**U.S. SECURITIES AND EXCHANGE COMMISSION**
 **Washington, D.C. 20549**
 
 **Form 10-QSB/A**
 **[Amendment No. 1]**
 
 
 **[x] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934**
 
 For the quarterly period ended September 30, 2004
 
 **[ ] Transition Report under Section 13 or 15(d)of the Exchange Act For the Transition Period from ________ to ___________**
 
 
 Commission File Number: 000-30646
 
 
 Industrial Enterprises of America, Inc.
 (formerly known as Advanced Bio/Chem, Inc.)
 (Exact name of registrant as specified in its charter)
 
 
 
 Nevada    13-3963499
 (State or jurisdiction of incorporation  (I.R.S. Employer Identification No.)
 or organization)
 
 770 South Post Oak Lane, Suite 330  **** Houston, Texas  77056
 (Address of principal executive offices)   (Zip Code)
 (713) 622-2875
 (Registrants telephone number, including area code)
 
 
 Ciro International, Inc., 445 Fifth Avenue, Suite 11A, New York, New York 10016
 (Former name, former address and former fiscal year, if changed since last report)
 
 Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or 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 [ ] No [X]
 
 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
 PROCEEDING DURING THE PRECEDING FIVE YEARS
 
 Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]
 
 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.
 
 As of October 15, 2004, 21,015,250 shares of the registrants Common Stock were outstanding.
 
 
 Transitional Small Business Disclosure Format (Check one): Yes [ ]  No [x]
 
     
 
 **Explanatory Note**
 
 The purpose of this Amendment No. 1 to the Quarterly Report on Form 10-QSB/A of Industrial Enterprises of America, Inc. (formerly Advanced Bio/Chem, Inc.) (the Company) for the quarterly period ended September 30, 2004 is to restate the Companys financial statements for the nine months ended September 30, 2004, as described in Note 2 to the financial statements. Additional information about the decision to restate these financial statements can be found in the Companys Current Report on Form 8-K, filed with the Securities and Exchange Commission (SEC) on January 21, 2005.
 
 The Company has not otherwise modified or updated other disclosure presented in the original report on Form 10-QSB, except (i) as required to reflect the effects of the restatement. The Form 10-QSB/A does not reflect events occurring after the filing of the Form 10-QSB or modify or update those disclosures. Information not affected by the restatement is unchanged and reflects the disclosures made at the time of the original filing of the Form 10-QSB on January 3, 2005. The following items have been amended as a result of the restatement: (A) Part I- Item 1- Financial Statements; and (B) Part I- Item 2- Managements Discussion and Analysis of Financial Condition and Results of Operations.
 
 ***Description of Restatement***
 
 On May 18, 2004, all of the Companys fixed assets and intellectual property were acquired by Power3 Medical Products, Inc. (Power3), a New York corporation, for 15,000,000 restricted shares of Power3 common stock, plus the employment of certain of the Companys employees, and assumption of certain liabilities of the Company. The Company has restated the financial statements for the nine months ended September 30, 2004 due to a change in accounting estimate in recording the sale of its operating asset at a substantial gain instead of recording the transaction as an exchange of assets at the book value. The effect of the change required a restatement of the financial statements in order to reflect the valuation change in asset value and the related adjustment to discontinuance of operations. The effect of this change was to increase the net loss for the period then ended by $9,075,495.
 
       
 
 **Table of Contents**
 
 
 **Page**Recent Developments.
1**Part I**Item 1. Financial Statements...
3Item 2. Managements Discussion and Analysis or Plan of Operations
4Item 3. Controls and Procedures.....
6**Part II**Item 1. Legal Proceedings....
7Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
7Item 3. Defaults Upon Senior Securities..
7Item 4. Submission of Matters to a Vote of Security Holders
7Item 5. Other Information
7Item 6. Exhibits....
7
 
 
 
 ***Recent Developments***
 
 **Name Change and Adoption of Amended and Restated Bylaws**
 
 Effective as of December 9, 2004, Advanced Bio/Chem, Inc., a Nevada corporation, formerly Ciro International, Inc. , amended its Articles of Incorporation to change its name from Advanced Bio/Chem, Inc. to Industrial Enterprises of America, Inc. by filing a Certificate of Amendment with the Secretary of State of the State of Nevada.
 
 Effective as of December 9, 2004, the Board of Directors of the Company adopted the Companys Amended and Restated Bylaws. The Board of Directors desired to amend the existing bylaws mainly due to the fact that such bylaws were adopted by the Companys predecessor, Mid-Way Medical and Diagnostic Center, Inc., in 1997.
 
 **Sale to Power3 Medical Products, Inc.**
 
 In May 2004, the Company entered into an Asset Purchase Agreement (the Agreement), among the Company, Power3, and Steven B. Rash and Ira Goldknopf (collectively, the "Shareholders"). The sale was approved by the Companys shareholders by proxy. As provided in the Agreement, the Company sold to Power3 all of the Companys assets in consideration for 15,000,000 shares of the common stock, par value $.001 per share, of Power3. The assets disposed of by the Company included all tangible personal property, intellectual property, rights in contracts that the Company is a party to, along with intangible property, including goodwill. In consideration for the benefits that they received by virtue of the transaction, each of the Shareholders agreed to make the representations, warranties, and indemnifications in the Agreement jointly and severally, along with the Company, and each of the Shareholders agreed to enter into and be bound by a Non-Competition Agreement and an Employment Agreement containing, among other things, covenants respecting confidentiality, non-competition and non-solicitation. The terms of the Agreement were determined by arms' length negotiations between the parties.
 
 **Appointment of New Directors and Officers**
 
 In May 2004, Steven B. Rash, the Companys Chief Executive Officer, and Ira Goldknopf, the Companys Chief Science Officer, resigned. In July 2004, the sole director of the Company, Helen Park, resigned and Crawford Shaw was appointed as sole director, President and Chief Executive Officer. The Companys current management has no information as to the departure or service of Eric Becker and Gene Thomas. The Company will continue to research to see if such information is available. In August 2004, John Mazzuto and Michael Collyer were appointed as directors to fill the vacancies on the Board of Directors. On October 15, 2004, the Board of Directors elected Crawford Shaw as the Companys Chairman of the Board, Chief Executive Officer and President, John D. Mazzuto as Vice Chairman of the Board, Chief Financial Officer and Assistant Secretary, Michael Collyer as Secretary and General Counsel, Dennis ONeill as Controller and Ilene Engelberg as Assistant Controller. Unfortunately, Mr. Collyer, a director, member of the Companys Compensation Committee and the Companys Secretary and General Counsel, passed away on December 15, 2004.
 
 
  1   **2004 Stock Option Plan**
 
 In August 2004, the Companys Board of Directors approved the adoption of the 2004 Stock Option Plan. The 2004 Stock Option Plan permits the grant of (i) options exercisable for shares of the Companys common stock, (ii) stock appreciation rights entitling the recipient to receive cash or shares of our common stock and (iii) restricted shares of our common stock to our officers and other employees, outside directors and consultants, upon such terms, including exercise price and conditions and vesting schedule, as may be determined by the Compensation Committee of our Board of Directors. The plan authorizes the granting of awards of up to a maximum of 15,000,000 shares of the Companys common stock.
 
 **Purchase of EMC Packaging, Inc.**
 
 In October 2004, the Company purchased all of the issued and outstanding capital stock (the EMC Shares) of EMC Packaging, Inc., a Delaware corporation (EMC), from the holders of all of the issued and outstanding capital stock of EMC (the EMC Stockholders). On the effective date of the purchase of the EMC Shares, EMC became the Companys wholly owned subsidiary. In consideration for their EMC Shares, the EMC Stockholders received an aggregate of 2,296,800 shares of the Companys common stock.
 
 
 **Departure of Independent Auditors and Retention of New Independent Auditors**
 
 The independent auditors of Ciro International, Inc., Lazar Levine and Felix LLP, predecessor auditor of the legal acquirer, for accounting purposes, in a reverse merger, resigned as the independent auditors of Ciro International, Inc. effective December 7, 2004 because such auditors had no dealings with the Company since July 24, 2003. In October 2003, the Company filed a Form 15 with the Securities and Exchange Commission (the Commission) under Rule 12g-4(a)(1)(i) **** of Securities Exchange Act of 1934, as amended (the Exchange Act), electing to become a non-reporting company on the basis that its common stock was held by fewer than 300 persons. On February 28, 2003, the board of directors of Advanced Bio/Chem, Inc., a Texas corporation (ABC Texas), approved the retention of Fitts, Roberts & Co., P.C to audit the financial statements of ABC Texas for the years ended December 31, 2002 and 2001. On June 3, 2004, the board of directors of ABC Texas again approved the retention of Fitts, Roberts & Co., P.C. to audit the financial statements of ABC Texas for the year ended December 31, 2003. On December 29, 2004, Fitts, Roberts & Co., P.C. informed the Company that it would not stand for reelection as the Companys independent auditors. The Company received certain observations from Fitts, Roberts & Co., P.C., including, but not limited to, the following: (i) the Company lacks specific policies and a procedure guide; (ii) the separation of duties to support internal controls is lacking; (iii) there is poor documentation and a lack of trained accounting staff; and (iv) the Company has a lack of reconciliation of accounts and has a number of audit adjusting journal entries. On December 9, 2004, the Companys Board of Directors approved the retention of Beckstead and Watts, LLP as the Companys independent auditors going forward. There have been no disagreements with any of the Companys independent auditors to the knowledge of the Companys Board of Directors.
 
 
  2   **2004 Private Placement**
 
 In September 2004, the Company offered and sold an aggregate of 1,000,000 shares of its common stock to several accredited investors for $0.05 per share. The purchasers in this private placement represented his or her intention to acquire the securities for investment only and not with a view toward distribution. These securities were not sold through an underwriter and there were no underwriting discounts or commissions involved. These sales and purchases in the private placement were exempt from registration under the Securities Act of 1933, as amended (the Securities Act) and the regulations promulgated thereunder, on the basis that the private placement did not involve a public offering.
 
 
 **Item 1. Financial Statements.**
 
 ***Critical Accounting Policies***
 
  The Company believes that the following critical accounting policies reflect its more significant judgments and estimates used in the preparation of its consolidated financial statements:
  
 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. Revenue recognition, in part, depends on managements assessment of when services are deemed completed.
 
 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. Management has determined as of December 31, 2003 that it is not probable that the Company will realize a future tax benefit from its deferred tax assets.
 
 
 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. Management exercises judgment in its determination of when significant non-cash stock transactions have occurred.
 
 Please see the Financial Statements beginning on page F-1 **.**
 3   **Item 2. Managements Discussion and Analysis or Plan of Operations.**
 
 **Restatement of financial statements due to a change in accounting estimate**
 
  The Company determined that it should restate the financial statements for the nine months ended September 30, 2004, due to a change in accounting estimate in recording the sale of its operating assets at a substantial gain instead of recording the transaction as an exchange of assets at book value. (See Footnotes 7and 8) The effect of the change required a restatement of the September 30, 2004, financial statements in order to reflect the valuation change in asset value and the related adjustment to discontinuance of operations. The effect of this change was to increase the net loss for the period then ended by $9,075,495.
  
 **Note Regarding Ciro and ABC Texas**
 
 The Companys discussion and analysis of its financial condition for the nine months ended September 30, 2004 treats the assets of Ciro International Inc. (the Companys predecessor (Ciro), as existing prior to the merger (the Merger) between Ciro Acquisition Corp., a Texas corporation and a wholly owned subsidiary of Ciro formed for purposes of the Merger (Ciro Acquisition), and ABC Texas, consummated pursuant to an Agreement and Plan of Merger (the Merger Agreement) among Ciro, Ciro Acquisition (which was inappropriately identified in the Merger Agreement as Advanced Bio/Chem Acquisition Corp. and ABC Texas, on their own, as immaterial, as illustrated in the Companys unaudited financial statements contained herein. Under the Merger Agreement, Ciro Acquisition merged with and into ABC Texas in a tax free exchange of shares at which time ABC Texas became a wholly owned subsidiary of Ciro. Prior June 12, 2003, the effective date of the Merger, Ciro was in essence a shell company since, as of December 31, 2002, all licenses issued by the Company expired. Following the effectiveness of the Merger, the Company became a holding company for ABC Texas and all of the Companys assets consisted of the assets of ABC Texas. As a result, comparisons of the three months ended March 31, 2004 and 2003 are solely of ABC Texas.
 
 Cash
$ 3,796Accounts receivable - trade
5,785Equipment, net of accumulated depreciation
128,881Patents, net of accumulated amortization
16,844Leasehold security deposit
2,968Total Assets disposed of
$ 158,274Capital leases
147,639Accounts payable
80,437Accrued expenses
31,675Total Liabilities disposed of
$ 259,751Liabilities due to discontinued operations
$(101,477)
 
 *Results of Operations*
 
 On May 11, 2004, by unanimous consent of the Board of Directors and a majority of the shareholders of the Company, the Company entered into an Asset Purchase Agreement with Power 3 Medical Products, Inc selling substantially all of the Companys operations, and operating assets. Effective May 18, 2004, the purchase agreement was finalized and the assets and certain liabilities were acquired by Power 3 for 15,000,000 shares of common stock of Power 3. The transaction is recognized as a related party transaction and was recorded as an exchange  4    of assets at the book value of the fixed and intellectual properties for the restricted shares. (See financials footnote Note 8 - Mergers and Acquisitions for further details.)
 The operating results of this discontinued operation for the period ended May 17, 2004, consisted of the following:
 
 Revenues
$ 141,362Operating expenses
(355,974)Interest expense
( 58,221)Net (loss)
$(272,884)
 
 
 As a result of this transaction, the Company recorded a net gain of $245,389 for the nine months ending September 30, 2004. In addition the Company has reflected its investment in the 15,000,000 Power 3 restricted shares at $145,725 or $0.01 per share as at May 17, 2004.
 
 Loss from operations (including discontinued) for the nine months ended September 30, 2004 was $(493,386) compared to a loss of $(1,835,430) in the same period in 2003. The decrease is attributed to decreased salaries and contract labor.
 
 Loss from operations for the three months ended September 30, 2004 was $(117,091) compared to a loss of $(1,244,566) in the same period in 2003. The decrease being attributed to decreased expenses since the sale of operations.
 
 Included in the three and nine month amounts in 2003 was a current period expense of $660,000 for the stock grant of 825,000 shares (at $0.80 per share) to the former CEO of the Company. In addition, an additional 200,000 shares (at $0.80 per share) was promised under an option agreement entered into on September 5, 2003 but not yet executed; nor are they anticipated to be executed since the officer is no longer employed by the Company.
 
 Net loss from continuing operations for the three and nine months ended September 30, 2004 amounted to $(117,091) and $(220,502), respectively, representing continuing selling, general and administrative expenses ($66,628) and ($121,511), respectively associated with the sale; and, interest expense ($50,463) and ($98,991), respectively on continuing debt obligations.
 
 Net (loss) income for the three and six months ended September 30, 2004 was $(117,091) and $(247,996). The nine-month amount includes the net gain on the sale of discontinued operations discussed above.
 
 Net (loss) income per share basic and diluted for the three and nine months ended September 30, 2004 was $(0.01) and $(0.02) per share, respectively, compared to $(0.15) and $(0.25) in the same respective periods in 2003. The earnings per share include the gain on the sale of discontinued operations of $(0.02) for the nine months ended September 30, 2004.
 
 *Liquidity and Capital Resources*
 
 The Company had a working capital deficit of $(1,488,427) as at September 30, 2004. This compares to a working capital deficit of $(1,977,216) at the fiscal year end, December 31, 2003. The majority of the increase in the deficit is attributed to the asset sale described above
 5
 Net cash provided by operations for the nine months ended September 30, 2004 was a negative $(551,966) compared to a negative cash flow in the same period in 2003 of $(567,503).
 
 The Company obtained funds to operate in the nine months ended September 30, 2004 from the issuance of common stock in the amount of $405,000 and increased notes payable to shareholders and related parties of $200,000.
 
 CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
 
 It should be noted that in this Management's Discussion and Analysis or Plan of Operations contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Exchange Act and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The terms "believe", "anticipate", "intend", "goal", "expect" and similar expressions may identify forward-looking statements. These forward-looking statements represent the Company's current expectations or beliefs concerning future events. The matters covered by these statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including the Company's dependence on weather-related factors, introduction and customer acceptance of new products, the impact of competition and price erosion, as well as supply and manufacturing constraints and other risks and uncertainties. The foregoing list should not be construed as exhaustive, and the Company disclaims any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements, or to reflect the occurrence of anticipated or unanticipated events. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.
 
 **Item 3. Controls and Procedures.**
 
 ***Evaluation of Disclosure Controls and Procedures***
 
 The Company's Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period being reported (the "Evaluation Date"), have concluded that as of the Evaluation Date, the Company's disclosure controls and procedures were not effective in ensuring that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Such officers reached this conclusion because the Companys records, prior to the recent change in management, had not been maintained and processed to meet both financial reporting and other Commission disclosure needs and requirements. Management has reviewed the recommendations set forth in a letter from the Companys auditors and have set March 30, 2005 as a deadline to bring the Companys disclosure controls and procedures in line with such recommendations. The Companys independent auditors have made a number of recommendations including, but not limited to, the following: (i) the Company should improve accounting controls through the formalization of accounting practices through promulgation of accounting policies and procedures, and (ii) additional recommendations related to improving internal controls through the separation of duties within the accounting function. Management has hired outside consultants to help with this process.
 6
  ***Changes in Internal Controls***
 
 No significant changes in the Company's internal controls or in other factors that could significantly affect these controls following the date of evaluation came to management's attention.
 
 **PART II**
 **Item 1. Legal Proceedings.**
 
 As of September 30, 2004, the Company was neither a party nor were any of its properties subject to any legal proceedings.
 
 **Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.**
 
 The following sets forth information relating to all sales of our common stock during the quarter ended September 30, 2004, which sales were not registered under the Securities Act.
 
 During the quarter ended September 30, 2004, the Company offered and sold an aggregate of 3,193,475 shares of its common stock to several accredited investors and for accrued interest and services for between $0.002 and $1.625 per share. The purchasers in this private placement represented his or her intention to acquire the securities for investment only and not with a view toward distribution. These securities were not sold through an underwriter and there were no underwriting discounts or commissions involved. These sales and purchases in the private placement were exempt from registration under the Securities Act and the regulations promulgated thereunder, on the basis that the private placement did not involve a public offering.
 
 Other than the securities mentioned above, the Company did not issue or sell any securities during the quarter ended September 30, 2004.
 
 **Item 3. Defaults Upon Senior Securities.**
 
 None.
 
 **Item 4. Submission of Matters to a Vote of Security Holders.**
 
 None
 
 **Item 5. Other Information.**
 
 Please see Recent Developments on page 1.
 
 **Item 6. Exhibits.**
 
 ***Exhibit Index***
 
 31.1
Certification of the Principal Executive Officer pursuant to Rule 13a-14(a).31.2
Certification of the Principal Financial Officer pursuant to Rule 13a-14(a).32.1
Section 1350 Certification of the Chief Executive Officer.32.2
Section 1350 Certification of the Chief Financial Officer.
  7   **Signatures**
 
 In accordance with the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 **Industrial Enterprises of America, Inc** .
 (Registrant)
 
 Dated: January 21, 2005
 By: /s/ John D. Mazzuto
 John D. Mazzuto, Chief Financial
 Officer, Vice Chairman of the Board, Assistant Secretary and a Director
 
 
 Dated: January 21, 2005
 By: /s/ Crawford Shaw
 Crawford Shaw, Chief Executive Officer, Chairman of the Board, President and a Director
 
 
 Dated: January 21, 2005
 By: /s/ Dennis ONeill
 Dennis ONeill, Controller
 
 
   8    **ADVANCED BIO/CHEM, INC.**
 **Balance Sheet**
 **September 30, 2004**
 **(Unaudited)**
 ASSETSCurrent AssetsCash


$ 36,690Total Current Assets
36,690Investment in common stock
145,725TOTAL ASSETS


$ 182,415LIABILITIES & SHAREHOLDERS' DEFICITCurrent LiabilitiesLitigation settlement payable
$ 20,000Current maturities of long term debt
157,916Liabilities due to discontinued operations
211,753Credit card debt - related parties
99,204Bank line of credit
122,510Accounts payable
225,896Accrued salaries, benefits and severance pay
158,666Accrued interest
296,397Accrued interest to shareholders and related parties
128,214Related party payable
76,832Lease payables
22,906Contractor payable
4,823Total Current Liabilities
$ 1,525,117Long Term LiabilitiesNotes payable, net of current maturities
591,843Notes payable related parties and shareholders
626,844Total Long Term Liabilities
$ 1,218,687Total Liabilities

$ 2,743,804Shareholders' DeficitCommon stock, $0.001 par value,50,000,000 shares authorized,18,577,750 shares issued and outstandingat September 30, 2004
18,578Additional paid-in capital
2,007,687Subscribed stock
50,000Retained (deficit)
(4,637,653)Total Shareholders' Deficit
$ (2,561,389)TOTAL LIABILITIES & SHAREHOLDERS' DEFICIT
$ 182,415
 
 
 The accompanying notes are an integral part of these financial statements
F-1
 **ADVANCED BIO/CHEM, INC.**
 **Statement of Operations**
 **(Unaudited)**
 
 **Three Months Ended**

**Nine Months Ended****September 30, 2004**

**September 30, 2003**

**September 30, 2004**

**September 30, 2003**Revenues




$ -

$ 25,399

$ 141,362

$ 217,193Expenses:Selling, general & administrative
54,401

79,807

156,698

140,167Salaries and contract labor
11,728

1,029,094

231,476

1,514,333Depreciation and amortization
-

23,318

38,690

69,955Legal and professional fees
500

83,497

50,672

175,974Total Expenses


$ 66,628

$ 1,215,716

$ 477,536

$ 1,900,429(Loss) from operations
$ (66,628)

$ (1,190,317)

$ (336,174)

$ (1,683,236)Interest expense


50,463

54,249

157,212

152,194Net (Loss) from operations before discontinued operations
$ (117,091)

$ (1,244,566)

$ (493,386)

$ (1,835,430)Gain on discontinued operations
-

-

245,389

-Net income (loss)


$ (117,091)

$ (1,244,566)

$ (247,996)

$ (1,835,430)Net income (loss) before discontinued operationsper share - basic and diluted
$ (0.01)

$ (0.15)

$ (0.03)

$ (0.25)Gain on discontinued operationsper share - basic and diluted
-

-

0.02

-Net income (loss) per share basic and diluted
$ (0.01)

$ (0.15)

$ (0.02)

$ (0.25)Weighted average number of common shares outstanding
15,186,421

8,543,818

15,786,421

7,374,066 
 
 
 The accompanying notes are an integral part of these financial statements
F-2
 **ADVANCED BIO/CHEM, INC.**
 **Statement of Cash Flows**
 **(Unaudited)**
 
 **Nine Months Ended****September 30, 2004**

**September 30, 2003**Net income (loss)
$ (247,996)

$ (1,835,430)Net changes in working capital accounts
(58,580)

1,267,927Gain on discontinued operations
(245,389)

-Financing activitiesBank overdraft
(7,498)

-Proceeds from bank line of credit
19,590

44,291Payments towards bank line of credit
(28,230)

(45,252)Proceeds from issuance of debt
-

55,000Principal payments on notes payable
(207)

(19,558)Proceeds from note payable shareholders and related parties
200,000

100Issuance of common stock
505,000

548,000Stock subscriptions
(100,000)

-Net cash provided by Financing Activities
$ 588,656

$ 582,581Net cash increase for period
$ 36,690

$ 15,078Cash at beginning of period
-

19,175Cash at end of period
$ 36,690

$ 34,253SUPPLEMENTAL DISCLOSURES RELATED TO CASH FLOWS:Interest paid
$ 57,985

$ 58,827SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:Debt converted to common stock
$ 81,675

$ 10,000Accrued interest converted to stock
$ 40,217

$ 2,487Accrued interest - notes payable capitalized
$ -

$ 13,354Accrued interest - notes payable shareholders capitalized
$ -

$ 19,248Stock issued for services
$ 7,500

$ 660,000
 
 
 The accompanying notes are an integral part of these financial statements
F-3    **Advanced Bio/Chem, Inc.**
 **Notes to Interim Financial Statements**
   **Note 1 - Basis of presentation**
 
 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. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
 Effective April, 2003, the Company elected to file as a non-reporting entity in accordance with Rule 12g-4 of the Securities Exchange Act of 1934. The Company has currently elected to reinstate as a filing entity and, as such, reference to year-end financial statements should be referred to the Companys Form 10-KSB for the fiscal year ended December 31, 2003.
 
 The condensed financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.
 
 These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is recommended that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Companys 2003 Form 10-KSB.
 
 Results of operations for the interim periods are not indicative of annual results.
 
 **Note 2 - Restatement of financial statements due to a change in accounting estimate**
 
  The Company determined that it should restate the financial statements for the nine months ended September 30, 2004, due to a change in accounting estimate in recording the sale of its operating assets at a substantial gain instead of recording the transaction as an exchange of assets at book value. (See Footnote 8 - Mergers and Acquisitions.) The effect of the change required a restatement of the September 30, 2004, financial statements in order to reflect the valuation change in asset value and the related adjustment to discontinuance of operations. The effect of this change was to increase the net loss for the period then ended by $9,075,495 from the previously filed statements.
  
 **Note 3 - Earnings per share**
 
 Basic earnings per share (EPS) includes dilution and is determined by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding. Diluted EPS reflects the potential dilution that could occur if options and other contracts to issue shares of common stock were exercised or converted into common stock. There are warrants to issue an additional 600,000 shares as of September 30, 2004, and no warrants or options as of September 30, 2003. None of the warrants have been exercised as of September 30, 2004.
  F-4   **Advanced Bio/Chem, Inc.**
 **Notes to Interim Financial Statements**
  
 **Note 4 - Stock based compensation**
 
 As permitted under generally accepted accounting principles, stock-based awards granted to employees are accounted for following APB 25. Accordingly, the Company has not recognized compensation expense for its stock-based awards to employees. Outlined below are pro forma results had compensation costs for the Companys stock-based compensation plans been determined based on the fair value approach of SFAS 123.
 
 For the Three Months Ended
 September 30
 2004

2003Net income (loss), as reported
$(117,091)

$(1,244,566)Less compensation cost determined under the fair value method
-

-Pro forma net income (loss)
$(117,091)

$(1,244,566
 
 Basic and dilutive (loss) per share:As reported
$ (0.01)

$ (0.15)Pro forma
$ (0.01)

$ (0.15)
 
 For the Nine Months Ended
 September 30
 2004

2003Net income (loss), as reported
$(247,996)

$(1,835,430)Less compensation cost determined under the fair value method
-

-Pro forma net (loss)
$8(247,996)

$(1,835,430)
 
 Basic and dilutive (loss) per share:As reported
$ (0.02)

$ (0.25)Pro forma
$ (0.02)

$ (0.25)
 
 These pro forma amounts may not be representative of future disclosures since the estimated fair value of stock options is amortized to expense over the vesting period and options may be granted in future years.
 
 Steven Rash, former CEO, was granted 825,000 shares of common stock at $0.80 per share for a charge of $660,000 against operations for the quarter ended September 30, 2003. 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 current operations has been made for the unexecuted option. These options are not anticipated to be executed.
 
 Kamy Behzadi, former Vice-President Product and Business Development, was granted 500,000 shares of common stock on May 13, 2004, for a charge of $500 against operations for the quarter ended June 30, 2004. Mr. Behzadi resigned from the Company effective May 16, 2004, and accepted a similar position with Power 3 Medical Products, Inc. (See additional footnote disclosure for Power 3 at Footnote 8, Mergers and Acquisitions.)
 
 Disclosures required by Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), including pro forma operating results had the Company prepared its financial statements in accordance with the
 F-5 fair value based method of accounting for stock- based compensation prescribed therein are shown below. Exercise prices and weighted-average contractual lives of stock options outstanding as of September 30, 2004 are as follows:
 
 Options Outstanding

Options ExercisableWeighted Average

Weighted Average



Weighted AverageExercise Prices

Number Outstanding

Remaining Contractual Life

Exercise Prices

Number Exercisable

Exercise Price$0.50

600,000

4.25

$0.50

600,000

$0.50 
 Summary of Options Granted and Outstanding:
 
 For the nine months ended September 302004

2003Shares

Weighted Average Exercise Price

Shares

Weighted Average Exercise PriceOptions:Outstanding at beginning of period

-

$ -

-

$ -Granted

600,000

$ 0.50

-

$ -Cancelled

-

$ -

-

$ -Outstanding at end of period

600,000

$ 0.50

-

$ - 
 The following table summarizes the pro forma operating results of the Company for September 30, 2004 had compensation costs for the stock options granted to employees been determined in accordance with the fair value based method of accounting for stock based compensation as prescribed by SFAS No. 123.
 
 Proforma net income (loss) available to common stockholders  $ (247,996)
 
 Proforma basic and diluted loss per share    $ (0.02)
 
 **Note 5 - Line of credit with bank**
 
 The Company has a $150,000 renewable line of credit with a commercial bank. The line bears interest at the banks prime rate plus 1%. There was an outstanding balance as of September 30, 2004, of $122,510. The line is guaranteed by the personal guarantees of certain shareholders and contains certain financial covenants.
 
 The Company recorded interest expense totaling $157,212 and $152,194 for the nine months ended September 30, 2004 and 2003, respectively.
 
 **Note 6 - Changes in common shares outstanding**
 
 Included in the table below are the changes in common shares since December 31, 2003. See Note 7 for discussion of mergers and acquisitions affecting common shares.
 
 CommonSharesOutstanding common shares at December 31, 2003
11,111,338Stock granted to employees
500,000Debt converted to stock
152,746Stock issued for cash
1,813,666Stock issued for services
5,000,000Outstanding common shares at September 30, 2004
18,577,750
  F-6   **Note 7 - Discontinued operations**
 
 On May 11, 2004, by unanimous consent of the Board of Directors and a majority of the shareholders of the Company, the Company entered into an Asset Purchase Agreement with Power 3 Medical Products, Inc. Effective May 18, 2004, the purchase agreement was finalized and the assets and certain liabilities were acquired by Power 3 for 15,000,000 shares of common stock of Power 3. (See Note 8 - Mergers and acquisitions for further details.)
 
 The assets and liabilities of the Company as of May 17, 2004 consisted of the following:
 
 Cash
$ 3,796Accounts receivable - trade
5,785Equipment, net of accumulated depreciation
128,881Patents, net of accumulated amortization
16,844Leasehold security deposit
2,968Total Assets
$ 158,274Capital leases
147,639Accounts payable
80,437Accrued expenses
31,675Total Liabilities Disposed of
$ 259,751Liabilities due to discontinued operations
$(101,477)
  The operating results of this discontinued operation for the period ended May 17, 2004, consisted of the following:
 
 Revenues
$ 141,362Operating expenses
(355,974)Interest expense
( 58,221)Net (loss)
$(272,884)
 
  **Note 8 - Mergers and acquisitions**
 
 On May 5, 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. 1,903,000 shares of common stock of the Company were exchanged for all the issued and outstanding shares of GESJ. 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 stock issued for compensation to the officers involved due to the cancellation of the shares.
 
 F-7 On June 12, 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 reverseacquisition 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.
 
 On May 18, 2004, all fixed assets and intellectual property were acquired by Power 3 Medical Products, Inc. (Power 3), a Nevada corporation, for 15,000,000 restricted shares of Power 3 common stock, plus employment of certain of the Companys employees, and assumption of certain liabilities of the Company. The transaction is recognized as a related party transaction and was recorded as an exchange of assets at the book value of the fixed and intellectual properties for the restricted shares.
  .
 
 **Note 9 - Subsequent events**
 
 On October 7, 2004, the Companys Board of Directors approved a merger with EMC Packaging, Inc. whereby the Company would be the surviving entity in a reverse acquisition. In consideration for each EMC share, the EMC stockholders received an aggregate of 2,296,800 shares of the Companys common stock valued at $808,474. For accounting purposes, the merger has not been considered a business combination.
 
  F-8