Notes Payable	9 Months Ended
Sep. 30, 2014
Notes to Financial Statements
Note 6. Notes Payable	2012 Notes and 2013 Notes. In May 2012, in consideration for the extension of certain promissory notes originally due and payable on March 31, 2012 (the “2012 Notes”) to June 30, 2012, the Company assigned to the holders of the 2012 Notes FPMI Warrants to purchase a total of 113,127 shares of FPMI common stock for $0.50 per share (the “$0.50 FPMI Warrants”). In August 2012, in consideration for the extension of the maturity date of the 2012 Notes to November 15, 2012, the Company agreed to assign a total of 155,877 $0.50 FPMI Warrants to the holders of the 2012 Notes. As a result, a total of 260,508 $0.50 FPMI Warrants have been assigned to holders of 2012 Notes. Between August 2012 and July 2013, the Company issued promissory notes in the aggregate principal amount of $114,000 (the “2013 Notes”). As additional consideration for the 2013 Notes, the Company issued an aggregate total of 200,000 shares of Common Stock, 8,496 $0.50 FPMI Warrants and 64,000 FPMI Warrants exercisable for $1.00 per share. The 2012 and 2013 Notes accrue interest at the rate of 6% annually prior to maturity, and 12% annually thereafter. All 2012 Notes and 2013 Notes have matured and are currently due and payable on demand. The 2012 Notes and 2013 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 2012 Notes and 2013 Notes for Common Stock in the event the Company consummates a qualified financing (the “Qualified Financing”), which is defined in the 2012 Notes and 2013 Notes as a financing resulting in gross proceeds to the Company of at least $500,000. While the Company intends to pay the 2012 Notes and 2013 Notes using proceeds from a Qualified Financing, such Qualified Financing may not occur prior to the date the holders of the 2012 Notes and 2013 Notes demand repayment. In connection with the issuance of the 2012 Notes and 2013 Notes, the Company has recorded debt discount and expenses of the beneficial conversion feature of $106,261 and $28,998, respectively. The Company will amortize these expenses over the life of the 2012 Notes and 2013 Notes. As of December 31, 2012, the Company recorded interest expense related to the debt discount of $21,905 and $3,777 related to the beneficial conversion feature. In connection with the issuance of the 2013 Notes, the Company has recorded debt discount and expenses in the amount of $27,753 related to the value of the 64,000 FPMI warrants to the holders of the 2013 Notes. The Company will amortize the costs over the remaining life of these 2013 Notes. As of September 30, 2014, the Company recorded other financing costs of $27,753 related to the debt discount on the 2013 Notes. On October 29, 2013, the holder of certain outstanding 2012 Notes and 2013 Notes totaling approximately $217,000 in principal and accrued interest agreed to cancel such notes in exchange for a new promissory note with a face amount of $217,000 maturing on March 31, 2014, and 100,000 FPMI Warrants. Separately, our financial advisor agreed to exchange $216,000 of fees accrued from May 15, 2012 to October 15, 2013, otherwise payable in cash on or before December 31, 2013, for a promissory note with a face amount of $250,000 maturing on March 31, 2014, and 100,000 FPMI Warrants. These promissory notes accrued interest at a rate of 8% annually prior to maturity, and, following maturity of both promissory notes on March 31, 2014, now accrue interest at rate of 12% annually. 2014 Notes. During the nine months ended September 30, 2014, the Company issued promissory notes to certain accredited investors in the aggregate principal amount of $136,000 (the “2014 Notes”). As additional consideration for the purchase of the 2014 Notes, the Company issued an aggregate total of 272,000 shares of Common Stock to the investors. The Company recorded debt discount of $30,038 related to the 2014 Notes and will amortize the expense over the life of the 2014 Notes. During the nine months ended September 30, 2014, the Company recorded $15,962 of interest expense related to the debt discount on the 2014 Notes. During the nine months ended September 30, 2014, the Company authorized the issuance of 2,601,233 shares of Common Stock to the holders of all outstanding notes payable with an aggregate outstanding principal balance of $870,693 in order to satisfy all accrued, but unpaid, interest on the notes issued between 2012 and June 2014. During the period, all of the authorized shares of Common Stock were issued to settle the total outstanding interest payable on the notes, which amounted to $93,924. The Company recognized a loss of $62,150 in connection with the settlement. New Note Offering. In connection with the New Note Offering described under the heading “Recent Developments” in Note 1 above, during the period ended September 30, 2014 we issued New Notes in the aggregate principal amount of $250,000 and issued or reserved an aggregate total of 500,000 shares of Common Stock in connection with the New Note Offering. Each New Note accrues interest at a rate of 10% per annum, payable in either cash or shares of Common Stock, and matures on February 28, 2015. Each New Note is convertible, at the option of the holder thereof, into that number of Conversion Shares equal to the Outstanding Balance of the New Note, divided by $0.08. Additionally, in the event the Company completes a Qualified Financing, the Outstanding Balance of all New Notes will, at the discretion of each respective holder, either (i) convert into securities sold in the Qualified Financing, or (ii) automatically convert into Conversion Shares. In connection with the New Note Offering, the Company recorded debt discount and expenses related to the beneficial conversion feature in the amount of $35,944 and $48,375, respectively. The Company will amortize these amounts over the life of the debt and, accordingly, recorded interest expense related to the debt discount and beneficial conversion feature in the amount of $12,421 and $16,286, respectively. The Company also incurred $46,000 of costs related to issuance of the New Note Offering, which will also be amortized over the life of the debt. Total issuance costs recognized during the three months ended September 30, 2014 amounted to $15,962. 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 $741 and $1,851 for the three and nine months ended September 30, 2014.

Notes Payable

9 Months Ended

Sep. 30, 2014

2012 Notes and 2013 Notes. In May 2012, in consideration for the extension of certain promissory notes originally due and payable on March 31, 2012 (the “2012 Notes”) to June 30, 2012, the Company assigned to the holders of the 2012 Notes FPMI Warrants to purchase a total of 113,127 shares of FPMI common stock for $0.50 per share (the “$0.50 FPMI Warrants”). In August 2012, in consideration for the extension of the maturity date of the 2012 Notes to November 15, 2012, the Company agreed to assign a total of 155,877 $0.50 FPMI Warrants to the holders of the 2012 Notes. As a result, a total of 260,508 $0.50 FPMI Warrants have been assigned to holders of 2012 Notes.

Between August 2012 and July 2013, the Company issued promissory notes in the aggregate principal amount of $114,000 (the “2013 Notes”). As additional consideration for the 2013 Notes, the Company issued an aggregate total of 200,000 shares of Common Stock, 8,496 $0.50 FPMI Warrants and 64,000 FPMI Warrants exercisable for $1.00 per share.

The 2012 and 2013 Notes accrue interest at the rate of 6% annually prior to maturity, and 12% annually thereafter. All 2012 Notes and 2013 Notes have matured and are currently due and payable on demand. The 2012 Notes and 2013 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 2012 Notes and 2013 Notes for Common Stock in the event the Company consummates a qualified financing (the “Qualified Financing”), which is defined in the 2012 Notes and 2013 Notes as a financing resulting in gross proceeds to the Company of at least $500,000. While the Company intends to pay the 2012 Notes and 2013 Notes using proceeds from a Qualified Financing, such Qualified Financing may not occur prior to the date the holders of the 2012 Notes and 2013 Notes demand repayment.

In connection with the issuance of the 2012 Notes and 2013 Notes, the Company has recorded debt discount and expenses of the beneficial conversion feature of $106,261 and $28,998, respectively. The Company will amortize these expenses over the life of the 2012 Notes and 2013 Notes. As of December 31, 2012, the Company recorded interest expense related to the debt discount of $21,905 and $3,777 related to the beneficial conversion feature.

In connection with the issuance of the 2013 Notes, the Company has recorded debt discount and expenses in the amount of $27,753 related to the value of the 64,000 FPMI warrants to the holders of the 2013 Notes. The Company will amortize the costs over the remaining life of these 2013 Notes. As of September 30, 2014, the Company recorded other financing costs of $27,753 related to the debt discount on the 2013 Notes.

On October 29, 2013, the holder of certain outstanding 2012 Notes and 2013 Notes totaling approximately $217,000 in principal and accrued interest agreed to cancel such notes in exchange for a new promissory note with a face amount of $217,000 maturing on March 31, 2014, and 100,000 FPMI Warrants. Separately, our financial advisor agreed to exchange $216,000 of fees accrued from May 15, 2012 to October 15, 2013, otherwise payable in cash on or before December 31, 2013, for a promissory note with a face amount of $250,000 maturing on March 31, 2014, and 100,000 FPMI Warrants. These promissory notes accrued interest at a rate of 8% annually prior to maturity, and, following maturity of both promissory notes on March 31, 2014, now accrue interest at rate of 12% annually.

2014 Notes. During the nine months ended September 30, 2014, the Company issued promissory notes to certain accredited investors in the aggregate principal amount of $136,000 (the “2014 Notes”). As additional consideration for the purchase of the 2014 Notes, the Company issued an aggregate total of 272,000 shares of Common Stock to the investors. The Company recorded debt discount of $30,038 related to the 2014 Notes and will amortize the expense over the life of the 2014 Notes. During the nine months ended September 30, 2014, the Company recorded $15,962 of interest expense related to the debt discount on the 2014 Notes.

During the nine months ended September 30, 2014, the Company authorized the issuance of 2,601,233 shares of Common Stock to the holders of all outstanding notes payable with an aggregate outstanding principal balance of $870,693 in order to satisfy all accrued, but unpaid, interest on the notes issued between 2012 and June 2014. During the period, all of the authorized shares of Common Stock were issued to settle the total outstanding interest payable on the notes, which amounted to $93,924. The Company recognized a loss of $62,150 in connection with the settlement.

New Note Offering. In connection with the New Note Offering described under the heading “Recent Developments” in Note 1 above, during the period ended September 30, 2014 we issued New Notes in the aggregate principal amount of $250,000 and issued or reserved an aggregate total of 500,000 shares of Common Stock in connection with the New Note Offering. Each New Note accrues interest at a rate of 10% per annum, payable in either cash or shares of Common Stock, and matures on February 28, 2015. Each New Note is convertible, at the option of the holder thereof, into that number of Conversion Shares equal to the Outstanding Balance of the New Note, divided by $0.08. Additionally, in the event the Company completes a Qualified Financing, the Outstanding Balance of all New Notes will, at the discretion of each respective holder, either (i) convert into securities sold in the Qualified Financing, or (ii) automatically convert into Conversion Shares. In connection with the New Note Offering, the Company recorded debt discount and expenses related to the beneficial conversion feature in the amount of $35,944 and $48,375, respectively. The Company will amortize these amounts over the life of the debt and, accordingly, recorded interest expense related to the debt discount and beneficial conversion feature in the amount of $12,421 and $16,286, respectively. The Company also incurred $46,000 of costs related to issuance of the New Note Offering, which will also be amortized over the life of the debt. Total issuance costs recognized during the three months ended September 30, 2014 amounted to $15,962.

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 $741 and $1,851 for the three and nine months ended September 30, 2014.

- 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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