10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

 (Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2011

OR

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

Commission file number: 000-24921

POWER3 MEDICAL PRODUCTS, INC.

(Exact name of registrant as specified in its charter)

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

26022 Budde Road

The Woodlands, Texas 77380

(Address of Principal Executive Offices)

(281) 298-7944

(Issuer's Telephone Number, including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x    No  o

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

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o   (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)    Yes  o No  x

APPLICABLE ONLY TO ISSUERS INVOLVED IN

BANKRUPTCY PROCEEDINGS DURING THE

PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.   Yes  o   No  o

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:  There were 554,910,730 shares of the issuer’s common stock, $0.001 par value per share, issued and outstanding on August 16, 2011.

EXPLANATORY NOTE - AMENDMENT

The sole purpose of this Amendment No. 1 to the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011 of  Power3 Medical Products, Inc.  (the “Company”) filed with the Securities and Exchange Commission on August 23, 2011 (the “Form 10-Q”) is to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T.

No other changes have been made to the Form 10-Q. This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q.

ITEM 6. EXHIBITS

The following exhibits are filed as part of this report:

31.1	Rule 13a-14(a) Certification of Chief Executive Officer*
31.2	Rule 13a-14(a) Certification of Chief Financial Officer*
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer*
101.INS	XBRL Instance Document **
101.SCH	XBRL Taxonomy Extension Schema Document **
101.CAL	XBRL Taxonomy Extension Calculation Linkbase **
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document **
101.LAB	XBRL Taxonomy Extension Label Linkbase Document **
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document **

* These exhibits were previously included or incorporated by reference in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011, filed with the Securities and Exchange Commission on August 10, 2011.

** Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and otherwise are not subject to liability under those sections.

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, thereunto duly authorized.

	POWER3 MEDICAL PRODUCTS, INC.
Date:  September 14, 2011	By:	/s/ Helen R. Park
		Helen R. Park
		Chief Executive Officer

XML



BALANCE SHEETS (Parentheticals) (USD $)	Jun. 30, 2011	Dec. 31, 2010
Accumulated Depreciation (in Dollars)	$ 108,693	$ 108,461
Preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares issued	1,500,000	1,500,000
Preferred stock, shares outstanding	1,500,000	1,500,000
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	600,000,000	600,000,000
Common stock, shares issued	524,778,730	472,237,565
Common stock, shares outstanding	524,778,730	472,237,565

XML



STATEMENTS OF OPERATIONS (Unaudited) (USD $)	3 Months Ended		6 Months Ended		86 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011
Net revenue	$ 0	$ 0	$ 0	$ 0	$ 542,249
Operating expenses:
Employee compensation and benefits	31,250	36,789	62,500	71,707	31,629,342
Professional and consulting fees	53,517	679,562	436,278	986,514	18,106,926
Impairment loss					13,371,776
Other selling general and administrative	24,094		86,080	162,848	2,740,228
Total operating expenses	108,861	716,351	584,858	1,221,069	65,848,272
Loss from operations	(108,861)	(716,351)	(584,858)	(1,221,069)	(65,306,023)
Other income (expense):
Derivative gain(loss)	197,757	(123,340)	950,568	10,580,355	7,923,572
Loss on litigation settlement					(267,865)
Interest income					7,867
Gain (loss) on debt settlement	(60,381)		(80,644)		1,502,228
Interest expense	(21,906)	(23,528)	(43,796)	(60,206)	(5,831,022)
Mandatory prepayment penalty					(420,000)
Other expense					(194,886)
Total other income (expense)	115,470	(146,868)	826,128	10,520,149	2,719,894
Net income (loss)	6,609	(863,219)	241,270	9,299,080	(62,586,129)
Deemed dividend					(1,140,760)
Net income (loss) attributable to common stockholders	$ 6,609	$ (863,219)	$ 241,270	$ 9,229,080	$ (63,726,889)
Net income (loss)
per share - basic (in Dollars per share)	$ 0.00	$ 0.00	$ 0.00	$ (0.02)
per share - diluted (in Dollars per share)	$ 0.00	$ 0.00	$ 0.00	$ (0.02)
Weighted average shares outstanding
Basic (in Shares)	517,476,361	442,685,225	502,080,160	440,432,559
Diluted (in Shares)	517,476,361	442,685,225	504,517,715	459,652,702

XML



Document And Entity Information	6 Months Ended
	Jun. 30, 2011	Aug. 16, 2011
Document and Entity Information [Abstract]
Entity Registrant Name	Power 3 Medical Products Inc
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		554,910,730
Amendment Flag	false
Entity Central Index Key	0001063530
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2

XML



Note 7. Commitments and Contingencies

6 Months Ended

Jun. 30, 2011

Commitments and Contingencies Disclosure [Text Block]

Note 7.  Commitments and Contingencies

Litigation

In September 2008, the Company entered into an Arbitration Agreement with Steven Rash, the Company’s former Chief Executive Officer, in connection with his agreement to resign as the Company’s Chief Executive Officer.  The Company agreed to arbitrate Mr. Rash’s claims for wages of $36,031 and other compensation due, breach of contracts or covenants, and benefits, and the Company’s claims for embezzlement, fraud and breach of contract by Mr. Rash.  As of June 30, 2011, arbitration had not been initiated by either party and, as of that date, the Company did not believe a material loss is probable in connection with this matter.

In March 2009, McLennon Law Corporation filed a lawsuit against the Company in the Superior Court of the State of California in and for the County of San Francisco for breach of contract for accrued but unpaid attorney fees and accrued interest thereon.  In July 2010, a judgment was entered against the Company for a total of $148,683 for unpaid attorney fees and interest, all of which was accrued in the Company’s financial statements for the year ended December 31, 2010.  As of June 30, 2011, the Company did not intend to appeal the court’s ruling.

In September 2009, Marion McCormick, one of the Company’s former non-executive employees, filed a lawsuit against the Company in the District Court for Montgomery County, Texas, 9th Judicial District, seeking damages and specific performance under a $30,000 convertible promissory note and a warrant exercisable into 1,000,000 shares of common stock.  In August 2010, the Company filed an amended answer and counterclaims against the former employee for breach of fiduciary duty and fraud.   The Company is disputing the amount, if any, that is due to the former employee under the note.  As of June 30, 2011, the Company did not believe a material loss is probable as a result of this litigation.

In February 2010, Transgenomic, Inc. (“Transgenomic”) filed a lawsuit against the Company in the United States District Court for the District of Nebraska.  The lawsuit contains claims for fraud, breach of contract, libel and slander, and sought a declaration of rights under a Collaboration and Exclusive License Agreement, dated January 23, 2009, between the parties that the Company had terminated on February 2, 2010.  In April 2010, the Company filed a partial motion to dismiss Transgenomic’s fraud claim.  In June 2010, the Company filed a lawsuit against Transgenomic in the District Court of Montgomery County, Texas, 359th Judicial District.  The lawsuit contained claims for trade secret misappropriation, breach of contract, misappropriation, conversion, unjust enrichment, quantum meruit and promissory estoppel as well as a request for injunctive relief.  In July 2010, the Company filed a non-suit to dismiss the case that the Company filed against Transgenomic in Texas without prejudice.  The Company intends to re-file the claims against Transgenomic in the United States District Court for the District of Nebraska as counterclaims accompanying its response to the claims filed by Transgenomic and has agreed to enter mediation with Transgenomic in an attempt to resolve this matter.  Mediation occurred in July 2011 between the parties and is currently awaiting the courts’ final approval.  Based on the July 22, 2011 mediation outcome with Transgenomic, the Company recorded a loss of $55,556 during the three month period ended June 30, 2011 and recorded a stock payable of $55,556 which represented 5,555,556 shares.  As of August 22, 2011, these shares have not yet been issued.

In March 2010, Rockmore filed a lawsuit against the Company in the Supreme Court for the State of New York.  The lawsuit contained claims for breach of contract and specific performance related to a convertible debenture in the amount of $31,677 and common stock warrant previously issued by the Company to Rockmore.  In September 2010, Rockmore filed a motion for summary judgment and injunction regarding its claims, and in October 2010, the Company filed an opposition to Rockmore’s motion.  In October 2010, the court granted Rockmore’s motion for summary judgment, but denied its request for an injunction.  In March 2011, the Company entered into a settlement agreement with Rockmore pursuant to which the Company agreed to issue 12 million shares of its common stock to Rockmore in full payment of the outstanding balance of the debenture and accrued interest thereon, and for a full release from all claims filed by Rockmore against the Company.  The Company recorded a contingent loss in the amount of $169,818 in its financial statements for the year ended December 31, 2010 in accordance with the provisions of ASC Topic 450, “Contingencies” (“ASC 450”). During the six month period ended June 30, 2011 the Company issued the 12,000,000 shares due Rockmore from the settlement.

In April 2010, the Company filed a lawsuit against Richard Kraniak (“Kraniak”) and Roger Kazanowski (“Kazanowski”) in the United States District Court for the Southern District of Texas, Houston Division.  The lawsuit contained claims for violations of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities and Exchange Act of 1934, as amended (the “Exchange Act”).  In May 2010, Kraniak and Kazanowski filed a motion to dismiss the lawsuit.  In June 2010, the Company filed a response to Kraniak and Kazanowski’s motion to dismiss as well as a first amended complaint against Kraniak and Kazanowski.  In October 2010, the Company filed a second amended complaint against Kraniak and Kazanowski, which it revised and re-filed in November 2010.  As of June 30, 2011, the Company did not believe a material loss is probable as a result of this litigation.

In July 2010, Kraniak and Kazanowski filed counterclaims against the Company in the United States District Court for the Southern District of Texas, Houston Division.  The counterclaims contained claims for breach of contract, misrepresentation, civil conspiracy and defamation.  In July 2010, the Company filed an answer to the counterclaims denying each of the alleged claims.  In December 2010, the Company filed motions for partial summary judgment with respect to each of the counterclaims filed by Kraniak and Kazanowski.  As of June 30, 2011, the Company did not believe a material loss is probable as a result of this litigation.

In April 2010, Neogenomics, Inc. (“Neogenomics”) filed a lawsuit and motion for summary judgment against the Company in the Supreme Court of the State of New York.  The lawsuit contained claims for breach of contract and specific performance related to the convertible debenture in the amount of $200,000 issued by the Company to Neogenomics in April 2007.  In May 2010, the Company filed a response to Neogenomic’s motion for summary judgment.  In December 2010, the court granted Neogenomic’s motion for summary judgment, awarding Neogenomics $217,457, comprised of $200,000 of principal under the debenture and $17,457 of accrued interest thereon.  As of June 30, 2011, the Company intended to appeal the court’s ruling.

In April 2010, Lucas Associates, Inc. (“Lucas Associates”) filed a lawsuit against the Company in the District Court of Montgomery County, Texas, 359thJudicial District.  The lawsuit contained claims for breach of contract, quantum meruit and fraud related to allegations that the Company failed to pay Lucas Associates a finder’s fee in connection with the hiring of John Ginzler as the Company’s Chief Financial Officer in 2009.  In June 2010, the Company filed a general denial to the claims alleged in the complaint.  In November 2010, the Company entered into a settlement with Lucas Associates pursuant to which the Company agreed to pay $20,000 to Lucas Associates in monthly installments of $1,250 beginning January 14, 2011.

In April 2010, John Ginzler, the Company’s former Chief Financial Officer, filed a lawsuit against the Company in the District Court of Montgomery County, Texas, 359th Judicial District.  The lawsuit contained claims for breach of contract related to compensation owed to him under an employment agreement entered into between him and the Company.  In June 2010, the Company filed a general denial to the claims alleged in the complaint.  In February 2011, the Company entered into a settlement agreement with John Ginzler pursuant to which the Company agreed to issue 12,285,714 shares of its common stock to him in full payment of all amounts owed to him under the employment agreement and for a full release from all claims filed by him against the Company. The Company recorded a contingent loss in the amount of $161,044 in its financial statements for the year ended December 31, 2010 in accordance with the provisions of ASC 450. During the six month period ended June 30, 2011 the Company issued the 12,285,714 shares due Mr. Ginzler as a result of the settlement agreement.

In May 2010, the Company filed a lawsuit against Able Income Fund LLC (“Able Income Fund”) in the United States District Court for the Southern District of Texas, Houston Division.  The lawsuit contained claims for violations of the Securities Act and the Exchange Act.  The Company subsequently moved for a default judgment on its claims due to Able Income Fund’s failure to timely respond to the Company’s lawsuit.  In November 2010, the Company’s motion for a default judgment was denied by the court.  As of June 30, 2011, the Company did not believe a material loss is probable as a result of this litigation.

In July 2010, Able Income Fund filed a lawsuit against the Company in the Supreme Court of the State of New York.  The lawsuit contained claims for breach of contract and specific performance related to two convertible debentures in the aggregate amount of $450,000 previously issued by the Company to Able Income Fund.  In September 2010, the Company filed a motion to dismiss Able Income Fund’s lawsuit.  In November 2010, Able Income Fund filed an amended complaint alleging the existence of an outstanding convertible debenture in the amount of $72,176.  As of June 30, 2011, the Company did not believe a material loss is probable as a result of the litigation.

Employment and Consulting Agreements

On June 1, 2009, the Company entered into an Amended and Restated Consulting Agreement with Bronco Technology, Inc. (the “Bronco Consulting Agreement”).  Under the terms of the agreement, Ms. Park agreed to continue to serve as the Company’s Interim Chief Executive Officer until May 31, 2011.  Under verbal agreement Ms. Park continues in the position as the Company’s Interim Chief Executive until a final written agreement is completed.  In consideration for Ms. Park’s services, the Company agreed to pay Bronco Technology, Inc. $8,334 per month, subject to annual review by the Company’s board of directors or compensation committee of the board of directors, if any.  The Company also agreed to pay Bronco Technology a cash commission payment of an amount equal to one percent, but not to exceed $5,000 per month, of the royalties received by the Company from the sale of certain of its products through license agreements signed during the term of the consulting agreement.

Effective May 17, 2009, the Company entered into an Amended and Restated Employment Agreement with Dr. Ira L. Goldknopf (the “Goldknopf Employment Agreement”) to continue serving as the Company’s President and Chief Scientific Officer.  The agreement is for a term of three years.  The Company agreed to pay Dr. Goldknopf an annual base salary of $100,000 through May 31, 2009, and an annual base salary of $125,000 for the remainder of the term, subject to annual review by the Company’s board of directors or compensation committee of the board of directors, if any.

Operating Leases

In May 2010, the Company entered into a commercial lease for its corporate headquarters located in The Woodlands, Texas pursuant to which the Company leases approximately 1,500 square feet of space for a fixed monthly rent payment of $2,500.  The Company will be required to make annual rent payments of $30,000 and $15,000 during 2011 and 2012, respectively.  The lease expires on June 30, 2012.

In June 2010, the Company entered into a commercial lease for its laboratory facilities located in The Woodlands, Texas pursuant to which the Company leases approximately 3,000 square feet of space for an initial monthly rent payment of $5,587.  The Company will be required to make annual rent payments of $68,532, $71,514, $73,008, $74,496 and $37,992 during 2011, 2012, 2013, 2014 and 2015, respectively.  The lease expires on June 30, 2015.

XML



Note 12. Potential Acquisition of Rozetta-Cell

6 Months Ended

Jun. 30, 2011

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

Note 12.  Potential Acquisition of Rozetta-Cell

On September 7, 2010, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Rozetta-Cell pursuant to which Rozetta-Cell will merge with and into the Company, the separate corporate existence of Rozetta-Cell will cease, and the Company will continue as the surviving company.

Subject to the terms and conditions of the Merger Agreement, which has been approved by the boards of directors of both the Company and Rozetta-Cell, if the merger is completed, each outstanding share of Rozetta-Cell common stock will be converted into the right to receive 10 shares of the Company’s common stock, subject to certain adjustments as provided in the Merger Agreement.

The Merger Agreement contains customary representations and warranties by the Company and Rozetta-Cell, covenants by Rozetta-Cell to conduct its business in the ordinary course until the merger is consummated, and covenants by Rozetta-Cell to not take certain actions until the merger is consummated.  Rozetta-Cell has also agreed to not solicit proposals relating to business combination transactions with other parties or enter into discussions concerning any proposals for business combination transactions with other parties.

Consummation of the merger is subject to certain customary conditions, including, among others, the approval of the merger by the shareholders of Rozetta-Cell, the approval of the issuance of shares of the Company’s common stock in connection with the merger by the shareholders of the Company, the approval of an amendment to the certification of incorporation of the Company by the shareholders of the Company to increase the number of shares of common stock authorized for issuance to that number of shares necessary to ensure that an adequate number of shares is available for issuance to the shareholders of Rozetta-Cell, the receipt of any required governmental approvals and expiration of applicable waiting periods, the accuracy of the representations and warranties by the Company and Rozetta-Cell (generally subject to a material adverse effect standard), and material compliance by the Company and Rozetta-Cell with their respective obligations under the Merger Agreement.

On December 31, 2010, the Company and Rozetta-Cell entered into a First Amendment and Waiver to Agreement and Plan of Merger (the “Amendment”) which amends the Merger Agreement.  Under the terms of the Amendment, the parties agreed to extend the outside date by which the merger must close to June 30, 2011 and require the conversion of all issued and outstanding shares of the Company’s Series B preferred stock into the Company’s common stock by the holders thereof subsequent to approval of the merger by the Company’s shareholders, but prior to completion of the merger.  The parties are currently finalizing a second amendment to extend the time requirement to complete the merger.

XML



Note 3. Net Income Per Share

6 Months Ended

Jun. 30, 2011

Earnings Per Share [Text Block]

Note 3.  Net Income Per Share

Basic income per share is based on the weighted-average number of shares of the Company’s common stock outstanding during the applicable period, and is calculated by dividing the reported net income for the applicable period by the weighted-average number of shares of common stock outstanding during the applicable period.  The Company calculates diluted income per share by dividing the reported net income for the applicable period by the weighted-average number of shares of common stock outstanding during the applicable period as adjusted to give effect to the exercise of all potentially dilutive securities outstanding at the end of the period.

For the three months ended June 30, 2011 and 2010, all potentially dilutive securities were excluded because their exercise price was less than the average market price of the Company’s common stock during that period.

XML



Note 9. Promissory Notes and Debentures

6 Months Ended

Jun. 30, 2011

Debt Disclosure [Text Block]

Note 9.  Promissory Notes and Debentures

In March 2011, the Company entered into a settlement agreement with Rockmore pursuant to which the Company agreed to issue 12 million shares of its common stock to Rockmore in full payment of the outstanding balance of the debenture and accrued interest thereon, and for a full release from all claims filed by Rockmore against the Company.  The Company recorded a contingent loss in the amount of $169,818 in its financial statements for the year ended December 31, 2010 in accordance with the provisions of ASC 450.  The Company recognized a reduction in derivative liability of $78,490 which resulted in a corresponding increase in additional paid-in capital.

During the six months ended June 30, 2011, Rozetta-Cell Life Sciences, Inc., a Nevada corporation that the Company is proposing to acquire (“Rozetta-Cell”), made loans to the Company for a total of $71,451.  The loans are interest free and payable on demand.  The Company incurred $4,309 of imputed interest during the six months ended June 30, 2011 which resulted in an increase in additional paid-in capital since the interest is not payable.

The carrying values of the Company’s notes payable, net of unamortized discounts, amounted to $806,933 and $735,482 at June 30, 2011 and December 31, 2010, respectively, as follows:

	June 30,  2011		December 31,  2010
Notes Payable	$	-0-	$	-0-
Notes Payable – Related Party		225,933		154,482
Notes Payable – in Default		501,000		501,000
Less: Unamortized Discount		-0-		-0-
Total		501,000		501,000
Notes Payable – in Default – Related Party		80,000		80,000
Total Notes Payable, Net	$	806,933	$	735,482

The carrying values of the Company’s convertible debentures, net of unamortized discounts, amounted to $272,176 and $303,853 at June 30, 2011 and December 31, 2010, respectively, as follows:

	June 31,  2011		December 31,  2010
Convertible Debentures – in Default	$	272,176	$	303,853
Total Convertible Debentures, Net	$	272,176	$	303,853

XML



Note 10. Fair Value Measurements

6 Months Ended

Jun. 30, 2011

Fair Value Disclosures [Text Block]

Note 10.  Fair Value Measurements

The Company has issued several convertible promissory notes, convertible debentures and stock warrants that have conversion features that represent freestanding derivative instruments that meet the requirements for liability classification under ASC Topic 815, Derivatives and Hedging (“ASC 815”).  As a result, the fair value of the derivative financial instruments in these securities is reflected in the Company’s balance sheet as a liability.  The fair value of the derivative financial instruments in these securities was measured at the inception date of the securities and each subsequent balance sheet date.  Any changes in the fair value of the derivative financial instruments were recorded as non-operating, non-cash income or expense at each balance sheet date.

The following table presents the Company’s derivative liabilities within the fair value hierarchy utilized to measure fair value on a recurring basis as of June 30, 2011 and December 31, 2010:

	Level 1		Level 2		Level 3
Derivative liabilities – June 30, 2011		-0-		-0-	$	431,414
Derivative liabilities – December 31, 2010		-0-		-0-	$	1,460,472

The following table presents a Level 3 reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs as of June 30, 2011 and December 31, 2010:

	Derivative  Liabilities
Balance, December 31, 2009	$	14,456,424
Purchases, sales, issuances and settlements (net)		(12,995,952	)
Balance, December 31, 2010		1,460,472
Purchases, sales, issuances and settlements (net)		(1,029,058	)
Balance, December 31, 2010	$	431,414

The Company’s other financial instruments consist of cash and equivalents, deposits, accounts payable, notes payable and convertible debentures.  The estimated fair value of the cash and equivalents, deposits and accounts payable approximates their respective carrying amounts due to the short-term nature of these instruments.  The estimated fair value of the notes payable and convertible debentures also approximates their respective carrying amounts since their terms are similar to those in the lending market for comparable loans with comparable risks.  None of these instruments are held for trading purposes.

XML



Note 8. Common Stock and Preferred Stock

6 Months Ended

Jun. 30, 2011

Stockholders' Equity Note Disclosure [Text Block]

Note 8.  Common Stock and Preferred Stock

The Company’s authorized capital consisted of 600,000,000 shares of common stock, $0.001 par value per share, at June 30, 2011 and December 31, 2010, respectively, and 50,000,000 shares of preferred stock, $0.001 par value per share, at June 31, 2011 and December 31, 2010, respectively.  There were 524,778,730 and 472,237,565 shares of common stock outstanding at June 30, 2011 and December 31, 2010, respectively, and 1,500,000 shares of preferred stock outstanding at June 30, 2011 and December 31, 2010, respectively.

Shares Issued in Capital-Raising Transactions

A summary of the shares of common stock issued by the Company in capital-raising transactions during the six months ended June 30, 2011 is provided below.

In February 2011, the Company sold 300,000 shares of common stock and Class A warrants exercisable into 300,000 shares of common stock to an accredited investor for aggregate gross proceeds of $3,000.  The Class A warrants have an exercise price of $0.025 per share, are exercisable during the period commencing on the date of grant and ending December 31, 2011, and expire at the end of the exercise period.

Shares Issued for Services

A summary of the shares of common stock issued by the Company for services during the six months ended June 30, 2011 is provided below.

In January 2011, the Company entered into a consulting agreement with an accredited investor pursuant to which the Company agreed to issue 3,166,667 shares of common stock to the consultant and to compensate the consultant $5,000 per month payable in cash or common stock in the Company’s discretion.  The shares were valued at the closing price of the Company’s common stock on the date the issuance of shares was approved by the Company’s board of directors for total consideration of $69,667, all of which was recognized as expense during the three months ended March 31, 2011.

In January 2011, the Company entered into a consulting agreement with an accredited investor pursuant to which the Company agreed to issue 3,000,000 shares of common stock to the consultant, to pay $8,650 to the consultant in cash or common stock in the Company’s discretion immediately upon execution of the agreement, and to compensate the consultant $5,000 per month payable in cash or common stock in the Company’s discretion.  The shares were valued at the closing price of the Company’s common stock on the date the issuance of shares was approved by the Company’s board of directors for total consideration of $76,456, all of which was recognized as expense during the three months ended March 31, 2011.

In January 2011, the Company and a consultant mutually agreed to terminate a consulting agreement that the parties had entered into in December 2009.  Pursuant to the terms of the consulting agreement, the Company had issued a restricted stock award for 6,000,000 shares of common stock.  Upon termination of the consulting agreement, the restricted stock award terminated automatically by its terms.  On the date of termination, 2,000,000 shares of common stock had vested.  The remaining 4,000,000 shares that had not yet vested were cancelled in their entirety.

In March 2011, the Company issued 3,461,539 shares of common stock to a consultant in full payment of outstanding fees payable in the amount of $28,199 performed during the three months ended March 31, 2011.  The shares were valued at the closing price of the Company’s common stock on the date the issuance of shares was approved by the Company’s board of directors for total consideration of $48,462.  The Company recorded a loss on settlement of debt in the amount of $20,263, all of which was recognized during the three months ended March 31, 2011.

In March 2011, the Company issued a total of 10,820,132 shares of common stock to various consultants as payment for services performed during the three months ended March 31, 2011 in accordance with the terms of the consultants’ respective consulting agreements.  The shares were valued at the closing price of the Company’s common stock on the date the issuance of shares was approved by the Company’s board of directors for total consideration of $158,551, all of which was recognized as expense during the three months ended March 31, 2011.

During the three month period ended June 30, 2011, the Company issued a total of 9,577,113 shares of common stock to various consultants as payment for services performed during that period in accordance with the terms of the consultants’ respective consulting agreements. The shares were valued at the closing price of the Company’s common stock on the date the issuance of shares was approved by the Company’s board of directors for total consideration of $91,594, all of which was recognized as expense during the three months ended June 30, 2011. The Company also issued 1,930,000 shares of common stock to a consultant in full payment of outstanding fees payable of $19,300 for services provided in a prior period. The shares were valued at the closing price of the Company’s common stock on the date the issuance of shares was approved by the Company’s board of directors for total consideration of $24,125. The Company recorded a loss on settlement of debt in the amount of $4,825, all of which was recognized during the three months ended June 30, 2011.

Shares Issued in Settlement of Litigation

In February 2011, the Company entered into a settlement agreement with John Ginzler pursuant to which the Company agreed to issue 12,285,714 shares of its common stock to him in full payment of all amounts owed to him under the employment agreement and for a full release from all claims filed by him against the Company.  The Company recorded a contingent loss in the amount of $161,044 in its financial statements for the year ended December 31, 2010 in accordance with the provisions of ASC 450.

In March 2011, the Company entered into a settlement agreement with Rockmore pursuant to which the Company agreed to issue 12 million shares of its common stock to Rockmore in full payment of the outstanding balance of the debenture and accrued interest thereon, and for a full release from all claims filed by Rockmore against the Company.  The Company recorded a contingent loss in the amount of $169,818 in its financial statements for the year ended December 31, 2010 in accordance with the provisions of ASC 450.

In July 22, 2011, Transgenomic, Inc. and the Company entered into mediation in an attempt to resolve an existing lawsuit.  Based on the mediation outcome with Transgenomic, the Company recorded a loss of $55,556 during the three month period ended June 30, 2011 and recorded a stock payable of $55,556 which represented 5,555,556 shares.  As of August 22, 2011 these shares have not yet been issued.

XML



Note 1. Description of Business

6 Months Ended

Jun. 30, 2011

Nature of Operations [Text Block]

Note 1.  Description of Business

Power3 Medical Products, Inc. (the “Company”) was incorporated in the State of Florida as “Sheffeld Acres, Inc.” on May 7, 1993.  In February 1995, the Company merged with, and changed its name to, “Surgical Safety Products, Inc.”, a New York corporation.  On September 11, 2003, the Company amended its Certificate of Incorporation to change its name to “Power3 Medical Products, Inc.”  The Company became a development stage company on May 18, 2004, when it completed the acquisition of certain intellectual property assets from Advanced Bio/Chem, Inc. and began focusing on research and development relating to those assets.  The Company currently focuses on the development of 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.

The Company has developed a portfolio of products including BC-SeraPro™, a proteomic blood serum test for the early detection of breast cancer, and NuroPro®, a serum test for the detection of neurodegenerative diseases including Alzheimer’s, Parkinson’s and ALS diseases.  These products are designed to analyze proteins and their mutations to assess an individual’s risk for developing disease later in life or a patient’s likelihood of responding to a particular drug, assess a patient’s risk of disease progression and disease recurrence, and measure a patient’s exposure to drug therapy to ensure optimal dosing and reduced drug toxicity. Future products and services are expected to originate from the Company’s internal research and development programs, collaborative efforts and alliances with third parties, and acquisitions of complementary technologies and businesses.  The Company intends to continue entering into collaboration and licensing agreements with biotechnology companies, academic and research institutions, and other organizations that have the ability to market and sell the Company’s products in return for licensing fees, royalties and milestone payments.

XML



Note 4. Property and Equipment

6 Months Ended

Jun. 30, 2011

Property, Plant and Equipment Disclosure [Text Block]

Note 4.  Property and Equipment

Property and equipment consisted of the following at June 30, 2011 and December 31, 2010:

Asset	June 30, 2011			December 31,  2010
Computers and Related Devices	$	18,209		$	18,209
Less: Accumulated Depreciation		(16,313	)		(16,081	)
Total		1,896			2,128
Lab Equipment		92,380			92,380
Less: Accumulated Depreciation		(92,380	)		(92,380	)
Total		-0-			-0-
Total Property and Equipment, Net	$	1,896		$	2,128

XML



Note 5. Other Current Liabilities

6 Months Ended

Jun. 30, 2011

Other Liabilities Disclosure [Text Block]

Note 5.  Other Current Liabilities

Other current liabilities consisted of the following at June 30, 2011 and December 31, 2010:

Liability	June 30,  2011		December 31,  2010
Accrued Interest	$	403,394	$	382,759
Accrued Payroll Taxes		23,574		23,574
Accrued Compensation and Salaries		442,581		380,081
Other Accrued Expenses and Liabilities		172,308		1,811
Total	$	1,041,857	$	788,225

XML



Note 13. Subsequent Events

6 Months Ended

Jun. 30, 2011

Subsequent Events [Text Block]

Note 13.  Subsequent Events

Subsequent to June 30, 2011, the Company issued a total of 30,132,000 shares of common stock to consultants as payment for services performed in accordance with the terms of the consultants’ respective consulting agreements.

In February 2010, Transgenomic, Inc. (“Transgenomic”) filed a lawsuit against the Company in the United States District Court for the District of Nebraska.  The lawsuit contains claims for fraud, breach of contract, libel and slander, and sought a declaration of rights under a Collaboration and Exclusive License Agreement, dated January 23, 2009, between the parties that the Company had terminated on February 2, 2010.  In April 2010, the Company filed a partial motion to dismiss Transgenomic’s fraud claim.  In June 2010, the Company filed a lawsuit against Transgenomic in the District Court of Montgomery County, Texas, 359th Judicial District.  The lawsuit contained claims for trade secret misappropriation, breach of contract, misappropriation, conversion, unjust enrichment, quantum meruit and promissory estoppel as well as a request for injunctive relief.  In July 2010, the Company filed a non-suit to dismiss the case that the Company filed against Transgenomic in Texas without prejudice.  The Company intends to re-file the claims against Transgenomic in the United States District Court for the District of Nebraska as counterclaims accompanying its response to the claims filed by Transgenomic and has agreed to enter mediation with Transgenomic in an attempt to resolve this matter.  Mediation occurred in July 2011 between the parties and is currently awaiting the courts final approval.  Based on the July 22, 2011 mediation outcome with Transgenomic, the Company recorded a loss of $55,556 during the three month period ended June 30, 2011 and recorded a stock payable of $55,556 which represented 5,555,556 shares.  As of August 22, 2011 these shares have not yet been issued.

There have been no additional significant subsequent events through the date these financial statements were issued.

XML



Note 6. Derivative Liabilities

6 Months Ended

Jun. 30, 2011

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Note 6.  Derivative Liabilities

As described more fully in Note 2.  Significant Accounting Policies – Derivative Financial Instruments of the notes to the Company’s audited financials statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, the Company changed the method by which it valued the conversion features in its convertible notes and convertible debentures by switching from the binomial lattice valuation model to the Black-Scholes pricing model duringthe three months ended June 30, 2010.

In March 2011, the Company entered into a settlement agreement with Rockmore Investment Master Fund LTD (“Rockmore”) pursuant to which the Company agreed to issue 12 million shares of its common stock to Rockmore in full payment of the outstanding balance of the debenture in the amount of $31,677 and accrued interest thereon, and for a full release from all claims filed by Rockmore against the Company.  The Company recorded a contingent loss in the amount of $169,818 in its financial statements for the year ended December 31, 2010 in accordance with the provisions of ASC 450.  The Company recognized a reduction in derivative liability of $78,490 which resulted in a corresponding increase in additional paid-in capital.

The Company’s derivative liabilities were $431,414 and $1,460,472 at June 30, 2011 and December 31, 2010, respectively.  The Company recognized gains of $197,757 for derivative liabilities during the three months ended June 30, 2011 and losses of $123,340 for derivative liabilities during the three months ended June 30, 2010.  The Company recognized gains of $950,568 for derivative liabilities during the six months ended June 30, 2011 and recognized gains of $10,580,355 for derivative liabilities during the six months ended June 30, 2010.

The derivative gains recognized during these periods were due primarily to the decrease in the Company’s stock price during 2011 and 2010, respectively.

The components of derivative financial instruments on the Company’s balance sheet at June 30, 2011 and December 31, 2010 are as follows:

	June 30, 2011		December 31,  2010
Common Stock Warrants	$	155,624	$	513,028
Convertible Promissory Notes and Debentures		275,790		947,444
Total	$	431,414	$	1,460,472

Under the Black-Scholes pricing model, the Company used the following weighted-average assumptions to determine the fair value of its notes, debentures and warrants:

	Dividend Yield			Expected Volatility			Risk-Free Interest Rate			Remaining Contractual  Life (Years)
Common Stock Warrants		0	%		114.6	%		0.03	%		1.81
Convertible Promissory Notes and Debentures		0	%		122.4	%		0.19	%		4.75

XML



STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	6 Months Ended		86 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011
Cash Flows From Operating Activities:
Net income (loss)	$ 241,270	$ 9,299,080	$ (62,586,129)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Imputed interest	4,309		4,309
Depreciation	232	683	108,694
Stock for services	394,479	461,032	39,371,740
Change in derivative liability, net of bifurcation	(950,568)	(10,580,355)	(6,769,671)
(Gain) loss on conversion of financial instruments			(1,579,670)
Impairment of goodwill			13,371,776
Impairment of intangible assets			179,788
Loss on previously capitalized lease			34,243
Loss on settlement of litigation and debt	80,644		385,273
Amortization of debt discount and deferred finance costs			4,005,435
Debt issued for compensation and services			1,028,927
Stock for settlement of litigation and debt			30,875
Release of stock held in escrow			24,000
Other non-cash items			(33,512)
Changes in operating assets and liabilities:
Prepaid expense and other current assets			186,084
Deposits and other assets		(6,332)	17,265
Accounts payable and other liabilities	(155,183)	572,152	4,486,233
Net cash used in operating activities	(74,451)	(231,993)	(7,734,340)
Cash Flows From Investing Activities:
Increase in property and equipment			(144,833)
Increase in other assets			(179,786)
Net cash used in investing activities			(324,619)
Cash Flows From Financing Activities:
Proceeds from sale of common stock	3,000		2,352,327
Borrowings on notes payable-related party	71,451		321,309
Proceeds from issuance of convertible debt			1,200,709
Borrowings on notes payable			3,838,430
Principal payments on notes payable			(122,478)
Principal payments –notes payable-related parties			(47,300)
Proceeds from exercise of warrants		234,534	513,366
Net cash provided by financing activities	74,451	234,534	8,056,363
Net increase (decrease) in cash		2,541	(2,596)
Cash at beginning of period			2,596
Cash at end of period	0	0	0
Cash paid for interest			59,840
Cash paid for income tax	0	0	0
Non-cash activities
Stock for conversion of debt – related party			2,227,759
Stock issued for common stock payable		98,207
Exchange of debt – related party			214,075
Exchange of convertible notes for stock			2,525,070
Stock issued for settlement of litigation and debt	336,571		1,115,245
Deemed dividend			1,140,760
Exchange of convertible preferred stock for common stock			3,380,975
Preferred stock issued for payables			358,500
Stock held in escrow			20,000
Stock contributed for debt payment			276,558
Return of stock held in escrow			16,800
Cashless exercise of warrants		32,374	32,507
Stock rescinded for debt			8,256
Stock rescinded or canceled	4,000	12,302	16,302
Settlement of derivative liability	$ 78,490		$ 78,490

XML



Note 2. Basis of Presentation and Going Concern

6 Months Ended

Jun. 30, 2011

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Note 2.  Basis of Presentation and Going Concern

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and in conformity with the instructions to Form 10-Q and Article 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (the “SEC”).  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, the disclosures included in these financial statements are adequate to make the information presented not misleading.

The unaudited financial statements included in this document have been prepared on the same basis as the annual financial statements and in management’s opinion, reflect all adjustments, including normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the interim periods presented. The unaudited financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2010 included in the Company’s Annual Report on Form 10-K.  The results of operations for the three and six month periods ended June 30, 2011 are not necessarily indicative of the results that the Company will have for any subsequent quarter or full fiscal year.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.  Certain amounts in the financial statements for 2010 have been reclassified to conform to the 2011 presentation.  These reclassifications did not result in any change to the previously reported total assets, net loss or stockholders’ deficit.

As of June 30, 2011, the Company’s significant accounting policies and estimates, and applicable recent accounting policies, which are detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, have not changed materially.

Going Concern

The Company’s financial statements have been prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company has historically incurred significant losses, which raises substantial doubt about the Company’s ability to continue as a going concern.  The accompanying financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.

XML



Note 11. 2011 Equity Awards Plan

6 Months Ended

Jun. 30, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 11.  2011 Equity Awards Plan

In February 2011, the Company adopted the Power3 Medical Products, Inc. 2011 Equity Awards Plan (the “2011 Equity Awards Plan”).  Under the plan, 25,000,000 shares of common stock may be granted to employees, officers and directors of, and consultants and advisors to, the Company under awards that may be made in the form of stock options, warrants, stock appreciation rights, restricted stock, restricted units, unrestricted stock and other equity-based or equity-related awards.  The plan terminates on February 28, 2021.  On February 28, 2011, the Company filed a registration statement on Form S-8, File No. 333-172504, with the SEC covering the public sale of the 25,000,000 shares of common stock available for issuance under the plan.

XML



BALANCE SHEETS (USD $)	Jun. 30, 2011	Dec. 31, 2010
ASSETS
Property and equipment , net of accumulated depreciation of $108,693 and $108,461 at June 30, 2011 and December 31, 2010, respectively	$ 1,896	$ 2,128
Deposits	11,332	11,332
Other assets	100	100
Total assets	13,328	13,560
Current liabilities
Accounts payable	1,460,290	1,643,510
Accounts payable – related parties	263,271	525,701
Notes payable – related parties	225,933	154,482
Notes payable- in default	501,000	501,000
Notes payable- in default- related parties	80,000	80,000
Convertible debentures- in default	272,176	303,853
Derivative liabilities	431,414	1,460,472
Other current liabilities	1,041,857	788,225
Total current liabilities	4,275,941	5,457,243
Total liabilities	4,275,941	5,457,243
Stockholders’ deficit
Preferred shares, par value $0.001; 50,000,000 authorized; 1,500,000 issued and outstanding as of June 30, 2011 and December 31, 2010	1,500	1,500
Common stock, par value $0.001; 600,000,000 shares authorized; 524,778,730 and 472,237,565 shares issued and outstanding as of June 30, 2011 and December 31, 2010	524,779	472,237
Additional paid in capital	73,825,914	72,994,212
Treasury stock	(16,000)	(16,000)
Common stock payable	190,556	135,000
Deficit accumulated during development stage	(67,107,862)	(67,349,132)
Deficit accumulated before entering development stage	(11,681,500)	(11,681,500)
Total stockholders’ deficit	(4,262,561)	(5,443,683)
Total liabilities and stockholders’ deficit	$ 13,328	$ 13,560