers executing this Agreement and any other documents contemplated by this Agreement; and

5.2.Conditions to Company’s Obligations at the Closing. The obligations of the Company to consummate the transactions contemplated herein to be consummated on the Closing Date is subject to the satisfaction, on or prior to the Closing Date of the conditions set forth below and expressly applicable thereto, any of which may be waived in writing by the Company:

(a) Representations and Warranties; Performance of Obligations. Each of the representations and warranties contained herein shall be true and correct on and as of the Closing Date. The Company shall have performed and complied with the covenants and provisions of this Agreement required to be performed or complied with by them at or prior to the Closing Date.

(b) Issuance in Compliance with Laws. On the Closing Date, the sale and issuance of the Shares and the proposed issuance of the Conversion Shares shall be legally permitted by all laws and regulations to which the Purchasers and the Company are subject.

(c) Filings, Consents, Permits, and Waivers. The Company and the Purchasers shall have made all filings and obtained any and all consents, permits and waivers necessary for consummation of the transactions contemplated by this Agreement.

(d) Proceedings and Litigation. No action, suit or proceeding shall have been commenced by any governmental authority against any party hereto seeking to restrain or delay the purchase and sale of Shares or the other transactions contemplated by this Agreement.

6. COVENANTS OF THE PARTIES.

6.1.Commercially Reasonable Efforts. Upon the terms and subject to the conditions set forth in this Agreement, the parties shall use their good faith commercially reasonable efforts to take, or cause to be taken, without any party being obligated to incur any material internal costs or make any payment or payments to any third party or parties which, individually or in the aggregate, are material and are not otherwise legally required to be made, all actions, and to do or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Closing and the other transactions contemplated hereunder, including (a) obtaining all required consents, (b) defending any litigation or claims challenging this Agreement or the consummation of any of the transactions contemplated hereunder, including, if the circumstances warrant, seeking to have any stay or temporary restraining court order vacated or reversed, and (c) the execution and delivery of any additional documents, agreements and instruments (in form and substance reasonably satisfactory to the parties) necessary to consummate the transactions contemplated hereunder and to fully carry out the purposes of this Agreement.

6.2.Post-Closing Filings. In connection with the Closing, the Company and the Purchasers, if applicable, agree to file all required forms or filings under applicable securities laws within the time required by such laws.

6.3.Acknowledgement of Disclosure. Purchaser acknowledges that it has been made available for his review all public filings with the SEC and any other documentation and materials that he has reasonably requested. Purchaser has reviewed the attached SEC Form 10-KSB, dated 12/31/06 and SEC Form 10-QSB, dated 9/30/07.

7. MISCELLANEOUS.

7.1.Governing Law. This Agreement shall be governed in all respects by the laws of the State of Texas without regard to the conflicts of laws principles of any jurisdiction. No suit, action or proceeding with respect to this Agreement may be brought in any court or before any similar authority other than in a court of competent jurisdiction in the State of Texas and the parties hereby submits to the exclusive jurisdiction of such courts for the purpose of such suit, proceeding or judgment. Each of the parties hereto hereby irrevocably waives any right which it may have had to bring such an action in any other court, domestic or foreign, or before any similar domestic or foreign authority and agreed not to claim or plead the same. Each of the parties hereto hereby irrevocably and unconditionally waives trial by jury in any legal action or proceeding in relation to this Agreement and for any counterclaim therein.

7.2.Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors and permitted assigns of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of the Shares from time to time. This Agreement may not be assigned without the prior written consent of the other parties hereto, except that each Purchaser may assign its rights and obligations hereunder to any affiliate or affiliates without such prior written consent.

7.3.Entire Agreement. This Agreement, the Exhibits and Schedules hereto, constitute the full and entire understanding and agreement between the parties hereto with regard to the subject matter hereof and thereof and no party hereto shall be liable or bound to any other party hereto in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein.

7.4.Severability. If any provision of the Agreement is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby.

7.5.Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. Any waiver, permit, consent or approval of any kind or character on any Purchaser’s part of any breach, default or noncompliance under this Agreement or any waiver on such party’s part of any provisions or conditions of the Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, Bylaws, or otherwise afforded to any party, shall be cumulative and not alternative.

7.6.Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, and if not, then on the next business day; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company at the address as set forth on the signature page hereof and to the Purchasers at the address set forth on Exhibit A attached hereto or at such other address as the Company or the Purchasers may designate by ten (10) days advance written notice to the other parties hereto.

7.7.Titles and Subtitles. The titles of the sections and subsections of the Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

7.8.Counterparts Execution by Facsimile Signature. This Agreement may be executed in any number of counterparts (including execution by facsimile), each of which shall be an original, but all of which together shall constitute one instrument. This Agreement may be executed by facsimile signature(s) which shall be binding on the party delivering same, to be followed by delivery of originally executed signature pages.

7.9.Acknowledgment. Any investigation or other examination that may have been made at any time by or on behalf of a party to whom representations and warranties are made in this Agreement shall not limit, diminish, supersede, act as a waiver of, or in any other way affect the representations, warranties and indemnities contained in this Agreement, and the respective parties may rely on the representations, warranties and indemnities made to them in this Agreement irrespective of and notwithstanding any information obtained by them in the course of any investigation, examination or otherwise, whether before or after the Closings.

7.10.Publicity. Except as otherwise required by law or applicable stock exchange rules, no announcement or other disclosure, public or otherwise, concerning the transactions contemplated by this Agreement shall be made, either directly or indirectly, by any party hereto which mentions another party (or parties) hereto without the prior written consent of such other party (or parties), which consent shall not be unreasonably withheld, delayed or conditioned.

7.11.Exculpation by Purchasers. Each Purchaser acknowledges that it is not relying upon any person, firm or corporation, other than the Company and its officers and directors, in making its investment or decision to invest in the Company.

7.12.No Third Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to confer on any person other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement.

7.13.Pronouns. All pronouns contained herein, and any variations thereof shall be deemed to refer to the masculine, feminine or neutral, singular or plural, as to the identity of the parties hereto may require.

IN WITNESS WHEREOF, the parties hereto have executed this Share Purchase

Agreement as of the date set forth in the first paragraph hereof.

COMPANY:		PURCHASERS:
POWER3 MEDICAL Products, INC.	By:
By:______________________________________		By: _________________________________
Name: Steven B. Rash Title: Chairman and CEO 3400 Research Forest Dr. Woodlands, Tx 77381 281-466-1600		Name: Title: Address Attn: Tel: Fax: Email:

with a copy to:

SHARE PURCHASE AGREEMENT EXHIBIT A

SCHEDULE OF PURCHASERS

	Column A	Column B
Name of Purchaser	Number of Shares to be Purchased	Total Purchase  Price Amount
TOTAL

[Signature Page to Stock Purchase Agreement]

ACCREDITED INVESTOR QUESTIONNAIRE

EXHIBIT B

Dear Purchaser/Investor:

The information contained in this questionnaire is being furnished to Power3 Medical Products, Inc. (the “Company”) in order that the Company may determine whether offers for the purchase and sale of the Company’s securities (the “Securities”) may be made to you, as an investor, in light of the requirements of Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”) and certain exemptions contained in state securities laws. You understand that the information is needed for the Company to determine whether it has reasonable grounds to believe that you are an “accredited investor” as that term is defined in Regulation D and that you have such knowledge and experience in financial, investment and business matters that you are capable of evaluating the merits and risks of the investment in the Securities. You understand that (a) the Company will rely on the information contained herein for purposes of such determination, (b) the Securities may not be registered under the Act, (c) the Securities will not be registered under the securities laws of any state, and (d) this questionnaire is not an offer to purchase the Securities or any other securities in any case where such offer would not be legally permitted.

Information contained in this questionnaire will be kept confidential by the Company and its agents, employees or representatives. You understand, however, that the Company may have the need to present it to such parties as it deems advisable in order to establish the applicability under any federal or state securities laws of an exemption from registration.

In accordance with the foregoing, the following representations and information are hereby made and furnished by the investor:

Please answer all questions. If the answer is “none” or “not applicable,” please so state.

INFORMATION REQUIRED OF EACH INVESTOR:

1. A.      If Investor is an Individual:

Name: _________________________________________________ Age: ____________

Social Security Number: ________________________No. of Dependents: ____________

Marital Status: ______________________________________Citizenship: ____________

B. If Investor is an entity:

Name: ______________________________________________

EIN: _______________________________________________

[Signature Page to Stock Purchase Agreement]

2. A.       If Investor is an Individual:

Home Address and telephone number:________________________________________

_______________________________________________________________________

Business Address and telephone number:_______________________________________

_______________________________________________________________________

B. If Investor is an entity:

Corporate Address and telephone number:______________________________________

________________________________________________________________________

3. A.       If Investor is an Individual:

State in which the investor:

is licensed to drive.                                                                                                            

is registered to vote_______________________________________________

B. If Investor is an entity:

State in which the investor:

files income tax returns.                                                                                           

has principal place of business.                                                                                           

4. Employer and position:                                                                                                                                        

5. Business or professional education and the degrees received are as follows:

School Degree Year Received

6. 6.         If Investor is an entity:

Provide the total assets of the entity as of a recent date:

Assets: $________________________.

Date: ___________________________.

7. If Investor is an Individual:

(a)	Individual income during 2006:	$________________
	(exclusive of spouse’s income)
(b)	Individual income during 2007:	$________________
	(exclusive of spouse’s income)
(c)	Estimated income during 2008:	$________________
	(exclusive of spouse’s income)

(d)	Joint income, with spouse     2006	$________________
	2007	$________________
(e)	Estimated joint income, with
	spouse, during 2008	$________________

8. Estimated net worth

(may include joint net worth with spouse) $________________

9. Is the investor involved in any litigation, which, if an adverse decision occurred, would materially affect the investor’s financial condition?

Yes ____ No ____

If yes, please provide details:

10. The investor is an experienced and sophisticated investor or is advised by a qualified investment advisor, all as required under the securities laws and regulations.

Yes ____No __

11. The investor understands the full nature and risk of an investment in the Securities and can afford the complete loss of the entire investment in the Securities.

Yes ____No ____

12. The investor is able to bear the economic risk of an investment in the Securities for an indefinite period of time and understands that an investment in the Securities may be illiquid.Yes ____No __

13. Does the investor have any other investments or contingent liabilities that the investor reasonably anticipates could cause the need for sudden cash requirements in excess of cash readily available to the investor? Yes ____ No ____

If yes, please explain:

________________________________________________________________

14. Please describe the investor’s experience as an investor (including amounts invested) in securities, particularly investments in non-marketable and tax incentive securities.

                                                                                                                                                   &# 160;                                                                                                                                             

15. Has the investor participated in other private placements of securities?

Yes ____ No ____

If yes, please provide details:

16. In evaluating the merits and risks of this investment, does the investor intend to rely upon the advice of the investor’s attorney, accountant, or other advisor?

Yes ____ No ____

17. If the investor is an entity, was it formed for the specific purpose of acquiring the securities offered? Yes ____ No ____

Please indicate the date of incorporation/organization ____

The investor understands that Company will be relying on the accuracy and completeness of the investor’s responses to the foregoing questions and the investor represents and warrants to the Company as follows:

(i) The answers to the above questions are complete and correct and may be relied upon by the Company whether or not the offering in which the investor proposes to participate is exempt from registration under the Act and the securities laws of certain states;

(ii) The investor will notify the Company immediately of any material change in any statement made herein occurring prior to the closing of any purchase by the investor of the Securities; and

(iii) The investor or its management, in case of an entity, has sufficient knowledge and experience in financial, investment and business matters to evaluate the merits and risks of the prospective investment; the investor is able to bear the economic risk of the investment in the Securities and currently could afford a complete loss of such investment.

[Signature Page to Stock Purchase Agreement]

IN WITNESS WHEREOF, the undersigned has executed this Accredited Investor Questionnaire this ______ day of _______________, 2008, and declares under oath that it is truthful and correct to the best of the undersigned’s knowledge.

Signature of the Investor or Authorized Signatory of Investor:____________________________

Name of Investor: ____________________________________________________

Name of Authorized Signatory: _________________________________________

Title of Authorized Signatory: __________________________________________

SCHEDULE TO

SHARE PURCHASE AGREEMENT

The Company has issued Share Purchase Agreements to the following Investors. The terms of the Share Purchase Agreement issued by the Company to each of the following holders are identical except for

Date Agreement Signed	Investor Name	Investor Address	Shares Purchased
2/7/2008	Mitchel, Clint	4335 Van Nuys Blvd #353, Sherman Oaks, CA 91403	200,000
2/15/2008	Horton, Jason	8146 Hendrie Blvd, Huntington Woods, MI 48070	50,000
2/5/2008	Richard J. Kraniak	101 West Long Lake Road, Bloomfield Hills, MI 48304	1,000,000
2/13/2008	Banker, Douglas	6508 Crane Road, Ypsilanti, MI 48197	100,000
2/12/2008	Prager, Evarard	P.O. Box 773 Montauk, NY 11954	100,000
2/29/2008	Hughes, Mike	2604 International Orange, TX 77632	24,000

EX-10.53

CLINICAL TRIAL AGREEMENT

THIS AGREEMENT, effective as of the 24^th day of August, 2007 (the “Effective Date”), is by and between The Cleo Roberts Center of Clinical Research at Sun Health Research Institute (hereinafter called “Sun Health”), having it’s principal place of business at 10515 West Santa Fe Drive, Sun City, AZ 85351, and Power3 Medical Products, Inc., a corporation organized and existing under the laws of the State of New York and having its offices at 3400 Research Forest Drive, The Woodlands, TX 77381

WHEREAS, Power3 Medical desires to conduct clinical trials with Sun Health Institute in order to obtain certain biological materials and associated experimental or clinical information, and to use such materials and information for the analysis, validation and identification of protein structure and function; and Sun Health agrees to provide such materials and associated experimental or clinical information to Power3 Medical; and which will guide the performance of this Agreement and which has been written by the Sponsor and accepted by Sun Health Research Institute; and Principal Investigator Dr. Essam Sheta , and

WHEREAS, the research program contemplated by this Agreement is of mutual interest and benefit to Sun Health Institute and to the Sponsor , and will further Sun Health Institute’s instructional and research objectives in a manner consistent with its corporate status.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree as follows:

1. Effective Date. 24^th day of August, 2007

This Agreement shall be effective as of the Effective Date and shall remain in full force and effect until it expires or is terminated in accordance with Section 15 hereof.

2. Scope of Work.

Sun Health Institute shall perform the study described in the Protocol entitled “Studying serum protein profile from patients with Nuerodegenerative diseases vs. age matched control & disease like disorders , attached hereto as Appendix A, and which is hereby incorporated into and made a part of this Agreement (“the Study”) subject to and in accordance with the provisions hereof.

3. Principal Investigator/Co-Investigator.

The Study will be conducted by and under the direction of Sun Health’s Institute’s; Marwin N. Sabbagh MD, FAAN hereafter referred to as “Principal Investigator”. The Principal Investigator will be responsible for the direction of the Study in accordance with all applicable Sun Health Institute’s policies and all applicable laws and regulations, including but not limited to Federal Food, Drug and Cosmetic Act regulations and guidelines.

4. Performance Period.

The Study shall be initiated on or about January 1, 2007 and shall terminate on or about December 31, 2007 (“the Performance Period”). If at any time the Principal Investigator has reason to believe work will not be completed within the Performance Period, the Principal Investigator will advise Sponsor of the reason (s) and length of time required to complete the Study.

5. Records and Reports.

It is understood that the Principal Investigator shall have the following record keeping

and reporting obligations: (i) preparation and maintenance of complete, accurately written records, accounts, notes, reports, and data of the Study performed under the Agreement; and (ii) preparation and submission to Sponsor of patient case reports (“Case Reports”) for each patient as provided in the protocol described in Appendix A.

6. Study Material.

Sponsor shall make available sufficient quantities of the Study material to carry out the Study. The Principal Investigator shall take responsible steps to handle, store, and use such materials in accordance with Appendix A. All such unused materials will be returned to Sponsor at the conclusion of the work, unless written authorization to destroy them is given by Sponsor.

7. Payment.

In consideration of SHRI’s performance of the Study, Sponsor shall pay SHRI as set forth below.

A. Sponsor shall pay SHRI a sum of $350.00 per completed, evaluable subject, who completes the protocol and for whom a Case Report is submitted. The sum assumes enrollment up to 400 evaluable subjects in accordance with the scope of work set forth in the Protocol. The payment noted above includes all applicable overheads due any party or entity and shall be paid on a per patient basis.

B. Payment shall be made to SHRI according to Appendix B appended hereto and incorporated by reference. All costs outlined in Appendix B shall remain firm for duration of the Research, unless otherwise agreed to in writing by SHRI and Sponsor.

C. Checks will be made payable to: “Sun Health Research Institute”, Tax ID No. 86-0768795

Checks shall be sent to:

Sun Health Research Institute

10515 West Santa Fe. Drive

Sun City, AZ

85351

Page 2 of 9

D. The payments shall be paid to SHRI within thirty (30) days after submission of subjects Case Reports by SHRI to Sponsor and the submission of an accounting invoice.

8. Confidential Information.

A. “Confidential Information” as used herein shall mean compounds or substances and information or data in written, oral or tangible form delivered by or on behalf of Sponsor hereunder for the performance of the Study and which is clearly labeled as confidential by Sponsor, or if presented in oral form, is immediately identified as confidential and is summarized and labeled in written form as confidential with fifteen (15) days of its oral presentation. Confidential Information will not include any information that: (i) was known by Sun Health Institute prior to its receipt from Sponsor; (ii) is generally publicly known or becomes publicly known subsequent to its receipt from Sponsor through no fault of _Sun Health Institute; (iii) is hereafter developed by Sun Health Institute independent of any disclosure by Sponsor hereunder; or (iv) is received by Sun Health Institute from another party not under an obligation of confidentiality to Sponsor.

B. However, Sun Health Institute agrees to retain Confidential Information in such confidence as Sun Health Institute retains its own confidential information, not to reveal such Confidential Information to third parties, except, as required, to the Food and Drug Administration (FDA), without the prior written permission of Sponsor, and to use such Confidential Information only for the purpose of conducting the research or work hereunder. At the termination of this agreement all Confidential Information (including copies and unused substances) will be returned to Sponsor, except that Sun Health Institute may retain one copy of such Confidential Information for archival purposes only.

C. The results of the Study shall be treated in confidence by Sun Health Institute, except that Sun Health Institute retains the right to publish any and all of its Study results, subject to a prior thirty (30) day period of review by Sponsor.

D. Sponsor shall have the right to use, copy and distribute as it sees fit any of the published results of the Study and to use and copy unpublished research results, provided that Sponsor may not use the name of Sun Health Institute and its Principal Investigator for any public or commercial purpose, including advertising, promotional or sales literature or product labeling without the prior written consent of Sun Health Institute.

9. HIPAA Compliance.

A. Sponsor and Sun Health Institute agree to comply with the applicable provisions of the Administrative Simplification section of the Health Insurance Portability and Accountability Act of 1996, as codified at 42 U.S.C. § 1320d through d-8 (“HIPAA”), and the requirements of any regulations promulgated thereunder including without limitation the federal privacy regulations as contained in 45 CFR Part 164 (the “Federal Privacy Regulations”) and the federal security standards as contained in 45 CFR Part 142 (the “Federal Security Regulations”). Sponsor and Sun Health Institute agree not to use or further disclose any protected health information, as defined in 42 U.S.C. § 1320d (collectively, the “Protected Health Information”), concerning a patient other than as permitted by this Agreement and the requirements of HIPAA or regulations promulgated under HIPAA including without limitation the Federal Privacy Regulations and the Federal Security Regulations. Sponsor and Sun Health Institute will implement appropriate safeguards to prevent the use or disclosure of a patient’s Protected Health Information other than as provided for by this Agreement. Sponsor and Sun Health Institute will promptly report to the other any use or disclosure of a patient’s Protected Health Information not provided for by this Agreement or in violation of HIPAA, the Federal Privacy Regulations, or the Federal Security Regulations of which Sponsor or Sun Health Institute becomes aware. In the event Sponsor or Sun Health Institute, with the other’s approval, contracts with any agents to whom it provides a patient’s Protected Health Information, it shall include provisions in such agreements whereby it and agent agree to the same restrictions and conditions that apply to it with respect to such patient’s Protected Health Information. Sponsor and Sun Health Institute, will make its internal practices, books, and records relating to the use and disclosure of a patient’s Protected Health Information available to the Secretary of Health and Human Services to the extent required for determining compliance with the Federal Privacy Regulations and the Federal Security Regulations. Notwithstanding the foregoing, no attorney-client, accountant-client, or other legal privilege shall be deemed waived by Sponsor or Sun Health Institute by virtue of this Section.

Page 3 of 9

10. Publication.

A. Prior to submission for publication of a manuscript describing the results of any aspect of the Study, Sun Health Institute shall send Sponsor a copy of the manuscript to be submitted, and shall allow Sponsor thirty (30) days from the date of mailing to review the manuscript. The purposes for such review are i) to provide the Sponsor with the opportunity to review and comment on the contents of the proposed publication, ii) to identify any Confidential Information belonging to the Sponsor to be deleted from the proposed publication; and iii) to allow Sponsor to determine whether the manuscript contains subject matter for which patent protection should be sought prior to publication of such manuscript. Should Sponsor believe the manuscript contains Confidential Information belonging to Sponsor or that the subject matter of the manuscript contains a patentable invention, then prior to the expiration of thirty (30) days from the mailing date of such manuscript to Sponsor by Sun Health Institute Sponsor shall give written notification of such determination to Sun Health Institute.

B. After the expiration of thirty (30) days from the date of mailing such manuscript by Sponsor, unless Sun Health Institute has received the written notice specified above from Sponsor, Sun Health Institute shall be free to submit such manuscript for publication and to publish the disclosed research results in any manner consistent with academic standards.

C. Upon receipt of such written notice from Sponsor that the manuscript contains a patentable invention, Sun Health Institute will thereafter delay submission of the manuscript for an additional period of up to sixty (60) days to permit preparation and filing of U.S. patent application on the subject matter to be disclosed in such manuscript. After expiration of such sixty (60) day period, or the filing of a patent application on each such invention, whichever shall occur first, Sun Health Institute shall be free to submit the manuscript and to publish the disclosed results.

D. Upon receipt of written notice from Sponsor that the manuscript contains Confidential Information of Sponsor, Sun Health Institute shall review the manuscript and delete Confidential Information of Sponsor.

11. Patents.

A. Sun Health Institute shall promptly disclose in writing to Sponsor any invention made by Sun Health Institute, its employees or the Principal Investigator during the course of the performance of the Study and with respect to the Study drug/device. Sponsor shall maintain all such disclosures in confidence and shall not deliver or divulge them to any person. Sun Health Institute hereby grants Sponsor a non-exclusive royalty-free license to practice any such inventions and under any patents or patent applications which Sun Health Institute may file for such inventions.

B. Sponsor shall also have an option to acquire an exclusive license to practice any such invention and patents and patent applications thereon upon reasonable terms and conditions, including reasonable royalties, as the parties may mutually agree in a subsequent writing. The option granted in this Section 10.B. shall commence on the date Sponsor receives a disclosure of invention, as set forth in Section 10.A. and shall terminate one hundred eighty (180) days thereafter.

Page 4 of 9

12. Indemnification.

With respect to this Study, Sponsor shall indemnify Institution as follows:

Sponsor shall indemnify, defend, and hold harmless Institution, and its trustees, directors, affiliates, officers, employees, physicians and agents, including the Principal Investigator (the "Indemnitees") from and against any and all actions, claims, lawsuits, demands or prosecutions that may be brought or instituted and all consequent damages, liabilities, costs and expenses (including reasonable attorneys' fees), by reason of personal injury, illness or death to any person arising out of or connected with the performance of the Research Devices being investigated pursuant to the Study. However, any damage, liability, cost or expense resulting from: (1) failure to adhere to the terms of the Protocol or Sponsor’s written instructions relative to the use of the investigational device; (2) failure to comply with any applicable FDA, NIH or other governmental requirement; and/or (3) the negligence or willful misconduct of an Indemnitee is excluded from this indemnity. In the event any such claim is made or lawsuit is initiated, Institution or the Principal Investigator, or both, shall promptly notify Sponsor in writing of such claim, shall cooperate fully with Sponsor in the defense of such claim or lawsuit, and shall permit Sponsor and/or its insurance carrier to defend and settle any such claim in its sole discre-tion.

Sponsor shall reimburse for reasonable and necessary medical expenses incurred by Research Subjects as a direct result of the treatment of adverse reactions from study drugs or devices following their administration or use in accordance with the Protocol, provided such expenses are not covered by the Research Subject’s medical or hospital insurance coverage and are in no way attributable to the negligence or misconduct of any agent or employee of Sun Health Institute. No other compensation of any type will be provided by the Sponsor to the Research Subjects except as required by law.

13. No Assignment.

Neither party shall have the right to assign, delegate or transfer at any time to any party, in whole or in part, any or all of the rights duties and interest herein granted without first obtaining the written consent of the other party to such assignment.

14. Use of Name.

Without the prior written consent of Sun Health Institute, Sponsor shall not use the name of Sun Health Institute or of any Sun Health Institute staff member, employee or student, or any adaptation thereof;

i) in any advertising, promotion or sales literature;

ii) in connection with any public or private offering or in conjunction with any application for regulatory approval, unless disclosure is otherwise required by law, in which case Sponsor may make factual statements concerning the Agreement or file copies of the Agreement after providing Sun Health Institute with an opportunity to comment and reasonable time within which to do so on such issue pertaining to public announcements about this Agreement or the status or existence of the Study without prior written approval of the other party.

15. Termination.

A. This Agreement shall become effective upon the date first hereinabove written and shall continue in effect for the full duration of the Performance Period unless sooner terminated. The parties hereto may, however, extend the term of this Agreement for additional periods as desired under mutually agreeable terms and conditions which the parties reduce to writing and sign.

B. In the event that either party hereto shall commit any breach or default in any of the terms or conditions of this Agreement, and also shall fail to remedy such default or breach within thirty (30) days after receipt of written notice thereof from the other party hereto, the party giving notice may, at its option and in addition to any other remedies which it may have at law or in equity, terminate this Agreement by sending notice of termination in writing to the other party to such effect, and such termination shall be effective as of the date of the receipt of such notice.

C. This Study and this Agreement may be terminated for any reason by the Sponsor or Sun Health Institute when in their independent and sole judgment or that of the Principal Investigator or the FDA, it is inappropriate, impractical, or inadvisable to continue.

D. Termination of this Agreement by either party for any reason shall not affect the rights and obligations of the parties accrued prior to the effective date of termination of this Agreement. Upon termination of this Agreement for any reason except breach or default by Sun Health Institute Sponsor shall pay Sun Health Institute for all work performed through the effective termination date, and all uncancelled obligations.

E. Sections 9, 10, 11, 12, 13, 14 and 15 of this Agreement shall survive expiration or termination of this Agreement.

Page 5 of 9

16. Notices.

Notices required or permitted hereunder shall be in writing and shall be deemed given as of the date it is (A) delivered by hand or (B) received by Registered or Certified mail, postage prepaid, return receipt directed, or received by facsimile and addressed to the party to receive such notice at the address set forth below. Such notices and communications shall be deemed to have been received by the addressee on the date of delivery or fourteen (14) days after having been sent by registered mail.

Sun Health Institute

For Technical/Scientific Matters

Principal Investigator:

Marwan N. Sabbagh MD, FAAN

Director of Clinical Research

The Cleo Roberts Center of Clinical Research

Sun Health Research Institute

10515 W. Santa Fe Dr

Sun City, AZ 85351

Phone: 623-875-6500

Fax: 623-875-6504

For Administrative Matters

John L. Roach

________________________

________________________

________________________

PH: 623-876-5706

Fax: 623-876-5461

Sponsor:

Power3 Medical Products, Inc.

3400 Research Forest Drive

The Woodlands, TX 77381

17.Miscellaneous.

A. In carrying out this Agreement the parties shall comply with all local, state and federal laws and regulations.

B. If any provision of this Agreement is determined to be invalid or void, the       remaining provisions shall remain in effect.

C. This Agreement (and the annexed Appendices) constitute the entire Agreement between the parties and no variation, modification or waiver of any of the terms or conditions hereof shall be deemed valid unless made in writing and signed by both parties hereto. This Agreement supersedes any and all prior agreements or understandings, whether oral or written, between Sponsor and Sun Health Institute.

D. No waiver by either party of any non-performance or violation by the other party of any of the covenants, obligations or agreements of such other party hereunder shall be deemed to be a waiver of any subsequent violation or non-performance of the same or any other covenant, agreement or obligation, nor shall forbearance by any party be deemed to be a waiver by such party of its rights or remedies with respect to such violation or non-performance.

F. The descriptive headings contained in this Agreement are included for convenience and reference only and shall not be held to expand, modify or aid in the interpretation, construction or meaning of this Agreement.

G. It is not the intent of the parties to create a partnership or joint venture or to       assume partnership responsibility or liability. The obligations of the parties shall be limited to those set out herein and such obligations shall be several and not joint.

H. Sun Health Institute and Investigator each represents and warrants to Sponsor that it has not been “debarred” by the United States Food & Drug Administration (“FDA”), nor have debarment proceedings against it been commenced. Sun Health Institute and Investigator will immediately notify Sponsor in writing if any such proceedings have commenced or if Sun Health Institute and/or Investigator are debarred by the FDA.

Page 6 of 9

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the date first above written.

BY: SPONSOR/Power3 Medical Products, Inc.	BY: Sun Health Institute
s://Steven B. Rash	s://John L. Roach
Steven B. Rash	Name: John L Roach
Chief Executive Officer Title: CFO
Date: 11/6/07	Date: 12/4/07

As Principal Investigator, I acknowledge that I have reviewed this Agreement and agree to be bound by its terms and conditions.

s://Marwan Sabbagh

Name:

Date: 12/10/07

Page 7 of 9

Appendix A

The Protocol:BC0001 ( Rev. 5 )“Studying serum protein profile from patient’s with disease’s vs. age-matched control & disease-like disorder’s ” Attached.

Page 8 of 9

Appendix B

Detailed Per Patient Budget: Attached.

Page 9 of 9

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Steven B. Rash, certify that:

1.    I have reviewed this annual report on Form 10-KSB for the year ended December 31, 2007 of Power3 Medical Products, Inc;

2.    Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.    Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

 5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Dated:    April 14, 2008	By:	/s/ Steven B. Rash
		Steven B. Rash, Chairman and CEO (principle executive officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Marion McCormick, certify that:

1.    I have reviewed this annual report on Form 10-KSB of the year ended December 31, 2007 of Power3 Medical Products, Inc;

2.    Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.    Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. 

Dated:    April 14, 2008	By:	/s/  Marion J. McCormick
		Marion J. McCormick Chief Accounting Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Power3 Medical Products, Inc. (the “Company”) on Form 10-KSB for the period ended December 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I Steven B. Rash, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:

(1)   The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 14, 2008	By:	/s/     Steven B. Rash
		Steven B. Rash Chief Executive Officer (principal executive officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Power3 Medical Products, Inc (the “Company”) on Form 10-KSB for the period ended December 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Marin J. McCormick, Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:

(1)   The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

April 14, 2008	By:	/s/   Marion McCormick
		Marion J. McCormick Chief Accounting Officer