Notes Payable	3 Months Ended
Mar. 31, 2013
Notes to Financial Statements
Note 7. Notes Payable	Convertible Notes Payable. During the three months ended June 30, 2011, the Company issued promissory notes to certain investors resulting in gross proceeds to the Company of $105,000 (the "Notes"). The Notes accrued interest at the rate of 3% annually, and were due and payable on or before November 19, 2011. On November 19, 2011 these Notes were cancelled and reissued in the original principal amount plus $1,373 of accrued interest, under the terms of the Notes described below. Concurrently with this debt financing commitment, the lender agreed to surrender and cancel 2,069,000 warrants held by it, and in consideration therefore the Company issued the lender 2,069,000 shares of common stock valued at $62,070. In May 2012, in consideration for the extension of the Notes due and payable on March 31, 2012 to June 30, 2012, the Company agreed to assign a total of 113,127 FPMI Warrants to the holders of the Notes. In August 2012, in consideration for the extension of the Maturity Date of the Notes maturing on June 30, 2012 to November 15, 2012, the Company agreed to assign a total of 155,877 FPMI Warrants to the holders of the Notes. As a result, and together with the assignment of 8,496 FPMI Warrants in connection with the issuance of the $10K Note described below, a total of 269,004 FPMI Warrants have been assigned to holders of Notes. Between August 2012 and May 14, 2013, the Company issued promissory notes to three investors in the principal amounts of $10,000 (the “$10K Note”), $25,000 (the “$25K Note”), $15,000 (the “$15K Note”), $20,000 (the “$20K Note”), $17,000 (the "$17K Note") and $2,000 (the "$2K Note") (together, the “Notes”). As additional consideration for the purchase of the Notes, the Company issued: (i) 200,000 shares of its common stock to the purchaser of the $25K Note and the $15K Note, (ii) 8,496 FPMI warrants exercisable for $0.50 per share to the purchaser of the $10K Note, and (iii) 39,000 FMPI warrants exercisable for $1.00 per share to the purchaser of the $20K Note, the $17K Note and the $2K Note. The Notes accrue interest at the rate of 6% annually. The $10K Note and the $25K Note are currently due and payable on demand, while the $15K Note, the $20K Note, the $17K Note and $2K Note are due and payable on June 30, 2013 (the “Maturity Date”). The Notes are convertible at the option of each respective holder into shares of common stock at a conversion price equal to $0.10 per share. In addition, the holders may exchange the Notes for common stock in the event the Company consummates a qualified financing (the “Qualified Financing”), which is defined in the Notes as a financing resulting in gross proceeds to the Company of at least $500,000. While the Company intends to pay the Notes using proceeds from a Qualified Financing, such Qualified Financing may not occur prior to the date the holders of the $10K Note and $25K Note demand repayment, or the Maturity Date of the $15K Note, the $20K Note, the $17K Note or the $2K Note. In connection with the issuance of all Notes, the Company has recorded debt discount and expenses of the beneficial conversion feature of $103,761and $28,998, respectively. The Company will amortize these expenses over the life of the Notes. As of December 31, 2011, the Company recorded interest expense related to the debt discount of $21,905 and $3,777 related to the beneficial conversion feature. During the three months ended March 31, 2013, the Company recorded interest expense of $2,407 related to the debt discount and beneficial conversion feature. In connection with the issuance of the $20K Note and the $17K Note, the Company has recorded debt discount and expenses in the amount of $16,845 related to the value of the exchange of 37,000 FPMI warrants to the Note holders. The Company will amortize the costs over the remaining life of the $20K Note and the $17K Notes. As of March 31, 2013, the Company recorded other financing costs of $4,793 related to the debt discount on these notes. Long-Term Notes Payable. The Company received a $44,000 loan from the Portland Development Commission in 2007. The loan matures in 20 years and was interest free through February 2010. The terms of the note stipulate monthly interest only payments from April 2010 through December 2014, at a 5% annual rate. The Company recorded interest expense on this loan of $561 for the three months ended March 31, 2013.

Notes Payable

3 Months Ended

Mar. 31, 2013

Convertible Notes Payable. During the three months ended June 30, 2011, the Company issued promissory notes to certain investors resulting in gross proceeds to the Company of $105,000 (the "Notes"). The Notes accrued interest at the rate of 3% annually, and were due and payable on or before November 19, 2011. On November 19, 2011 these Notes were cancelled and reissued in the original principal amount plus $1,373 of accrued interest, under the terms of the Notes described below. Concurrently with this debt financing commitment, the lender agreed to surrender and cancel 2,069,000 warrants held by it, and in consideration therefore the Company issued the lender 2,069,000 shares of common stock valued at $62,070.

In May 2012, in consideration for the extension of the Notes due and payable on March 31, 2012 to June 30, 2012, the Company agreed to assign a total of 113,127 FPMI Warrants to the holders of the Notes. In August 2012, in consideration for the extension of the Maturity Date of the Notes maturing on June 30, 2012 to November 15, 2012, the Company agreed to assign a total of 155,877 FPMI Warrants to the holders of the Notes. As a result, and together with the assignment of 8,496 FPMI Warrants in connection with the issuance of the $10K Note described below, a total of 269,004 FPMI Warrants have been assigned to holders of Notes.

Between August 2012 and May 14, 2013, the Company issued promissory notes to three investors in the principal amounts of $10,000 (the “$10K Note”), $25,000 (the “$25K Note”), $15,000 (the “$15K Note”), $20,000 (the “$20K Note”), $17,000 (the "$17K Note") and $2,000 (the "$2K Note") (together, the “Notes”). As additional consideration for the purchase of the Notes, the Company issued: (i) 200,000 shares of its common stock to the purchaser of the $25K Note and the $15K Note, (ii) 8,496 FPMI warrants exercisable for $0.50 per share to the purchaser of the $10K Note, and (iii) 39,000 FMPI warrants exercisable for $1.00 per share to the purchaser of the $20K Note, the $17K Note and the $2K Note.

The Notes accrue interest at the rate of 6% annually. The $10K Note and the $25K Note are currently due and payable on demand, while the $15K Note, the $20K Note, the $17K Note and $2K Note are due and payable on June 30, 2013 (the “Maturity Date”). The Notes are convertible at the option of each respective holder into shares of common stock at a conversion price equal to $0.10 per share. In addition, the holders may exchange the Notes for common stock in the event the Company consummates a qualified financing (the “Qualified Financing”), which is defined in the Notes as a financing resulting in gross proceeds to the Company of at least $500,000. While the Company intends to pay the Notes using proceeds from a Qualified Financing, such Qualified Financing may not occur prior to the date the holders of the $10K Note and $25K Note demand repayment, or the Maturity Date of the $15K Note, the $20K Note, the $17K Note or the $2K Note.

In connection with the issuance of all Notes, the Company has recorded debt discount and expenses of the beneficial conversion feature of $103,761and $28,998, respectively. The Company will amortize these expenses over the life of the Notes. As of December 31, 2011, the Company recorded interest expense related to the debt discount of $21,905 and $3,777 related to the beneficial conversion feature. During the three months ended March 31, 2013, the Company recorded interest expense of $2,407 related to the debt discount and beneficial conversion feature.

In connection with the issuance of the $20K Note and the $17K Note, the Company has recorded debt discount and expenses in the amount of $16,845 related to the value of the exchange of 37,000 FPMI warrants to the Note holders. The Company will amortize the costs over the remaining life of the $20K Note and the $17K Notes. As of March 31, 2013, the Company recorded other financing costs of $4,793 related to the debt discount on these notes.

Long-Term Notes Payable. The Company received a $44,000 loan from the Portland Development Commission in 2007. The loan matures in 20 years and was interest free through February 2010. The terms of the note stipulate monthly interest only payments from April 2010 through December 2014, at a 5% annual rate. The Company recorded interest expense on this loan of $561 for the three months ended March 31, 2013.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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