8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  November 4, 2008

POWER3 MEDICAL PRODUCTS, INC.

(Exact name of registrant specified in charter)

New York	000-24921	65-0565144
(State of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3400 Research Forest Drive, Suite B2-3

The Woodlands, Texas  77381

(Address of principal executive offices)  (Zip Code)

(281) 466-1600

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

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

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

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

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

Section 1— Registrant’s Business and Operations

Item 1.01 Entry into a Material Definitive Agreement

On November 4, 2008, Power3 Medical Products, Inc., a New York corporation (the “Company”), completed a private placement of its debt and equity securities.  The private placement was completed pursuant to a series of convertible promissory notes (“Notes”) and warrants (“Warrants”) that were issued to certain investors (the “Investors”).  The Company sold $1,854,435 in principal amount of the Notes, which are convertible into 61,814,500 shares of the Company’s common stock, $0.001 par value (“Common Stock”), and Warrants to purchase an aggregate of 57,059,538 shares of Common Stock.  The Company has received $140,000 in cash and $1,714,435 as an offset against amounts due to the Investors by the Company for amounts previously advanced to the Company or amounts due for services provided to the Company by the Investors.

The Notes are unsecured and accrue interest at a rate of 12.0% per annum.  All outstanding principal and accrued interest is due and payable on November 4, 2009 and is convertible at the option of the holder into shares of Common Stock at a conversion price equal to $0.03 per share.  The Company can prepay the Notes only with ten days prior written notice to the holders.  The form of Note is filed herewith an Exhibit 10.1, and the description of the Notes contained herein is qualified by reference to the terms of the form of Note.

The Warrants have an exercise price of $0.04 per share of Common Stock and expire on the date three years after the issuance of the Warrants.  The Warrants include a cashless exercise option.  The exercise price and the number of shares of Common Stock purchasable upon exercise of the Warrants are subject to adjustment (under formulae set forth in the Warrants) upon the occurrence of certain events, including, but not limited to: (i) stock dividends, stock splits or reverse stock splits; (ii) the payment of dividends on the Common Stock payable in shares of Common Stock or securities convertible into Common Stock; (iii) a recapitalization, reorganization or reclassification involving the Common Stock, or a consolidation or merger of the Company; or (iv) a liquidation or dissolution of the Company.  The Warrants also provide for “piggyback” registration rights for the shares of Common Stock issuable upon exercise of the Warrants.  The form of Warrant is filed herewith an Exhibit 10.2, and the description of the Warrants contained herein is qualified by reference to the terms of the form of Warrant.

One of the Investors has material relationships with the Company.  Ira L. Goldknopf, the Company’s President, Chief Scientific Officer, interim Chairman and sole director, received a Note with an initial principal amount of $1,189,435 and Warrants to purchase 36,598,000 shares of Common Stock.

Section 2— Financial Information

Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant

Reference is made to the disclosure provided in response to Item 1.01 of this Form 8-K with respect to the incurrence by the Company of a direct financial obligation of approximately $1,854,435 in connection with the issuance of the Notes to the Investors, which disclosure is incorporated herein by this reference.

Section 3— Securities and Trading Markets

Item 3.02 Unregistered Sales of Equity Securities

Reference is made to the disclosure provided in response to Item 1.01 of this Form 8-K with respect to the issuance to the Investors by the Company of $1,854,435 in principal amount of the Notes, which are convertible into 61,814,500 shares of Common Stock, and Warrants to purchase an aggregate of 57,059,538 shares of Common Stock the Notes and Warrants, which disclosure is incorporated herein by this reference.

The Notes and Warrants, and the shares of Common Stock issuable thereunder, were offered and sold to three private individuals that the Company reasonably believes are “accredited investors,” as such term is defined in Rule 501 under the Securities Act.  The offers and sales were made without registration under the Securities Act, or the securities laws of certain states, in reliance on the exemptions provided by Section 4(2) of the Securities Act and Regulation D under the Securities Act and in reliance on similar exemptions under applicable state laws.  No general solicitation or general advertising was used in connection with the offering of the Notes and Warrants.  The Company disclosed to the Investors that the Notes, the Warrants and the underlying Common Stock could not be sold unless they are registered under the Securities Act or unless an exemption from registration is available, and the Notes and Warrants included, and the certificates representing the Common Stock to be issued upon conversion of the Notes or exercise of the Warrants will include, a legend to that effect.

Section 8— Other Events

Item 8.01 Other Events

If the Company is unable to successfully obtain additional financing, it will not have sufficient cash to continue operations.  As of October 31, 2008, the Company had approximately $8,833 in cash and cash equivalents.  The Company needs additional capital immediately to fund its liquidity requirements.  The Company is seeking between $3 million and $5 million in new financing in the fourth quarter of 2008 or the first quarter of 2009.  The Company believes that $3 million is the minimum amount of financing it needs to repay existing obligations and to continue funding its new business strategy for at least 12 months following the date of this report.  The Company will need to raise additional funds from either one or a combination of additional financings or otherwise obtain capital, in order to satisfy its future liquidity requirements.

We have not entered into an agreement with potential investors regarding the terms of any additional financing. Even if the Company receives such financing, it may need to raise additional funds at any time and, given its history, the Company cannot be certain that it will be able to obtain additional financing on favorable terms, if at all.  Due to the recent volatility of the U.S. equity markets, the Company may not have access to new capital investment when it needs to raise additional funds.  If the Company cannot effectuate financing transactions to raise needed funds on acceptable terms, it will not be able to implement its new strategy, take advantage of future opportunities or respond to competitive pressure or unanticipated requirements.  If the Company cannot obtain additional capital immediately, it will have to take drastic steps such as reducing its level of operations, disposing of selected assets, ceasing to do business or seeking protection under federal bankruptcy laws.

Section 9 — Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit No.	Description
10.1	Form of Convertible Promissory Note, dated as of November 4, 2008, issued by the Company to the Investors.
10.2	Form of Warrant, dated as of November 4, 2008, issued by the Company to the Investors.

SIGNATURES

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

Power3 Medical Products, Inc.
By:	/s/ Ira L. Goldknopf
Name:	Ira L. Goldknopf
Title:	President and Chief Scientific Officer

Dated: November 10, 2008

EX-10.1

Exhibit 10.1

NEITHER THIS PROMISSORY NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION OF THIS PROMISSORY NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW.  NO SALE, TRANSFER, PLEDGE OR ASSIGNMENT OF THIS NOTE OR SUCH SECURITIES SHALL BE VALID OR EFFECTIVE UNLESS (A) SUCH TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAW, OR (B) SUCH TRANSFER IS MADE PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND OF ANY APPLICABLE STATE SECURITIES LAW.

$______   November 04, 2008

POWER3 MEDICAL PRODUCTS, INC.

CONVERTIBLE PROMISSORY NOTE

FOR GOOD AND VALUABLE CONSIDERATION RECEIVED, the undersigned, POWER3 MEDICAL PRODUCTS, INC., a New York corporation (“Maker"), hereby unconditionally promises to pay to the order of _________________________________ a resident of _________________ whose address is ______________________ (together with such party's successors and permitted assigns, "Holder"), in lawful money of the United States of America at such place as Holder may direct, the principal amount of _______________________________ ($_______) (the “Principal Amount”) loaned by Holder to Maker under this Convertible Demand Promissory Note (the "Note"), together with accrued interest on the outstanding principal amount at such interest rates and at such times as are specified in this Note.

1. Definitions.  Capitalized terms used herein but not defined herein shall have the meanings specified in Exhibit A attached hereto.

2. The Loan.

2.1 Loan.  On the date hereof, Holder has made a loan in the Principal Amount to Maker (the “Loan”) and pursuant to the terms and conditions of this Note.

2.2 Interest.  The Loan made under this Note shall bear interest from the date hereof until paid or otherwise forgiven pursuant to the terms hereof at a rate equal to the lesser of (a) twelve percent (12.0%) per annum until paid, commencing on November 4, 2008, computed on the basis of a 360 day year consisting of 12 months of 30 days each but for the actual number of days outstanding.  All past due principal on this Note will bear interest from maturity (whether at scheduled maturity, upon acceleration of maturity following an Event of Default (as defined below) or otherwise) until paid at the Past Due Rate.

NOTWITHSTANDING the foregoing or any other term in this Note to the contrary, it is the intention of Holder and Maker to conform strictly to any applicable usury laws.  Accordingly, if Holder contracts for, charges, or receives any consideration in connection with this Note which constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be canceled automatically and, if previously paid, shall at Holder's option be applied to the Principal Amount or be refunded to Maker.  In determining whether any interest exceeds the Highest Lawful Rate, such interest shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread in equal parts throughout the term of this Note.

3. Payments.

3.1 Maturity Date.  Subject to earlier conversion pursuant to Section 4.1, this Note shall mature, and the Amount Outstanding shall be due and payable, on the earlier to occur of (each a "Maturity Date") (i) November 4, 2009 or (ii) the date on which the Loan is accelerated due to an Event of Default pursuant to Section 6.2.  Subject to earlier conversion pursuant to Section 4, all accrued and unpaid interest will be payable in arrears, upon the Maturity Date, when all accrued and unpaid interest will be due and payable.

3.2 Prepayments.  Maker may not prepay this Note in whole or in part without giving Holder ten (10) days prior written notice.

3.3 Payments Generally.  Unless otherwise stated, all monetary amounts expressed under this Note and all payments due under this Note are expressed in and shall be due in U.S. Dollars.  Maker shall make all payments required under this Note not later than 12:00 noon, Houston, Texas time, on any date when due at such location as is specified by Holder in writing in immediately available funds.  Whenever any payment to be made under this Note shall be stated to be due on a day other than a Business Day, such payment shall be due and payable on the next succeeding Business Day.  If the date for payment of any obligation is not specified in this Note, such obligations shall be payable upon demand.  Any and all payments by or on account of any obligation of Maker under this Note shall be made without deduction for any taxes.

4. Conversion.

4.1 Optional Conversion.    Holder will have the option, in its sole discretion, at any time prior to the Maturity Date, to convert all or any portion of the Amount Outstanding into shares of the Common Stock, at a conversion price equal to $0.03 per share.

4.2 No Fractional Shares.  No fractional shares of Common Stock will be issued upon conversion of this Note.  In lieu of any fractional Shares to which Holder would otherwise be entitled upon any such purchase, Maker will pay Holder a cash amount equal to such fraction multiplied by the conversion price, subject to adjustment for any stock splits, stock dividends, reverse stock splits, combinations or other adjustments to the Common Stock.

4.3 No Impairment.  Maker will not, by amendment of its certificate of incorporation, bylaws, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by Maker, but will at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the purchase rights of Holder hereunder against impairment.

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5. Covenants.

5.1 Company Fundamentals.  Maker shall: (a) pay when due all taxes and governmental charges of every kind upon it or against its income, profits, or property, except to the extent contested in good faith and for which adequate reserves have been established; (b) renew, preserve, maintain, and pay when due all fees related to, and keep in full force and effect, all of its material licenses, patents, permits, and franchises; (c) do all things necessary to preserve its entity existence and its qualifications and rights in all jurisdictions where such qualification is necessary; (d) comply with all applicable laws and regulations; and (e) maintain accurate and complete books and records of its business affairs.

5.2 Matters Requiring Notice.  For so long as there is any Amount Outstanding, Maker will notify Holder immediately, upon acquiring knowledge of (a) the institution or threatened institution of any lawsuit or administrative proceeding which, if adversely determined, might result in a Material Adverse Change or (b) any Event of Default.

5.3 Further Assurances.  Maker will execute such additional instruments as may be requested by Holder in order to carry out the intent of this Note, and to perfect or give further assurances of any of the rights granted or provided for in this Note.

5.4 Use of Proceeds.  Maker shall use the proceeds of the Loans only for working capital and general corporate purposes.

6. Default and Remedies.

6.1 Events of Default.  The occurrence of any of the following shall constitute an "Event of Default" hereunder:

6.1.1Maker fails to pay when due any principal, interest, or other amount due under this Note, or otherwise fails to comply with the terms of this Note;

6.1.2Any representation or warranty made in this Note proves to have been untrue or misleading in any material respect as of the date made;

6.1.3Maker or any present or future Affiliate, shareholder, or creditor of Maker shall commence any action, suit, or proceeding against or affecting Maker, or involving the validity or enforceability of the Note, at law or in equity, or before any governmental authority, which in the sole judgment of Holder, impairs or would impair the enforceability of the Note or Holder's ability to collect the Obligations when due;

6.1.4Maker shall be prevented or relieved by any governmental authority from performing or observing any material term, covenant, or condition of the Note;

6.1.5There shall be or have been a Material Adverse Change; or

6.1.6There shall be or have been a Bankruptcy Event.

6.2 Acceleration.  If an Event of Default due to a Bankruptcy Event shall have occurred, then, and in any such event, the unpaid Amount Outstanding shall automatically become and be forthwith due and payable in full, without notice of intent to demand, presentment for payment, notice of nonpayment, protest, notice of protest, grace, notice of dishonor, notice of intent to accelerate, notice of acceleration, and all other notices, all of which are hereby expressly waived by Maker.  If any other Event of Default shall have occurred and be continuing, then, and in any such event, Holder may declare the unpaid Amount Outstanding to be immediately due and payable and thereupon the Amount Outstanding shall be immediately due and payable without notice of intent to demand, presentment for payment, notice of nonpayment, protest, notice of protest, grace, notice of dishonor, notice of intent to accelerate, notice of acceleration, and all other notices, all of which are hereby expressly waived by Maker.

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6.3 Remedies.  During the continuation of an Event of Default, Holder may exercise all of its rights under this Note and all other rights at law or in equity.

7. Representations and Warranties of Holder.  Holder hereby represents and warrants to Maker that: (i) this Note and the Common Stock issuable upon conversion hereof are being acquired for its own account, for investment and not with a view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act of 1933, as amended (the "Act"), (ii) Holder understands that this Note and the Common Stock issuable upon conversion hereof have not been registered under the Act by reason of their issuance in a transaction exempt from the registration and prospectus delivery requirements of the Act pursuant to Section 4(2) thereof, and that they must be held by Holder indefinitely, and that Holder must therefore bear the economic risk of such investment indefinitely, unless a subsequent disposition thereof is registered under the Act or is exempted from such registration, (iii) Holder has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the purchase of this Note and the Common Stock issuable upon conversion hereof and of protecting its interests in connection therewith, (iv) Holder is able to bear the economic risk of the purchase of this Note and the Common Stock issuable upon conversion of this Note, and (v) Holder is an “accredited investor” as such term is defined in Rule 501 of Regulation D promulgated under the Act.

8. Miscellaneous.

All notices and other communications made under this Note shall be addressed to the applicable party at the following address:

If to Maker:   Power3 Medical Technologies, Inc. 3400 Research Forest Dr., Ste B2-3 The Woodlands, Texas 77381 Attn: Ira L. Goldknopf, President If to Holder:   ________________ ________________ ________________  

Notices shall, unless otherwise specified herein, be in writing and may be delivered by hand delivery, United States mail, overnight courier service, or facsimile or e-mail.  Notice by facsimile, hand delivery, or e-mail shall be effective at the close of business on the day actually received, if received during business hours on a Business Day, and otherwise shall be effective at the close of business on the next Business Day; provided that e-mail shall not be considered received until sender's receipt of an acknowledgement from the intended recipient (such as by the "return receipt requested" function, as available, return e-mail, or other written acknowledgement).  Notice by overnight United States mail or courier shall be effective on the next Business Day after it was sent.  A party may change its addresses by providing notice of same in accordance herewith.

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No right, power, or remedy conferred to Holder in this Note or now or hereafter existing at law, in equity, by statute, or otherwise shall be exclusive, and each such right, power, or remedy shall to the fullest extent permitted by law be cumulative and in addition to every other such right, power, or remedy.  No course of dealing and no delay in exercising any right, power, or remedy conferred to Holder shall operate as a waiver of or otherwise prejudice any such right, power, or remedy.  No notice to or demand upon Maker shall entitle Maker to similar notices or demands in the future.

This Note shall be governed by the laws of the State of Texas.  If any provision in this Note is held to be unenforceable, such provision shall be severed and the remaining provisions shall remain in full force and effect.  The provisions of this Note may be waived or amended only in a writing signed by the party against whom enforcement of the waiver or amendment is sought.  This Note shall bind and inure to the benefit of Maker and Holder and their respective successors and permitted assigns.  Neither party may assign its rights or delegate its duties under this Note without the prior written consent of the other party, except that Holder may assign its rights and delegate its duties under this Note to an Affiliate without the consent of Maker.  Time is of the essence of this Agreement.

HOLDER HEREBY ACKNOWLEDGES AND CERTIFIES TO MAKER THAT (A) HOLDER HAS BEEN ADVISED BY MAKER TO SEEK THE ADVICE OF AN ATTORNEY AND AN ACCOUNTANT IN CONNECTION WITH THIS NOTE AND (B) HOLDER HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF AN ATTORNEY AND ACCOUNTANT OF HOLDER'S CHOICE IN CONNECTION WITH THIS NOTE (INCLUDING THE RIGHTS GRANTED HEREIN).

THIS NOTE EMBODIES THE FINAL, ENTIRE AGREEMENT BETWEEN HOLDER AND MAKER AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF HOLDER AND MAKER.

* * * * *

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[SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE]

IN WITNESS WHEREOF, Maker has duly executed this Convertible Promissory Note as of the date first above written.

POWER3 MEDICAL TECHNOLOGIES, INC. 

By: __________________________  

Ira L. Goldknopf, President 

ACCEPTED BY:

By: _____________________________

Name: _________________

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EXHIBIT A

DEFINITIONS

"Affiliate" means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified, including, without limitation, an investment fund that is managed or sponsored by the Person in question.

"Aggregate Accrued Interest" means the aggregate of any and all accrued and unpaid interest under this Note.

"Amount Outstanding" means the sum of the Principal Amount and the Aggregate Accrued Interest.

"Bankruptcy Event" means (a) any petition or other request for relief seeking an arrangement, receivership, reorganization, liquidation, or similar relief under bankruptcy or other laws for the relief of debtors that shall have been filed against Maker or any of its properties, without Maker's consent, and such request for relief (i) remains in effect for 30 or more days, whether or not consecutive, or (ii) is approved by a final nonappealable order or (b) Maker consents to or files any a petition or other request for relief of the type described in clause (a) above seeking relief from creditors, makes any assignment for the benefit of creditors or other arrangement with creditors, or admits in writing its inability to pay its debts as they become due.

"Business Day" means a day other than a Saturday, Sunday, or any other day on which commercial banks in Houston, Texas, are authorized or required by law to remain closed.

"Control" and "Controlled" mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise, which includes customary powers of a manager of any limited liability company or any general partner of any limited partnership or any board of directors of any corporation.

"Highest Lawful Rate" means the maximum lawful interest rate that may be contracted for, charged, or received under the laws applicable to this Note which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum lawful interest rate.

"Material Adverse Change" means (a) any material adverse change in the assets, liabilities, financial condition, business, or affairs of Maker after the date hereof or (b) a material adverse effect on Maker's ability to perform the Obligations.

“Common Stock” means the Common Stock, $0.001 par value, of Maker.

"Obligations" means all loans to, and debts, liabilities, obligations, covenants, and duties of, Maker to Holder or its Affiliates arising under this Note, including interest and fees that accrue after the commencement by or against Maker or any Affiliate thereof of any proceeding under any debtor relief laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

A-1

"Past Due Rate" means a rate per annum equal to the lesser of (a) 18% and (b) the Highest Lawful Rate.

"Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority, or other entity.

A-2

EX-10.2

Exhibit 10.2

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND THE APPLICABLE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION.

WARRANT TO PURCHASE 100,000 SHARES

OF THE COMMON STOCK OF

POWER3 MEDICAL PRODUCTS, INC.

Warrant No.:  2008-___  Date of Issuance: November 04, 2008

This certifies that _________________ or his, her or its permitted assigns (each individually, a “Holder”) for value received, shall be entitled to purchase from Power3 Medical Products, Inc., a New York corporation (the “Company”), having its principal place of business at 3400 Research Forest Drive, Suite B2-3, The Woodlands, Texas 77381, a maximum of __________ fully paid and nonassessable shares of the Company’s common stock, $0.001 par value per share (“Common Stock”), for a purchase price equal to $0.04 per share (the “Exercise Price”) at any time, or from time to time, beginning with the filing by the Company of an amendment to its certificate of incorporation authorizing sufficient shares of Common Stock for such exercise, up to and including 5:00 p.m., Central Standard time on the date three years after the date of this Warrant (the “Expiration Date”), upon (i) the surrender to the Company at its principal place of business (or at such other location as the Company may advise the Holder in writing) of this Warrant and a Form of Subscription in substantially the form attached hereto duly completed and executed and, (ii) if applicable, payment in cash or by check or other consideration permitted pursuant to Section 1(b) hereof of the aggregate Exercise Price for the number of shares for which this Warrant is being exercised, determined in accordance with the provisions hereof. The Exercise Price and the number of shares of Common Stock purchasable hereunder are subject to adjustment as provided in Section 3 hereof.

This Warrant is subject to the following terms and conditions:

1.  Exercise; Issuance of Certificates; Payment For Shares.

(a)           General.  This Warrant is exercisable at the option of the Holder of record hereof, at any time or from time to time up to the Expiration Date for all or any part of the shares of Common Stock (but not for a fraction of a share) which may be Purchased hereunder. The Company agrees that the shares of Common Stock purchased under this Warrant shall be and are deemed to be issued to the Holder hereof as the record owner of such shares as of the close of business on the date on which (i) this Warrant shall have been surrendered, properly endorsed, (ii) the completed, executed Form of Subscription shall have been surrendered, and (iii) payment shall have been made to the Company for such shares, in each case, at the Company’s address set forth above (or at such other location as the Company may advise the Holder in writing). Certificates for the shares of Common Stock so purchased, together with any other securities or property to which the Holder is entitled upon such exercise, shall be delivered to the Holder by the Company at the Company’s expense within a reasonable time after the rights represented by this Warrant have been so exercised, and in any event, within ten (10) days of such exercise. In case of a purchase of less than all the shares that may be purchased under this Warrant, the Company shall cancel this Warrant and execute and deliver a new Warrant or Warrants of like tenor for the balance of the shares purchasable under the Warrant surrendered upon such purchase, to the Holder hereof within a reasonable time. Each stock certificate so delivered shall be in such denominations of Common Stock as may be requested by the Holder hereof and shall be registered in the name of the Holder.

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(b)           Net Issue Exercise.  Notwithstanding any provisions herein to the contrary, if the fair market value of one share of the Company’s Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant for cash, the Holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Form of Subscription and notice of such election, in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula:

X = Y (A-B)

           A

Where:

X =           the number of shares of Common Stock to be issued to the Holder;

Y = the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation);

A = the fair market value of one share of the Company’s Common Stock (at the date of such calculation); and

B =           Exercise Price (as adjusted to the date of such calculation).

For purposes of the above calculation, “fair market value” shall mean with respect to the Common Stock on any date in question the average of the closing bid prices per share of the Common Stock for the previous fifteen (15) consecutive trading days (i) on the principal securities exchange or trading market where the Common Stock is listed or traded or, if the foregoing does not apply, (ii) in the over-the-counter market on the electronic bulletin board for the Common Stock or, if, and only if, no trading price is reported for the Common Stock, then its fair market value shall be as determined, in good faith by the board of directors of the Company.

(c)           Common Stock Legend.  Upon any exercise of the Warrants, certificates representing the shares of Common Stock shall bear a restrictive legend substantially identical to that set forth on the face of this Warrant.

2.  Shares To Be Fully Paid; Reservation of Shares.

The Company covenants and agrees that all shares of Common Stock that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duty authorized, validly issued, fully paid and nonassessable and free of all taxes, liens and charges with respect to the issue thereof.  The Company further covenants and agrees that, during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant, a sufficient number of shares of authorized but unissued Common Stock, or other securities and property, when and as required to provide for the exercise of the rights represented by this Warrant. The Company will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any domestic securities exchange upon which the Common Stock may be listed; provided, however, that the Company shall not be required to effect a registration under Federal or State securities laws with respect to such exercise.

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3.  Adjustment of Exercise Price and Number of Shares.

The Exercise Price and the number of shares (or amount of other securities or property) purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 3.  This Section shall not require an adjustment to the Exercise Price in connection with any dividends paid in cash orupon any sale of shares of Common Stock for a per share price that is less than the Exercise Price.

(a)           Subdivision or Combination of Stock. If the Company shall effect a stock dividend or stock split or subdivide its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such stock dividend, stock split or subdivision shall be proportionately reduced, and conversely, if the Company shall effect a reverse stock split or combine its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such reverse stock split or combination shall be proportionately increased.  Upon each adjustment of the Exercise Price, the Holder of this Warrant shall thereafter be entitled to purchase, at the Exercise Price resulting from such adjustment, the number of shares obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the Exercise Price resulting from such adjustment.

(b)           Dividends in Common Stock, Other Stock, Property, Reclassification.If the holders of Common Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive, without payment therefor,

(i)           Common Stock or any shares of stock or other securities that are directly or indirectly convertible into or exchangeable for Common Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution (other than shares of Common Stock issued as a stock dividend, stock split or subdivision, adjustments in respect of which shall be covered by the terms of Section 3(a) above),

(ii)           any cash paid or payable otherwise than as a cash dividend(other than a liquidation or dissolution, which shall be covered by the terms of Section 3(d) below), or

(iii)           additional shares of Common Stock or additional stock or other securities or property (including cash) by way of spin-off, split-up, reclassification, recapitalization, reorganization, combination of shares or similar corporate rearrangement (other than shares of Common Stock issued as a stock dividend, stock split or subdivision, adjustments in respect of which shall be covered by the terms of Section 3(a) above),

then, and in each such case, the Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of Common Stock receivable upon such exercise, and without payment of any additional consideration therefor, the amount of stock and other securities and property (including cash in the cases referred to in clauses (ii) and (iii) above) which such Holder would hold on the date of such exercise had such Holder been the holder of record of such Common Stock as of the date on which holders of Common Stock received or became entitled to receive such shares or all other additional stock and other securities and property.

(c)           Reorganization, Reclassification, Consolidation, Merger or Sale.  If any reclassification, recapitalization or reorganization, or consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets or other similar transaction, shall be effected in such a way that holders of Common Stock shall be entitled to receive, with respect to or in exchange for their shares of Common Stock, securities or other assets or property (an “Organic Change”) and the Company is the resulting or surviving corporation of such Organic Change, then, as a condition of such Organic Change, provisions shall be made by the Company whereby the Holder hereof shall thereafter have the right

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to purchase and receive (in lieu of the shares of the Common Stock of the Company purchasable and receivable upon the exercise of this Warrant immediately prior to such Organic Change) such shares of stock, securities or other assets or property as may be issued or payable in connection with such Organic Change with respect to or in exchange for the number of outstanding shares of such Common Stock purchasable and receivable upon the exercise of this Warrant immediately prior to such Organic Change. In the event of any Organic Change, appropriate provision shall be made by the Company with respect to the rights and interests of the Holder of this Warrant to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Exercise Price and of the number of shares (or amount of stock, other securities or property) purchasable and receivable upon the exercise of this Warrant) shall thereafter be applicable, in relation to any shares of stock, securities or property thereafter deliverable upon the exercise hereof.  In the event of any Organic Change pursuant to which the Company is not the surviving or resulting corporation, prior to the consummation thereof, the corporation resulting from such Organic Change or the corporation purchasing such assets shall assume by written instrument the obligation to deliver to the Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Holder may be entitled to purchase; provided, however, this Warrant may be canceled by the Company as of the effective date of any such Organic Change pursuant to which the Company is not the surviving or resulting corporation by giving notice to the Holder of the Company’s intent to do so at least ten (10) business days prior to the effective date of such Organic Change or record date associated with such Organic Change, whichever is earlier.

(d)           Liquidation or Dissolution.  In the event of a proposed dissolution or liquidation of the Company, this Warrant will terminate immediately prior to the consummation of such proposed action, so long as the Company has delivered the notice required by Section 3(f)(iv) below.

(e)           Certain Events.   If any change in the outstanding Common Stock of the Company or any other event occurs as to which the other provisions of this Section 3 are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Holder of the Warrant in accordance with such provisions, then the Board of Directors of the Company shall make an adjustment in the number and class of shares or other securities or property available under the Warrant, the Exercise Price or the application of such provisions, so as to protect such purchase rights as aforesaid. The adjustment shall be such as will give the Holder of the Warrant upon exercise for the same aggregate Exercise Price the total number, class and kind of shares or other securities or property as the Holder have owned had the Warrant been exercised prior to the event and had the Holder continued to hold such shares until after the event requiring adjustment.

(f)           Notices of Change.

(i)           Immediately upon any adjustment in the number or class of shares subject to this Warrant and of the Exercise Price, the Company shall give written notice thereof to the Holder, setting forth in reasonable detail and certifying the calculation of such adjustment,

(ii)           The Company shall give written notice to the Holder at least ten (10) business days prior to the date on which the Company closes its books or takes a record for determining rights to receive any dividends or distributions,

(iii)           The Company shall also give written notice to the Holder at least ten (10) business days prior to the date on which an Organic Change shall take place, and

(iv)           The Company shall give written notice to the Holder at least ten (10) business days prior to the effective date of any proposed liquidation or dissolution of the Company.

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(g)           Calculations.  All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable.  The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

(h)           Adjustments.  Notwithstanding any provision of this Section 3, no adjustment of the Exercise Price shall be required if such adjustment is less than $0.01; provided, however, that any adjustments that by reason of this Section 3(h) are not required to be made shall be carried forward and taken into account for purposes of any subsequent adjustment.

4.  Issue Tax.

The issuance of certificates for shares of Common Stock upon the exercise of the Warrant shall be made without charge to the Holder of the Warrant for any issue tax (other than any applicable income taxes) in respect thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the then Holder of the Warrant being exercised.

5.  No Voting or Dividend Rights; Limitation of Liability.

Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote or to consent or to receive notice as a stockholder of the Company or any other matters or any rights whatsoever as a stockholder of the Company. No dividends or interest shall be payable or accrue in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised. No provisions hereof, in the absence of affirmative action by the Holder to purchase shares of Common Stock, and no mere enumeration herein of the rights or privileges of the Holder hereof shall give rise to any liability of such Holder for the Exercise Price or as a stockholder of the Company, whether such liability is asserted by the Company or by its creditors.

6.  Transfer; Division and Combination.

(a)           Transfer Restricted.  This Warrant, and any rights hereunder, may not be assigned or transferred, except as provided in the legend hereon and in accordance with and subject to provisions of (i) all applicable state securities laws, and (ii) the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations promulgated thereunder.  Any purported transfer or assignment made other than in accordance with this Section 6 shall be null and void and of no force and effect.

(b)           Assignment.  Any assignment permitted hereunder shall be made by surrender of this Warrant to the Company at its principal place of business as set forth above with a Form of Assignment in substantially the form attached hereto duly completed and executed and funds sufficient to pay any transfer tax, if any.  In such event, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment in the amount so assigned and this Warrant shall be promptly canceled; provided, however, that in the event that Holder hereof shall assign or transfer less than the full amount of this Warrant, a new Warrant evidencing the remaining portion of this Warrant not so assigned or transferred shall be issued in the name of the Holder.

(c)           Division and Combination.  This Warrant may divided or combined with other Warrants upon presentation and surrender hereof at the principal place of business of the Company as set forth above, together with a written notice specifying the names and denominations in which new Warrants are to be issued signed by the Holder.  Subject to compliance with Section 3(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants of like tenor in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

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(d)           Non-Interference; Par Value.  The Company shall not close its books against the transfer of this Warrant or any share of Common stock issued or issuable upon the exercise of this Warrant in any manner which interferes with the timely exercise of this Warrant.  The Company shall from time to time take all such action as may be necessary to ensure that the par value per share of the unissued Common Stock acquirable upon exercisable of this Warrant is at all times equal to or less than the Exercise Price then in effect.

7.  Representations and Covenants of the Holder.

This Warrant has been entered into by the Company in reliance upon the following representations and covenants of the Holder:

(a)           Investment Purpose. The Holder is purchasing the Warrant for the Holder’s own account, or for one or more investor accounts for which the Holder is acting as a fiduciary or agent, in each case for investment, and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act and state securities laws.

(b)           Disposition of Holder’s Rights.   The Holder agrees on its own behalf and on behalf of any investor account for which such Holder is the Warrant to offer, sell or otherwise transfer such Warrant only (i) to the Company, (ii) pursuant to a registration statement which has been declared effective under the Securities Act, or (iii) pursuant to any available exemption from the registration requirements of the Securities Act and applicable state securities laws.  The Holder acknowledges that the Company reserves the right prior to the offer, sale or other transfer made pursuant to clause (iii) above to require the delivery of an opinion of counsel, certifications and/or other information satisfactory to the Company.

8.  Right to Piggyback Registrations.

If the Company proposes to register any of its securities under the Securities Act for its own account or for the account of holder of in excess of 10% of the outstanding Common Stock (other than pursuant to a (a) registration solely in connection with an employee benefit or stock ownership plan, (b) registration on Form S-4 or its successor, or (c) registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the shares of Common Stock issuable upon exercise of the Warrant, and the registration form to be used may be used for the registration of shares of Common Stock issuable upon exercise of the Warrant), the Company will give prompt written notice to the Holder of its intention to effect such a registration and the Company will use its commercially reasonable efforts to include in such registration all shares of Common Stock issuable upon exercise of the Warrant that Holders of the Warrant request the Company to include in such registration by written notice given to the Company within ten days after the date of sending of the notice from the Company.

9.  Register.

The Company will maintain a register containing the names and addresses of the registered Holders of the Warrants.  The Holder may change his or its address as shown on the Warrant register at any time by giving written notice to the Company requesting such change.

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10.          Fractional Shares.

No fractional shares shall be issued upon exercise of this Warrant. The Company shall, in lieu of issuing any fractional share, pay the Holder entitled to such fraction a sum in cash equal to such fraction multiplied by the then effective Exercise Price.

11.          Miscellaneous.

(a)           Amendments. Any term of this Warrant may be amended with the written consent of the Company and the Holder.

(b)           Notices.  Any notice, request or other document required or permitted to be given or delivered to the Holder hereof or the Company shall be delivered or shall be sent by certified mail, postage prepaid, to each such Holder at its address as on the Warrant Register or to the Company at the address indicated therefor in the first paragraph of this Warrant or such other address as either may from time to time provide to the other.

(c)           Binding Effect on Successors.  This Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets. All of the covenants and agreements of the Company shall inure to the benefit of the permitted successors and assigns of the Holder hereof.

(d)           Descriptive Headings and Governing Law.  The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Texas.

(e)           Lost Warrants.  The Company represents and warrants to the Holder hereof that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company, at its expense, will make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date of issuance written above.

COMPANY: 

POWER3 MEDICAL PRODUCTS, INC. 

By:________________________________ 

Ira L. Goldknopf, President 

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EXHIBIT A

FORM OF SUBSCRIPTION

Date:  _________, 200_

Power3 Medical Products, Inc.

3400 Research Forest Dr., Ste B2-3

The Woodlands, Texas 77381

Attn: President

Ladies and Gentlemen:

□ The undersigned hereby elects to exercise the warrant issued to it by Power3 Medical Products, Inc. (the “Company’) and dated November 4, 2008 (the “Warrant”) and to purchase thereunder ________ shares of the Common Stock of the Company (the “Shares”) at a purchase price of 04/100 Dollars ($0.04) per Share for an aggregate purchase price of ______________Dollars ($) (the “Exercise Price”). Pursuant to the terms of the Warrant, the undersigned has delivered the Exercise Price herewith in full in cash or by certified check or wire transfer.

□ The undersigned hereby elects to convert ________________ percent (___%) of the value of the Warrant pursuant to the Net Exercise provisions of Section 1(b) of the Warrant.

In connection with the exercise of the Warrant to purchase the number of shares specified above, undersigned makes the following representations and covenants:

1.           The undersigned is an “Accredited Investor,” as such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

2.           The undersigned is purchasing the Shares for the undersigned’s own account, or for one or more investor accounts for which the undersigned is acting as a fiduciary or agent, in each case for investment, and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act.

3.           The undersigned has had access to such financial and other information concerning the Company and the Shares that the undersigned has deemed necessary in connection with a decision to purchase the Shares, including an opportunity to ask questions of and request information from the Company.

Very truly yours, 

________________________________ 

By:______________________________ 

Name:____________________________ 

Title:_____________________________ 

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EXHIBIT B

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute this form and supply required information.

Do not use this form to exercise the Warrant)

                  FOR VALUE RECEIVED, _____________________________ hereby sells,  assigns and transfers all of the rights of the undersigned  under the attached  Warrant (No. 2008- _____) with respect to the number of shares of Common Stock covered thereby set forth below, unto:

Name of Assignee  Address  No. of Shares 

By:__________________________________

Name:____________________________

Title:_____________________________

Signature Guaranteed:

By:__________________________________

The signature should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934.

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