POWER3 MEDICAL, INC. AMENDED CURRENT REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D. C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934. May 18, 2004 Date of Report (Date of Earliest Event Reported) Power3 Medical Products, Inc (Exact name of registrant as specified in charter) Commission File Number: 0-24921 New York 65-0565144 (State of Incorporation) (I.R.S. Employer I.D. No) 3400 Research Forest Drive The Woodlands, Texas 77381 (Address of Principal Executive Offices) (281) 466-1600 (Registrant's Telephone Number, Including Area Code) -1- Item 1. CHANGES IN CONTROL OF REGISTRANT None. Item 2. ACQUISITION OR DISPOSITION OF ASSETS As reported in its Current Report on Form 8-K filed on Power3 Medical Products, Inc., acquired certain assets and liabilities of Advanced Bio/Chem, Inc. This Form 8KA amends the original Form 8K. With this Amendment, the Registrant files the financial statements of businesses acquired and pro forma financial information required by Item 7. Item 3. BANKRUPTCY OR RECEIVERSHIP None. Item 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT None. Item 5. OTHER EVENTS Management has made the decision to recommend to the Board of Directors that the registrant change its domicile from New York to either Delaware or Nevada. Item 6. RESIGNATION OF REGISTRANT'S DIRECTORS Tim Novak and Paul Gray Item 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial statements of businesses. Previously filed. (b) Financial statements of businesses acquired. -2- Audited financial statements of Advanced Biochem, Inc as of December 31, 2003 and for the years ended December 31, 2003 and 2002. Unaudited financial statements as of March 31, 2004 and for the quarters ended March 31, 2004 and 2003. (c) Pro forma combined financial information as of March 31, 2004 and for the twelve months ended December 31, 2003 and for the period January 1, 2004 through March 31, 2004. Item 8. CHANGE IN FISCAL YEAR None. 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, this 2nd day of August, 2004. Power3 Medical Products, Inc. By: Steven B. Rash Steven B. Rash Chief Executive Officer By: Michael J. Rosinski Michael J. Rosinski Chief Financial Officer -3- Item 7. FINANCIAL STATEMENTS AND EXHIBITS POWER3 MEDICAL PRODUCTS, INC. TABLE OF CONTENTS Financial Statements as of and for the period January 1, 2004 to March 31, 2004: Balance Sheet 5 Statement of Operations 6 Statement of Cash Flows 7 Notes to Financial Statements 8 -4- ADVANCED BIO/CHEM, INC. BALANCE SHEETS --ASSETS-- March 31, March 31, 2004 2003 (Unaudited) (Unaudited) CURRENT ASSETS: Cash $ 1,956 $ 69 Accounts receivable $ 5,130 $ 1,800 Prepaid Expenses $ 2,978 $ - TOTAL CURRENT ASSETS $ 10,064 $ 1,869 TOTAL FIXED ASSETS $ 144,259 $ - TOTAL OTHER ASSETS $ 19,972 $ - TOTAL ASSETS $ 174,295 $ 1,869 ============= ============= --LIABILITIES AND SHAREHOLDERS' EQUITY-- CURRENT LIABILITIES Due to affiliate $ - $ 6,000 Accounts payable and accrued expenses $ 1,550,092 $ 62,500 Current Maturities of Long Term Debt $ 231,432 $ - TOTAL CURRENT LIABILITIES $ 1,781,524 $ 68,500 Long Term Debt Notes Payable to Stockholders and Related Parties $ 324,761 $ - Notes Payable Net of Current Maturities $ 702,085 $ - TOTAL LONG TERM DEBT $ 1,026,846 $ - SHAREHOLDER'S EQUITY (DEFICIT) Common Stock - $0.01 par value, 50,000,000 shares authorized, 11,111 shares issued and outstanding at March 31, 2004 $ 11,111 $ 7,280 Common stock Subscribed $ 415,000 $ - Additional paid-in capital $ 1,409,072 $ 945,643 Accumulated deficit $ (4,469,258) $ (1,019,554) TOTAL SHAREHOLDER'S EQUITY (DEFICIT) $ (2,634,075) $ (66,631) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) $ 174,295 $ 1,869 ============= ============= 5 ADVANCED BIO/CHEM, INC. STATEMENT OF OPERATIONS (Unaudited) March 31, March 31, 2004 2003 REVENUES: Royalty Income $ 137,837 $ - TOTAL REVENUES $ 137,837 $ - OPERATING COSTS: Selling, general and adminsitrative expenses $ 165,497 $ 58,563 (LOSS) BEFORE PROVISION FOR INCOME TAXES $ (27,660) $ (58,563) Provision for income taxes $ - $ - OTHER INCOME (EXPENSE) Other Income $ - $ - Interest Expense $ (51,624) $ - TOTAL OTHER INCOME (EXPENSE) $ (51,624) $ - NET (LOSS) $ (79,284) $ (58,563) ============ =========== (LOSS) PER SHARE Basic $ (0.01) $ (0.01) ============ =========== Diluted $ (0.01) $ (0.01) ============ =========== Weighted average number of common shares outstanding - basic and diluted 11,111,328 7,280,000 6 ADVANCED BIO/CHEM, INC. STATEMENT OF CASH FLOWS (Unaudited) March 31, March 31, 2004 2003 INCREASE (DECREASE) IN CASH: CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) $ (79,284) $ (58,563) Depreciation and amortization 23,152 - Adjustments to reconcile net (loss) to net cash (used) provided by operating activities: Management fees credited to additional paid-in capital $ - $ - Increase in assets: Accounts receivable/other $ (4,133) $ - Increase in liabilities: $ - $ 6,000 Accounts payable and accrued expenses $ (199,663) $ 52,500 NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES $ (259,932) $ (63) CASH FLOWS FROM FINANCING ACTIVITIES: Long Term Debt Net $ (3,112) $ - Common Stock Subscribed $ 265,000 $ - Total $ 261,888 $ - NET CASH PROVIDED BY FINANCING ACTIVITIES $ 1,956 $ - NET INCREASE IN CASH $ - $ 63 Cash, at beginning of period $ - $ 132 CASH, AT END OF PERIOD $ 1,956 $ 69 ============= ============= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Income taxes $ - $ - 7 ADVANCED BIO/CHEM, INC. NOTES TO THE FINANCIAL STATEMENTS MARCH 31, 2004 NOTE 1. COMPANY BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature and Background of the Organization Advanced Bio/Chem, Inc. (d/b/a ProteEx), a Nevada corporation (the "Company") is a biotechnology company utilizing protein identification for cancer discovery and applying proteomics to the medical diagnostic market principally hospitals and other medical facilities. The Company's products are in the form of diagnostic tests. Principal national markets include diagnostics and drug discovery and development in the United States and Canada. On April 14, 2003, the Company and GESJ, Inc., ("GESJ"), a Texas corporation, owned by four officers of the Company, entered into an agreement and plan of merger in which GESJ merged into the Company in a tax-free exchange of shares. The purpose of the merger was to acquire the management team of GESJ. In June 2003, the Company merged with Ciro International, Inc., a Nevada corporation, resulting in the Company being the surviving entity in a reverse acquisition with Ciro, a public shell company. In May 2004, the Company sold all of its fixed assets and intellectual property to Power 3 Medical Products, Inc. ("Power 3") in exchange for 15,000,000 shares of Power 3 and the assumption of certain liabilities of the Company. Basis of Presentation Then accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and Item 310(b) of Regulation S-B. The do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements of the Company as of December 31, 2003 and for the two years ended December 31, 2003 and 2002, including notes thereto included in this From 8K/A. Use of Estimates in Preparing Financial Statements Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect amounts reported in these financial statements and accompanying notes. The more significant areas requiring the use of management estimates relate to the percentage of work completed in determining deferred revenue, evaluating the outcome of uncertainties involving claims against or on behalf of the Company, useful lives for depreciation and amortization, cash flow projections and fair values used in the determination of asset impairment. Actual results could differ materially from these estimates. 8 Going Concern The Company has sustained net losses from its inception in 2000 through December 31, 2003. At December 31, 2003, the Company had a deficit in stockholders' equity in excess of $4.3 million and current liabilities exceeded current assets by $2.0 million. On May 18, 2004, all fixed assets and intellectual property of the Company were acquired by Power 3 Medical Products, Inc. in exchange for 15,000,000 shares of that company's common stock, as further discussed in Note 15. The notes payable to various individuals as described in Note 8, and certain other liabilities remain the obligations of the Company. In order to continue the Company will be required to obtain additional funding from outside sources, or sell additional assets to meet its debt service obligations. Management is in the process of seeking additional financing. Without continued forbearance of the Company's creditors, additional financing, or the sale of assets the Company would be unable to continue as a going concern. There can be no assurance that the Company can obtain sufficient additional financing or raise adequate funds through the sale of its assets to service its debt obligations. The Company's financial statements are presented on the basis of a going concern and do not include any adjustments that might result from this uncertainty. NOTE 2. SUBSEQUENT EVENTS On May 18, 2004, all fixed assets and intellectual property of the Company were acquired by Power 3 Medical Products, Inc. ("Power 3"), a Nevada corporation, for 15,000,000 shares of Power 3 common stock, plus employment of certain employees of the Company, and assumption of certain liabilities of the Company. Furthermore, Power 3 designated 3,000,000 shares of its Series B Convertible Preferred Stock that, voting as a class, represents a majority of the voting interest of the corporation. 1,500,000 Series B Convertible Preferred Stock were issued each to Steven B. Rash, Chairman and CEO, and Ira L. Goldknopf, Ph.D., Chief Science Officer. In the event either holder of shares of Series B Convertible Preferred Stock ceases to be an officer, director or employee of the corporation, their preferred shares automatically convert to common shares at a ratio of one common share for each preferred share. In addition, 13,250,000 shares of common stock were issued each to Steven B. Rash and Ira L. Goldknopf, Ph.D. in consideration of their executing an employment agreement with Power 3. 9 ADVANCED BIO/CHEM, INC. d/b/a ProteEx FINANCIAL STATEMENTS December 31, 2003 and 2002 TABLE OF CONTENTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.....................11 BALANCE SHEETS..............................................................12 STATEMENTS OF OPERATIONS....................................................14 STATEMENT OF STOCKHOLDERS' DEFICIT..........................................15 STATEMENTS OF CASH FLOWS....................................................16 NOTES TO THE FINANCIAL STATEMENTS...........................................18 10 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors Advanced Bio/Chem, Inc. The Woodlands, Texas We have audited the accompanying balance sheets of Advanced Bio/Chem, Inc. (d/b/a ProteEx) as of December 31, 2003 and 2002, and the related statements of operations, stockholders equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Advanced Bio/Chem, Inc. (d/b/a ProteEx) as of December 31, 2003 and 2002, and the results of its operations and cash flows for the years then ended in conformity with U.S. generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and its total liabilities exceed its total assets. This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Fitts, Roberts & Co., P.C. Houston, Texas July 26, 2004 11 ADVANCED BIO/CHEM, INC. d/b/a ProteEx BALANCE SHEETS ASSETS December 31, December 31, 2003 2002 CURRENT ASSETS Cash $ - $ 19,175 Accounts receivable - trade, net - 10,600 Accounts receivable - officers and employees - 903 Prepaid expenses 3,971 3,542 Total current assets 3,971 34,220 PROPERTY AND EQUIPMENT, net of accumulated depreciation of $230,521 in 2003 and $140,466 in 2002 166,766 256,821 OTHER ASSETS Deposits 2,968 2,968 Patents, net of $4,881 amortization and of $1,663 in 2003 and 2002, respectively 17,649 20,868 Total other assets 20,617 23,836 TOTAL ASSETS $ 191,354 $ 314,877 ============ ============= See notes to financial statements 12 ADVANCED BIO/CHEM, INC. d/b/a ProteEx BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' DEFICIT December 31, December 31, 2003 2002 CURRENT LIABILITIES $ 7,498 $ - Cash overdraft Accounts payable - trade 266,271 174,666 Due to Bronco Technology - a related party 78,703 80,459 Credit card debt - related parties 114,530 118,742 Accrued liabilities 677,792 365,786 Bank line of credit 150,000 149,989 Accrued interest on notes payable 266,631 158,466 Accrued interest on notes to related parties 58,753 33,855 Current maturities of long-term debt 231,432 117,881 Deferred revenue 129,577 14,828 Total current liabilities 1,981,187 1,214,672 LONG-TERM DEBT Notes payable to stockholders and related parties 324,761 305,413 Notes payable, net of current maturities 705,197 786,843 Total long-term debt 1,029,958 1,092,256 TOTAL LIABILITIES 3,011,145 2,306,928 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' DEFICIT Common stock, $0.001 par value, 50,000,000 shares authorized, 11,111,338 shares outstanding at December 31, 2003 and 12,120,046 shares outstanding at December 31, 2002 11,111 1,212 Additional paid-in capital 1,409,072 170,494 Due from officers for stock - (74,206) Subscribed stock 150,000 - Retained deficit (4,389,974) (2,089,551) TOTAL STOCKHOLDERS' DEFICIT (2,819,791) (1,992,051) TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 191,354 $ 314,877 ============ ============= See notes to financial statements 13 ADVANCED BIO/CHEM, INC. d/b/a ProteEx STATEMENTS OF OPERATIONS For the years ended December 31, 2003 2002 Revenues $ 278,114 $ 197,176 Expenses Selling, general and administrative expenses 2,265,222 786,793 Depreciation and amortization 93,273 93,188 Loss on disposal of equipment - 110,261 Total expenses 2,358,495 990,242 Loss from operations (2,080,381) (793,066) Interest expense 220,042 197,232 Loss before income tax (2,300,423) (990,298) Income tax - - Net loss $ (2,300,423) $ (990,298) ============= ============= See notes to financial statements 14 ADVANCED BIO/CHEM, INC. d/b/a ProteEx STATEMENT OF STOCKHOLDERS' DEFICIT For the years ended December 31, 2003 and 2002 Stockholders' Deficit Common Common Additional Due from Subscribed Retained Total Shares Stock Paid-In Capital Officers Stock Deficit Balance at December 31, 2001 12,120,046 $ 1,212 $ 169,494 $ (74,206) $ - $(1,099,253) $ (1,002,753) Capital contributions - - 1,000 - - - 1,000 Net loss - - - - - (990,298) (990,298) Balance at December 31, 2002 12,120,046 1,212 170,494 (74,206) - (2,089,551) (1,992,051) Reverse stock split (8,360,012) (836) 836 - - - - Change in par value 3,383 (3,383) - - - - Ciro reverse merger 3,619,554 3,620 (3,620) - - - - GESJ merger 1,903,000 1,903 (1,903) - - - - Stock issued for cash 450,000 450 124,550 - - - 125,000 Private placement 521,904 522 437,478 - - - 438,000 Debt converted to stock 31,846 32 25,445 - - - 25,477 Stock granted to employees 825,000 825 659,175 74,206 - - 734,206 Stock subscriptions - - - - 150,000 - 150,000 Net loss - - - - - (2,300,423) (2,300,423) Balance at December 31, 2003 11,111,338 $ 11,111 $ 1,409,072 $ - $ 150,000 $(4,389,974) $ (2,819,791) =========== ========= ============= ========== ========== ============ ============= See notes to financial statements 15 ADVANCED BIO/CHEM, INC. d/b/a ProteEx STATEMENTS OF CASH FLOWS For the years ended December 31, 2003 2002 OPERATING ACTIVITIES Net loss $ (2,300,423) $ (990,298) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 93,273 93,188 Stock-based compensation 734,206 - Changes in operating assets and liabilities: Accounts receivable 10,600 17,710 Other current assets 474 (3,005) Accounts payable 91,605 57,525 Accrued liabilities and deferred revenues 596,142 222,670 Net cash used in operating activities (774,123) (602,210) INVESTING ACTIVITIES Purchase of capital assets - (23,538) Patent costs - (18,673) Net cash used in investing activities - (42,211) FINANCING ACTIVITIES Proceeds from issuance of debt 58,343 345,020 Net borrowings under line of credit 11 4,883 Bank overdraft 7,498 - Principal payments on notes payable (17,936) - Proceeds from sales of stock 713,000 1,000 Payments on capital leases - (8,421) (Decrease) increase in credit card debt (4,212) 70,472 (Payments) borrowings on related party loans (1,756) 250,642 Net cash provided by financing activities 754,948 663,596 NET (DECREASE) INCREASE IN CASH (19,175) 19,175 CASH, beginning of year 19,175 - CASH, end of year $ - $ 19,175 ============= =========== See notes to financial statements 16 ADVANCED BIO/CHEM, INC. d/b/a ProteEx STATEMENTS OF CASH FLOWS - continued For the years ended December 31, 2003 2002 SUPPLEMENTAL DISCLOSURES RELATED TO CASH FLOWS: Interest paid $ 87,718 $ 75,852 SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Equipment acquired and returned $ - $ 224,520 Accrued interest capitalized 32,602 - Stock issued for services 734,206 - Debt converted to stock 25,477 - See notes to financial statements 17 ADVANCED BIO/CHEM, INC. d/b/a ProteEx NOTES TO THE FINANCIAL STATEMENTS NOTE 1. COMPANY BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature and Background of the Organization Advanced Bio/Chem, Inc. (d/b/a ProteEx), a Nevada corporation (the "Company") is a biotechnology company utilizing protein identification for cancer discovery and applying proteomics to the medical diagnostic market principally hospitals and other medical facilities. The Company's products are in the form of diagnostic tests. Principal national markets include diagnostics and drug discovery and development in the United States and Canada. On April 14, 2003, the Company and GESJ, Inc., ("GESJ"), a Texas corporation, owned by four officers of the Company, entered into an agreement and plan of merger in which GESJ merged into the Company in a tax-free exchange of shares. The purpose of the merger was to acquire the management team of GESJ. In June 2003, the Company merged with Ciro International, Inc., a Nevada corporation, resulting in the Company being the surviving entity in a reverse acquisition with Ciro, a public shell company. In May 2004, the Company sold all of its fixed assets and intellectual property to Power 3 Medical Products, Inc. ("Power 3") in exchange for 15,000,000 shares of Power 3 and the assumption of certain liabilities of the Company, as further discussed in Note 15. Basis of Accounting The financial statements of the Company have been prepared on the accrual basis of accounting and, accordingly, reflect all significant receivables, payables and other liabilities. Use of Estimates in Preparing Financial Statements Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect amounts reported in these financial statements and accompanying notes. The more significant areas requiring the use of management estimates relate to the percentage of work completed in determining deferred revenue, evaluating the outcome of uncertainties involving claims against or on behalf of the Company, useful lives for depreciation and amortization, cash flow projections and fair values used in the determination of asset impairment. Actual results could differ materially from these estimates. 18 ADVANCED BIO/CHEM, INC. d/b/a ProteEx NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 1. COMPANY BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Revenue Recognition The Company recognizes revenue principally from contract services performed in the area of protein identification as the services are completed. Payments by customers for services not yet performed are classified as deferred revenue. Fair Values of Financial Instruments The Company's financial instruments consist of cash, accounts receivable, accounts payable and notes payable. The carrying amounts reported in the balance sheets for cash, accounts receivable and accounts payable approximate fair values due to the short maturity of those instruments. The carrying amount of debt reported in the balance sheets approximates fair value because, in general, the interest on the underlying instruments approximates market rates. Property and Equipment Property and equipment are recorded at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the respective assets. Repairs and maintenance, which are not considered betterments and do not extend the useful life of property, are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the asset and accumulated depreciation are removed from the accounts and the resulting gain or loss is reflected in income. Patents Patents are recorded at cost which includes legal fees and filing fees and amortized over ten years on a straight-line basis. Patents are periodically reviewed to assess recoverability from future operations using undiscounted cash flows. To the extent carrying values exceed fair values, an impairment loss is recognized in operating results. Amortization expense on the patents is provided using the straight-line method over the lives of the patents. Cash Equivalents For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. 19 ADVANCED BIO/CHEM, INC. d/b/a ProteEx NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 1. COMPANY BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income Tax The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not. Effective September 6, 2000, the Company elected by unanimous consent of its stockholders to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those provisions, the Company did not pay federal income taxes on its taxable income after the effective date of the election. Instead, the stockholders were liable for individual federal income tax on their respective shares of the Company's taxable income. Accordingly, no provision or liability for income taxes was made for the fiscal year ending December 31, 2002. The election to be treated as an S-corporation was revoked effective January 1, 2003. Employee Leasing Arrangement The Company signed a Professional Services Agreement with Gevity HR. Under the terms of the contract, existing active employees and employees subsequently hired by the Company are co-employed by both the Company and Gevity HR. Gevity HR employs the employee and assumes responsibility for the employee under Gevity HR's employer identification number and then: (a) processes payroll, pays wages and makes deductions that are legally required or duly authorized; (b) collects, reports and pays applicable payroll taxes and keeps payroll and tax records as required by federal, state and local payroll tax laws and regulations; (c) secures workers' compensation insurance and timely pays the premiums therefore; (d) complies with state and federal unemployment payroll laws by maintaining accounts, pays unemployment insurance taxes, files reports and administers and manages claims; and (e) administers benefits as designated by the Company. Accounting for Stock-Based Compensation The Company has adopted the disclosure provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." In accordance with the provisions of SFAS No. 123, the Company applies Accounting Principles Board Opinion 25 and related interpretations in accounting for stock issued to its employees and consultants. 20 ADVANCED BIO/CHEM, INC. d/b/a ProteEx NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 1. COMPANY BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Reclassifications Certain amounts from 2002 have been reclassified to conform to current year presentation. NOTE 2. FINANCIAL RESULTS, LIQUIDITY AND BASIS OF PRESENTATION The Company has sustained net losses from its inception in 2000 through December 31, 2003. At December 31, 2003, the Company had a deficit in stockholders' equity in excess of $4.3 million and current liabilities exceeded current assets by $2.0 million. On May 18, 2004, all fixed assets and intellectual property of the Company were acquired by Power 3 Medical Products, Inc. in exchange for 15,000,000 shares of that company's common stock, as further discussed in Note 15. The notes payable to various individuals as described in Note 8, and certain other liabilities remain the obligations of the Company. In order to continue the Company will be required to obtain additional funding from outside sources, or sell additional assets to meet its debt service obligations. Management is in the process of seeking additional financing. Without continued forbearance of the Company's creditors, additional financing, or the sale of assets the Company would be unable to continue as a going concern. There can be no assurance that the Company can obtain sufficient additional financing or raise adequate funds through the sale of its assets to service its debt obligations. The Company's financial statements are presented on the basis of a going concern and do not include any adjustments that might result from this uncertainty. NOTE 3. PATENTS No patents have been issued as of December 31, 2003. However, patents pending include: Provisional Patent 1: Breast Cancer, Nipple Aspirate (NPA) - filed November 20, 2001 Diagnostic test for breast cancer and any other cancer information on the use of 2D gel to distinguish protein pattern differences in NPA fluid between cancers versus non-cancer. Provisional Patent 2: Filed April 24, 2002. Proteonomic Methods for diagnosis and monitoring of breast cancer, information given to substantiate further discoveries, including patient and normal comparisons of 2D gel patterns of proteins in NPA fluid. 21 ADVANCED BIO/CHEM, INC. d/b/a ProteEx NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 3. PATENTS (CONTINUED) Provisional Patent 3: Renal disease filed October 29, 2002. A large group of S-Nitrosylated proteins as disease markers and drug targets for hypertension, renal disease, cancer and other diseases, information on novel proteins discovered in renal disease. Provisional Patent 4: CML Drug resistance filed March 7, 2003. Proteomic test and biomarkers for diagnosis, prognosis, monitoring, and treatment decisions for drug resistance and sensitivity, a mechanism of drug resistance and sensitivity to discern key drug targets, and a key drug target for drug resistance for chronic myelogenous leukemia, other leukemias and pre-leukemias, brease cancer and pre-cancerous conditions and any other cancer and pre-cancerous conditions. Patent: Breast Cancer, NAF filed November 20, 2002. Proteonomic methods for diagnosis and monitoring of breast cancer, information of combination of 1 and 2 with further information and claims involving known markers of breast cancer and disposition in NPA fluid, including individual with normal mammogram and family history of breast cancer. Patent: Breast Cancer, NAF filed November 20, 2002. Continuation in part proteomic methods for diagnosis and monitoring of breast cancer. Patent costs and accumulated amortization as of December 31 were: 2003 2002 Costs incurred for patents $ 22,530 $22,531 Accumulated amortization 4,881 1,663 Patents, net $ 17,649 $20,868 ======== ======= Amortization expense was $3,218 and $1,631 in 2003 and 2002, respectively. NOTE 4. PROPERTY AND EQUIPMENT A summary of property and equipment follows: Estimated December 31, December 31, Useful Life 2003 2002 Laboratory equipment 3-5 years $ 381,743 $ 381,743 Data processing equipment 5 years 15,544 15,544 397,287 397,287 Less accumulated depreciation 230,521 140,466 $ 166,766 $ 256,821 =========== =========== 22 ADVANCED BIO/CHEM, INC. d/b/a ProteEx NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 5. ACCRUED LIABILITIES A summary of accrued liabilities follows: December 31, December 31, 2003 2002 Litigation settlement $ 20,000 $ 40,000 Capital leases payable 147,639 173,639 Contractor payable 4,823 4,823 Accrued severance pay 16,158 17,208 Accrued salaries 372,676 - Lease payable 42,540 61,508 Property taxes payable 21,956 16,099 Rent payable 52,000 52,509 $ 677,792 $ 365,786 ============= ============= NOTE 6. CREDIT CARD DEBT The Company has informally assumed the obligation to repay funds provided to the Company by related parties through borrowing on personal credit cards. The balances totaled $114,530 and $118,742 at December 31, 2003 and 2002, respectively. Credit card debt as set forth above is not guaranteed by the Company, nor are the credit cards in the Company's name. The Company has assumed the debt from the originators of the credit cards, Helen R. Park and Ira L. Goldknopf, who are significant shareholders, since the debt was for the express purpose of purchases on behalf of and for the benefit of the Company. In addition, these purchases were authorized by the Company for lab supplies, travel and equipment. The Company is paying the minimum required monthly payments as set forth by the creditor. NOTE 7. LEASES The Company leased office and laboratory space under an operating lease from Houston Advanced Research Center ("HARC"), a Texas non-profit corporation, in The Woodlands, Texas. Rent was $3,808 per month. The original term of the lease expired August 2002 and the Company rented on a month-to-month basis until June, 2004, when new lease space was obtained elsewhere in The Woodlands, Texas. Rent expense for 2003 and 2002 was $45,705 and $52,587, respectively, primarily for the HARC lease. Other short-term equipment operating lease expenses were incurred. 23 ADVANCED BIO/CHEM, INC. d/b/a ProteEx NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 7. LEASES (CONTINUED) The Company leases laboratory equipment under a three-year lease expiring August 30, 2004. The lease has been recorded as a capital lease. The cost of $86,000, the fair value at the inception of the lease, had been included on the balance sheet under the caption "Property and equipment," at December 31, 2003 and 2002, less accumulated depreciation of $64,501 at December 31, 2003, and $35,834 at December 31, 2002. The Company is in default on this lease and, consequently, the entire balance of the lease payments is included in current liabilities. NOTE 8. NOTES PAYABLE During the year ended December 31, 2002, management determined that several notes payable made in prior years were usurious under Texas laws. As a result, all usurious notes were renegotiated to reflect new rates and maturity dates. Unpaid accrued interest at December 31, 2003, and 2002, reflects the renegotiated note rates and maturity dates. A summary of notes payable follows: December 31, December 31, 2003 2002 Note payable for insurance, unsecured $ 2,906 $ 2,493 Notes payable to various individuals due November 2003 to May 2006, annual interest rates from 12% to 15%, unsecured, convertible to common stock at $0.80 per share 933,723 902,231 Subtotal 936,629 904,724 Less current portion 231,432 117,881 $ 705,197 $ 786,843 ========= ========= The Company has a line of credit with a bank as follows for December 31, 2003 and 2002: 2003 2002 Bank revolving credit agreement, annual interest rate at bank prime plus 2.25 percentage points (6.5% at December 31, 2003 and 2002), $150,000 maximum amount, renewed through February 22, 2005, repayment over thirty-six months, guaranteed by two shareholders, secured by assets of the Company $150,000 $ 149,989 24 ADVANCED BIO/CHEM, INC. d/b/a ProteEx NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 8. NOTES PAYABLE (CONTINUED) A summary of long-term debt principal maturities follows: For the Years Ending December 31, Amount 2004 $ 231,432 2005 63,354 2006 640,843 Beyond 1,000 Total $ 936,629 ========== Certain debts to individuals have matured and are past due. The Company has not obtained waivers for these defaults. NOTE 9. INCOME TAX MATTERS AND CHANGE IN TAX STATUS For the years ended December 31, 2002, 2001 and 2000, the Company, with the consent of its stockholders, elected to be taxed under sections of federal income tax law, which provide that, in lieu of corporation income taxes, the stockholders separately account for their pro rata shares of the Company's income, deductions, losses and credits. The Company's stockholders terminated this election effective with the year beginning on January 1, 2003. Deferred tax assets consist of the following components as of December 31, 2003: Deferred tax assets: Loss carryforward (state and federal) $ 610,176 Accrual to cash adjustments 488,737 Property and equipment 3,179 Less valuation allowance (1,102,092) $ - ============== 25 ADVANCED BIO/CHEM, INC. d/b/a ProteEx NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 9. INCOME TAX MATTERS AND CHANGE IN TAX STATUS (CONTINUED) During the year ended December 31, 2003, the Company recorded a valuation allowance of $(1,102,092) on the deferred tax assets to reduce the total to an amount that management believes will ultimately be realized. Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. There was no other activity in the valuation allowance account during 2003. Loss carryforwards for tax purposes as of December 31, 2003 have the following expiration dates. Amount Expiration Date State Federal 2005 $ 16,072 $ - 2006 917,943 - 2007 642,361 - 2008 1,400,620 - 2023 1,400,620 The alternative minimum tax (AMT) credit carryforward may be carried forward indefinitely to reduce future regular federal income taxes payable. There were no provisions for incomes taxes charged to the losses from operations for the years ended December 31, 2003 and 2002. The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax loss from operations for the years ended December 31, 2003 and 2002 due to the following: 2003 2002 Computed "expected" tax benefit $ 782,144 $ 336,701 (Increase) decrease in income tax resulting from: State tax net of Federal benefit 103,519 - Election to tax income to stockholders 150,163 (336,701) State NOL Carryover for prior years 70,937 - Other (4,671) - Valuation allowance (1,102,092) - $ - $ - ============ ========== 26 ADVANCED BIO/CHEM, INC. d/b/a ProteEx NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 9. INCOME TAX MATTERS AND CHANGE IN TAX STATUS (CONTINUED) The Texas franchise tax includes a component that is a tax on income. The Company was subject to this tax even during the period of time its stockholders elected to be taxed on their pro rata share of the Company's income, deductions, losses and credits. Consequently, a component of the Company's loss carryforward relate to the Texas franchise tax as shown above. NOTE 10. RELATED PARTY TRANSACTIONS The Company has notes payable to the following related parties: 2003 2002 Shareholders, unsecured, 12% interest, due May 1, 2005 $ 287,761 $ 268,413 Notes Payable to Bronco Technology, unsecured, 12% interest, due May 27, 2027 37,000 37,000 $ 324,761 $ 305,413 =========== =========== In addition, the Company incurred payables to a shareholder's 100% owned corporation, Bronco Technology, Inc.("Bronco"), resulting from payments made by Bronco on behalf of the Company for various expenses. At December 31, 2003 and 2002, the Company owed Bronco $78,703 and $80,459, respectively. 27 ADVANCED BIO/CHEM, INC. d/b/a ProteEx NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 11. MERGERS AND ACQUISITIONS On April 14, 2003, the Company and GESJ, Inc. ("GESJ"), a Texas corporation, owned by four officers of the Company, entered into an agreement and plan of merger in which GESJ merged into the Company in a tax-free exchange of shares. The Company exchanged 1,903,000 shares of its common stock for all the issued and outstanding shares of GESJ. These shares issued by the Company were subsequently cancelled in 2004. The Company continued as the surviving entity. The purpose of the merger was to acquire the management team of GESJ. GESJ had no assets or liabilities as of the merger date. The Company has not recorded the transaction as compensation to the officers involved due to the cancellation of the shares. In June 2003, the Company's directors approved a merger with Ciro International, Inc. ("Ciro"), a Nevada Corporation, whereby the Company would be the surviving entity in a reverse acquisition with Ciro, a public shell company. For accounting purposes, the combination was treated as an issuance of shares for cash by the Company and has not been considered a business combination. In May 2004, the Company sold all of its fixed assets and intellectual property to Power 3 Medical Products, Inc. ("Power 3") in exchange for 15,000,000 shares of Power 3 and the assumption of certain liabilities of the Company. NOTE 12. PRIVATE PLACEMENT OFFERINGS On March 17, 2003, the Company offered a private placement of a minimum of 500,000 shares up to a maximum of 1,000,000 of voting common stock for an offering price of $0.80 per share. 521,904 shares were issued under the private placement offering. Also on March 17, 2003, the board of directors approved a 3 for 1 reverse stock split. NOTE 13. STOCK BASED COMPENSATION Steven Rash, CEO, was granted 825,000 shares of common stock at $0.80 per share for a current period expense of $660,000. In addition pursuant to Mr. Rash's September 5, 2003 employment contract, an option agreement for an additional 200,000 shares at the exercise price of $0.80 was promised, but as yet not executed. No charge to operations has been made for the unexecuted option. 28 ADVANCED BIO/CHEM, INC. d/b/a ProteEx NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 14. MAJOR CUSTOMERS Revenues from major customers, which exceeded ten percent of total revenues, are as follows: For the Years Ended> Customer December 31, 2003 December 31, 2002 Viventia Biotech $ 177,454 $ 144,083 Memorial Health - Savannah 44,133 - University of Texas MD Anderson Cancer Center 23,500 - NOTE 15. SUBSEQUENT EVENTS On May 18, 2004, all fixed assets and intellectual property of the Company were acquired by Power 3 Medical Products, Inc. ("Power 3"), a Nevada corporation, for 15,000,000 shares of Power 3 common stock, plus employment of certain employees of the Company, and assumption of certain liabilities of the Company. Furthermore, Power 3 designated 3,000,000 shares of its Series B Convertible Preferred Stock that, voting as a class, represents a majority of the voting interest of the corporation. 1,500,000 Series B Convertible Preferred Stock were issued each to Steven B. Rash, Chairman and CEO, and Ira L. Goldknopf, Ph.D., Chief Science Officer. In the event either holder of shares of Series B Convertible Preferred Stock ceases to be an officer, director or employee of the corporation, their preferred shares automatically convert to common shares at a ratio of one common share for each preferred share. In addition, 13,250,000 shares of common stock were issued to both Steven B. Rash and Ira L. Goldknopf, Ph.D. in consideration of their executing an employment agreement with Power 3. NOTE 16. COMMITMENTS AND CONTINGENCIES An equipment vendor filed a complaint against the Company in April of 2002 in a California court alleging breach of contract and seeking damages. The Company reached a settlement agreement in April of 2003 under which the Company will pay the vendor $40,000 in installments through August 2003. The Company recorded the settlement cost of $40,000 in 2002 general and administrative expenses. At December 31, 2003, the Company had a balance remaining of $20,000, which is past due. 29 ADVANCED BIO/CHEM, INC. d/b/a ProteEx NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 17. RECENT PRONOUNCEMENTS Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 142 "Goodwill and Other Intangible Assets." Under SFAS 142, goodwill and indefinite-lived intangible assets are no longer amortized, but are reviewed for impairment annually, or more frequently if circumstances indicate potential impairment. Separable intangible assets that are not deemed to have an indefinite life will continue to be amortized over their useful lives. For goodwill and indefinite-lived intangible assets acquired prior to July 1, 2001, goodwill continued to be amortized through 2001, at which time, amortization ceased and a transitional goodwill impairment test was performed. Any impairment charges resulting from the initial application of the new rules were classified as a cumulative change in accounting principle. The initial transition evaluation was completed by June 30, 2002, which is within the six-month transition period allowed by the new standard. SFAS 142 has no impact on our financial statements. In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS 145 requires that gains or losses recorded from the extinguishment of debt that do not meet the criteria of Accounting Principles Board ("APB") Opinion No. 30 should not be presented as extraordinary items. This statement is effective for fiscal years beginning after May 15, 2002 as it relates to the reissued FASB Statement No. 4, with earlier application permitted. Any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods presented that does not meet the criteria in APB No. 30 for classification as an extraordinary item should be reclassified. SFAS 145 has no impact on our financial statements. In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity," under which a liability for an exit cost was recognized at the date of an entity's commitment to an exit plan. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized at fair value when the liability is incurred. The provisions of this statement are effective for exit or disposal activities that are initiated after December 31, 2002. SFAS 146 has no impact on our financial statements. In November 2002, the FASB issued FASB Interpretation ("FIN") 45 "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others," which elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of the guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and initial measurement provisions of this Interpretation are applied prospectively to guarantees issued or modified after December 31, 2002. The adoption of these recognition provisions will 30 ADVANCED BIO/CHEM, INC. d/b/a ProteEx NOTES TO THE FINANCIAL STATEMENTS (continued) NOTE 17. RECENT PRONOUNCEMENTS (CONTINUED) result in recording liabilities associated with certain guarantees provided by us. The disclosure requirements of this Interpretation are effective for financial statements of interim or annual periods ending after December 15, 2002. FIN 45 has no impact on our financial statements In December 2002, SFAS No. 148, "Accounting for Stock-Based Compensation -- Transition and Disclosure -- An Amendment of FASB Statement No. 123," was issued by the FASB and amends FASB Statement No. 123, "Accounting for Stock-Based Compensation." This Statement provides alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation and amends the disclosure provisions of SFAS No. 123 to require prominent disclosure about the effects on reported net income of an entity's accounting policy decisions with respect to stock-based employee compensation. Additionally, this Statement amends APB Opinion No. 28, "Interim Financial Reporting," to require disclosure about those effects in interim financial information. The transition method provisions of this Statement are effective for fiscal years ending after December 15, 2002. The interim financial reporting requirements of this Statement are effective for financial reports containing condensed financial statements for interim periods beginning after December 15, 2002. We will continue to account for this compensation in accordance with APB No. 25. We adopted the interim reporting requirements in the first fiscal period of the year ending 2003. In January 2003, the FASB issued FIN 46 "Consolidation of Variable Interest Entities," which clarifies the application of Accounting Research Bulletin ("ARB") 51, Consolidated Financial Statements, to certain entities (called variable interest entities) in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The disclosure requirements of this Interpretation are effective for all financial statements issued after January 31, 2003. The consolidation requirements apply to all variable interest entities created after January 31, 2003. In addition, public companies must apply the consolidation requirements to variable interest entities that existed prior to February 1, 2003 and remain in existence as of the beginning of annual or interim periods beginning after June 15, 2003. FIN 46 has no impact on our financial statements. In May 2003, SFAS No. 150 "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity," was issued to establish new standards for how an entity classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an entity classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of these instruments were previously classified as equity. This statement was effective when issued for financial instruments entered into or modified after May 31, 2003, and otherwise is effective for calendar year public companies for the third quarter of 2003. SFAS 150 did not have an impact on the financial statements in 2003. 31 Item 7. FINANCIAL STATEMENTS AND EXHIBITS (b) Pro forma financial information. Power3 Medical Products, Inc PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (Unaudited) The following unaudited pro forma combined condensed financial statements include the historical and pro forma effects of the acquisition of certain assets and liabilities of Advanced Bio/Chem, Inc These pro forma financial statements also include the historical and pro forma effects of the issuance of 3,000,000 shares of convertible preferred stock, 15,000,00 shares of common stock for the assets and liabilities of Advanced Bio/Chem and 37,625,000 shares of common stock to certain new employees of Advanced Bio/Chem . The following unaudited pro forma combined condensed financial statements have been prepared by our management from our historical financial statements and the historical financial statements of Advanced Bio/Chem, Inc., which are included in this form 8K/A. The unaudited pro forma combined condensed statements of operations reflect adjustments as if the transactions had occurred on January 1, 2003 and January 1, 2004. The unaudited pro forma combined condensed balance sheet reflects adjustments as if the transactions had occurred on January 1, 2004. See "Note 1 - Basis of Presentation." The pro forma adjustments described in the accompanying notes are based upon preliminary estimates and certain assumptions that management believes are reasonable in the circumstances. The unaudited pro forma combined condensed financial statements are not necessarily indicative of what the financial position or results of operations actually would have been if the transaction had occurred on the applicable dates indicated. Moreover, they are not intended to be indicative of future results of operations or financial position. The unaudited pro forma combined condensed financial statements should be read in conjunction with our historical financial statements and Advanced Bio/Chem, Inc Inc. and related notes thereto, which are included in this form 8K/A. 32 POWER 3 MEDICAL PRODUCTS, INC. and ADVANCED BIO/CHEM, INC. PROFORMA COMBINED CONDENSED BALANCE SHEETS March 31, 2004 (Unaudited) Power 3 Medical Advanced ProForma ProForma ASSETS Products, Inc. Bio/Chem, Inc. Adjustments Totals CURRENT ASSETS Cash $ 105 $ 1,956 $ (1,956)(a) $ 105 Accounts receivable 971 5,130 (5,130)(a) 971 Prepaid expenses - 2,978 (2,978)(a) - Total Current Assets $ 1,076 $ 10,064 $ (10,064) $ 1,076 PROPERTY AND EQUIPMENT, net of accumulated depreciation $ - $ 144,259 $ - $ 144,259 OTHER ASSETS Deposits $ - $ 2,968 $ (2,968)(a) $ - Patents, net of amortization - 17,004 - 17,004 Total other assets $ - $ 19,972 $ (2,968)(a) $ 17,004 TOTAL ASSETS $ 1,076 $ 174,295 $ (13,032) $ 162,339 ============= ============== ============ ============ LIABILITIES AND STOCKHOLDERS' (DEFICIT) CURRENT LIABILITIES: Accounts payable and accrued and other liabilities $ 860,463 $ 844,790 $ (585,040)(a) $ 1,120,213 Bank line of credit - 149,938 (149,938)(a) - Due related parties - 187,065 (187,065)(a) - Stockholder advances 123,263 - - 123,263 Notes payable related party 54,500 - - 54,500 Accrued interest on notes payable - 298,510 (298,510)(a) - Accrued interest on notes to related parties - 69,789 (69,789)(a) - Current maturities of long-term debt - 231,432 (231,432)(a) - Other notes payable 25,000 - - 25,000 Deferred revenues - - - - Total current liabilities $ 1,063,226 $ 1,781,524 $(1,521,774) $ 1,322,976 LONG-TERM DEBT: Notes payable to stockholders and related parties $ - $ 324,761 $ (324,761)(a) $ - Notes payable, net of current maturities - 702,085 (702,085)(a) - Total long-term debt $ - $ 1,026,846 $(1,026,846) $ - Total liabilities $ 1,063,226 $ 2,808,370 $(2,548,620) $ 1,322,976 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' (DEFICIT) Preferred Stock, $0.001 par value, 50,000,000 shares authorized Series A, Convertible Preferred Stock, 3,870,000 shares issued and outstanding with a liquidation value of $387,000 $ 3,870 $ - $ - $ 3,870 Series B, Convertible Preferred Stock, 3,000,000 shares issued and outstanding with a liquidation value of $300,000 3,000 (b) 3,000 Common stock $0.001 par value, 150,000,000 shares authorized; 2,442,830 shares issued and outstanding 8,442 - 15,000 (c) 23,442 Common stock $0.001 par value, 50,000,000 shares authorized; 37,625 (d) 37,625 authorized; 11,111,338 shares issued and outstanding - 11,111 (11,111)(c) - Common stock subscribed 505 415,000 - 415,505 Additional paid-in capital 9,428,163 1,409,072 2,535,588 (a) 49,890,809 2,697,000 (b) (3,889)(c) 33,824,875 (d) Deferred stock compensation (675,000) - 675,000 (e) - Deficit (9,828,130) (4,469,258) (2,700,000)(b) (51,534,888) (33,862,500)(d) - - (675,000)(e) - Total stockholders' deficit (1,062,150) (2,634,075) 2,535,588 (1,160,637) TOTAL LIABILITIES and SHAREHOLDERS' DEFICIT $ 1,076 $ 174,295 $ (13,032) $ 162,339 ============= ============== ============ ============ SEE NOTES TO PROFORMA CONDENSED FINANCIAL STATEMENTS 33 POWER 3 MEDICAL PRODUCTS, INC. and ADVANCED BIO/CHEM, INC. PROFORMA COMBINED CONDENSED STATEMENT OF OPERATIONS For the three months ended March 31, 2004 (Unaudited) Power 3 Medical Advanced ProForma ProForma Products, Inc. Bio/Chem, Inc. Adjustments Totals REVENUES $ 11,491 $ 137,837 $ - $ 149,328 COSTS OF REVENUES 5,173 - - 5,173 GROSS PROFIT $ 6,318 $ 137,837 $ - $ 144,155 OPERATING EXPENSES Production costs $ - $ - $ - $ - Stock based compensation 225,000 - 2,700,000 (b) 37,462,500 33,862,500 (d) 675,000 Selling, general and administrative expenses 161,557 142,185 - 303,742 Depreciation and amortization - 23,312 - 23,312 Total operating expense $ 386,557 $ 165,497 $ 37,237,500 $ 37,789,554 LOSS FROM OPERATIONS $ (380,239) $ (27,660) $(37,237,500) $(37,645,399) OTHER INCOME (EXPENSE): Other income $ - $ - $ - (a)$ - Interest expense (1,514) (51,624) - (53,138) Total other income (expense) $ (1,514) $ (51,624) $ - $ (53,138) NET LOSS $ (381,753) $ (79,284) $(37,237,500) $(37,698,537) ============== ============= ============= ============= LOSS PER SHARE $(0.051) $(0.007) $(0.627) ============== ============= ============= AVERAGE SHARES OUTSTANDING 7,453,800 11,111,328 60,078,000 ============== ============= ============= SEE NOTES TO PROFORMA CONDENSED FINANCIAL STATEMENTS 34 POWER 3 MEDICAL PRODUCTS, INC. and ADVANCED BIO/CHEM, INC. PROFORMA COMBINED CONDENSED STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 (Unaudited) Power 3 Medical Advanced ProForma ProForma Products, Inc. Bio/Chem, Inc. Adjustments Totals REVENUES $ 45,874 $ 278,114 $ - $ 323,988 COSTS OF REVENUES - - - - GROSS PROFIT $ 45,874 $ 278,114 $ - $ 323,988 OPERATING EXPENSES Production costs $ 21,273 $ - $ - $ 21,273 Stock based compensation 1,695,000 - 2,700,000 (b) 38,932,500 33,862,500 (d) 675,000 (e) Selling, general and administrative expenses 558,657 2,265,222 - 2,823,879 Depreciation and amortization - 93,273 - 93,273 Total operating expense $ 2,274,930 $ 2,358,495 $ 37,237,500 $ 41,870,925 LOSS FROM OPERATIONS $ (2,229,056) $ (2,080,381) $(37,237,500) $(41,546,937) OTHER INCOME (EXPENSE): Other income $ 402,709 $ - $ - $ 402,709 Interest expense (19,149) (220,042) - (239,191) Total other income (expense) $ 383,560 $ (220,042) $ - $ 163,518 NET LOSS $ (1,845,496) $ (2,300,423) $(37,237,500) $(41,383,419) ============== ============== ============= ============= LOSS PER SHARE $(1.81) $(0.207) $(0.751) ============== ============== ============= AVERAGE SHARES OUTSTANDING 1,017,000 11,111,338 55,067,830 ============== ============== ============= SEE NOTES TO PROFORMA CONDENSED FINANCIAL STATEMENTS 35 Power3 Medical Products, Inc. NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION The accompanying unaudited pro forma combined condensed statements of operations present the our historical results of operations for the twelve months ended December 31, 2003 and Advanced Bio/Chem, Inc. for the period January 1, 2004 to March 31,, 2004 with pro forma adjustments as if the transaction had taken place on January 1, 2003 AND January 31, 2004. The unaudited pro forma combined condensed balance sheet presents the historical balance sheets as of March 31, 2004, with pro forma adjustments as if the transaction had been consummated as of January 1, 2004 in a transaction accounted for as a purchase in accordance with accounting principles generally accepted in the United States of America. Certain reclassifications have been made to the historical financial Statements to conform to the pro forma combined condensed financial statement presentation. 2. PRO FORMA ADJUSTMENTS The following adjustments give pro forma effect to the transaction: (a) To record the effects of the acquisition of only certain assets and liabilities of Advanced Bio/Chem by Power3 Medical Products, Inc. (b) To record the issuance of 3,000,000 shares of Series B Convertible Preferred Stock by Power3 Medical Products, Inc. to consultants at $0.90 oer share (based on market value of shares on date of grant): Series B Convertible Preferred Stock $ 3,000 Additional paid in capital 2,697,000 Stock Based Compensation (2,700,000) $ - ============ (c) To record the issuance of 15,000,000 shares of Power3 Medical Common Stock to acquire certain assets and liabilities of Advanced Bio/Chem, Inc: Power3 Common Stock $ 15,000 Advanced Bio/Chem Common Stock (11,111) Additional Paid in Capital (3,889) $ - ========= (d) To record the issuance of 37,525,000 shares of Power3 Medical Common Stock to certain new employees of Power3 Medical at $0.90 per share (based on market value of shares at date of grant): Power3 Common Stock $ 37,625 Additional Paid in Capital 33,824,875 Stock Based Compensation (33,862,000) $ - ============= (e) To record termination of consulting agreement: Additional Paid in Capital $ 675,000 Stock Based Compensation (675,000) $ - =========== 36
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8-K/A Filing
Power 3 Medical Products (PWRM) Inactive 8-K/AAcquisition or disposition of assets
Filed: 3 Aug 04, 12:00am