FLUOROPHARMA MEDICAL, INC. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - FLUOROPHARMA MEDICAL, INC.	Financial_Report.xls
EX-31.1 - FLUOROPHARMA MEDICAL, INC.	ex31-1.htm
EX-32.1 - FLUOROPHARMA MEDICAL, INC.	ex32-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2012
o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ______________ to _____________

Commission file number: 333-147193

FluoroPharma Medical, Inc.

(Exact name of registrant as specified in its charter)

Nevada		20-8325616
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

8 Hillside Avenue, Suite 207 Montclair, NJ		07042
(Address of principal executive offices)		(Zip Code)

(973) 744-1565

(Registrant’s telephone number, including area code)

500 Boylston Street, Suite 1600, Boston, MA 02116

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

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

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

Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	x

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

As of May 14, 2012, there were 22,440,894 shares of $0.001 par value common stock issued and outstanding.

FORM 10-Q

FluoroPharma Medical Inc.

INDEX

		Page
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Unaudited Condensed Consolidated Balance Sheets		1
Unaudited Condensed Consolidated Statements of Operations		2
Unaudited Condensed Consolidated Statements of Cash Flows		3
Unaudited Condensed Consolidated Statements of Stockholders Equity		4
Notes to Unaudited Condensed Consolidated Financial Statements		5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation		17

Item 3. Quantitative and Qualitative Disclosures About Market Risk		21

Item 4. Controls and Procedures		21

PART II - OTHER INFORMATION

Item 1. Legal Proceedings		22

Item 1A. Risk Factors		22

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		22

Item 3. Defaults Upon Senior Securities		22

Item 4. Mine Safety Disclosures		22

Item 5. Other Information		22

Item 6. Exhibits		22

Signatures

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Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FLUOROPHARMA MEDICAL, INC. and Subisidiary (a development stage company)
CONDENSED CONSOLIDATED BALANCE SHEETS

		March 31, 2012		December 31, 2011
		(unaudited)
ASSETS

Current Assets:
Cash and cash equivalents		$	2,386,638	$	3,265,141
Prepaid expenses & other			32,163		50,291
	Total Current Assets		2,418,801		3,315,432

Property and equipment, net			195,016		169,808
Intangible assets, net			59,678		61,155

	Total Assets	$	2,673,495	$	3,546,395

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:
Accounts payable		$	103,550	$	341,172
Accrued expenses			6,458		39,232
	Total Current Liabilities		110,008		380,404

Commitments & Contingencies			-		-

Stockholders’ Equity:
Preferred stock Series A; $0.001 par value, 3,500,000 authorized
1,972,800 and 1,924,230 shares issued and outstanding, respectively			1,973		1,924
Common stock - Class A - $0.001 par value, 200,000,000
authorized, 22,440,894 and 22,310,894 shares issued and
outstanding, respectively			22,442		22,312
Additional paid-in capital			16,266,141		16,015,484
Deficit accumulated in the development stage			(13,727,069)		(12,873,729)
	Total Stockholders’ Equity		2,563,487		3,165,991

	Total Liabilities and Stockholders’ Equity	$	2,673,495	$	3,546,395

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Table of Contents

FLUOROPHARMA MEDICAL, INC. and Subsidiary (a development stage company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the three months ended						June 13, 2003 (inception) to
	March 31, 2012			March 31, 2011			March 31, 2012
	(unaudited)			(unaudited)			(unaudited)

Operating Expenses:
General and administrative	$	278,047		$	17,033		$	5,258,804
Professional fees		356,321			158,763			3,494,765
Research and development		295,295			-			4,939,071
Sales		-			269			1,292
Amortization		1,477			3,911			101,932
Depreciation		6,074			6,005			137,158
Total Operating Expenses		937,214			185,981			13,933,022

Loss from Operations		(937,214	)		(185,981	)		(13,933,022	)

Other Income (Expense):
Interest income		187			-			4,514
Gain on debt reconstruction		-			-			1,358,127
Loss on disposition of fixed assets		-			-			(71,550	)
Gain on settlement of Accounts Payable		124,000			-			248,889
Interest expense		-			(25,176	)		(316,326	)
Total Other Income (Expense), net		124,187			(25,176	)		1,223,654

Loss Before Provision for Income Taxes		(813,027	)		(211,157	)		(12,709,368	)

Provision for Income Taxes		-			-			-

Net Loss	$	(813,027	)	$	(211,157	)	$	(12,709,368	)

Preferred Stock Dividend		(40,313	)		-			(1,017,701	)

Net Loss Attributable to Common Stockholders	$	(853,340	)	$	(211,157	)	$	(13,727,069	)

Net loss per common share
Basic	$	(0.03	)	$	(0.02	)
Diluted	$	(0.03	)	$	(0.02	)

Weighted Average Shares Used in
per Share Calculation:
Basic		22,336,894			12,705,038
Diluted		22,336,894			12,705,038

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Table of Contents

FLUOROPHARMA MEDICAL, INC. and Subsidiary (a development stage company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
	For the three months ended March 31,							June 13, 2003 (inception) to
		2012			2011			March 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(813,027	)	$	(211,157	)	$	(12,709,368	)
Adjustments to reconcile net loss to net cash used by
operating activities
Depreciation and amortization			7,551			9,916			239,090
Issuance of common stock for consulting			-			-			23,488
Expenses related to employee stock options			100,023			4,833			2,404,202
Amortization of debt discount						7,328			19,292
Non-cash fair value of stock options issued to
non-employees for consulting			110,500			-			1,658,260
Loss on fixed asset dispositions			-			-			71,550
Gain on debt settlement			(124,000	)		-			(1,607,016	)
Loss on early extinguishment of debt			-			-			61,419
(Increase) decrease in:
Accounts receivable			-						50,000
Prepaid expenses			18,128			7,552			(32,163	)
Increase (decrease) in:
Accounts payable			(113,622	)		74,771			592,497
Accrued expenses			(32,774	)		(63,935	)		502,240
Net Cash Used by Operating Activities			(847,221	)		(170,692	)		(8,726,509	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for intangible assets			-			(2,500	)		(161,609	)
Net cash received in acquistition			-			-			69
Cash paid for purchase of property and equipment			(31,282	)		-			(403,326	)
Net Cash Used by Investing Activities			(31,282	)		(2,500	)		(564,866	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes – stockholder			-			-			1,400,000
Proceeds from issuance of short-term convertible notes			-			195,000			608,165
Advances from stockholders			-			-			679,500
Proceeds from sale of common stock - Class A, net			-			-			6,447,400
Proceeds from sale of common stock - Class B			-			-			622,948
Proceeds from sale of preferred stock, net			-			-			1,920,000
Net Cash Provided by Financing Activities			-			195,000			11,678,013

Net Increase (Decrease) in Cash and Cash Equivalents			(878,503	)		21,808			2,386,638
Cash and Cash Equivalents, Beginning of Period			3,265,141			11,413			-
Cash and Cash Equivalents, End of Period		$	2,386,638			33,221		$	2,386,638

Supplemental Cash Flow Disclosures:
Interest expense paid in cash		$	-			-		$	-
Income tax paid		$	-			-		$	-

Supplemental Non-Cash Disclosure:
Conversion of preferred stock to common stock		$	-			-		$	288
Notes payable – stockholder – settled in common stock		$	-			-		$	2,135,000
Accrued interest – stockholder – settled in common stock		$	-		$	-		$	188,569
Preferred Stock Dividend		$	(40,313	)	$	-		$	(1,017,701	)
Advances from stockholders settled in common stock		$	-		$	-		$	679,500
Accounts payable settled in common stock		$	-		$	-		$	471,472
Accounts payable settled in common stock options		$	-		$	-		$	30,500
Accrued expenses settled in common stock options		$	-		$	-		$	3,000
Decrease in accounts payable related to fixed asset disposition		$	-		$	-		$	133,314
Decrease in accounts payable related to settlement		$	-		$	-		$	172,889
Decrease in accrued expenses related to settlement		$	-		$	-		$	3,000
Increase in accounts receivable related to common stock issuance		$	-		$	-		$	50,000

The accompanying notes are an integral part of these condensed consolidated financial statements.

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FLUOROPHARMA MEDICAL, INC. and Subsidiary (a development stage company)
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

	Preferred Stock			Common Stock								Total
	Number of shares		Amount		Number of shares		Amount	Additional Paid-In Capital		Accumulated Deficit		Stockholders' Equity

Issuance of common stock	-	$	-		2,696,250	$	2,697	$	(899)	$	-	$	1,798
Issuance of preferred stock	206,250		206		-		-		274,793		-		274,999
Net loss	-		-		-		-		-		(333,146)		(333,146)
BALANCE, December 31, 2004	206,250		206		2,696,250		2,697		273,894		(333,146)		(56,349)

Issuance of preferred stock for
contract termination	37,500		38		-		-		49,963		-		50,001
Issuance of preferred stock	187,500		188		-		-		249,813		-		250,001
Issuance of stock options to non-employees	-		-		-		-		158,803		-		158,803
Net loss	-		-		-		-		-		(687,576)		(687,576)
BALANCE, December 31, 2005	431,250		432		2,696,250		2,697		732,472		(1,020,722)		(285,121)

Issuance of common stock for consulting	-		-		24,638		24		23,464		-		23,488
Conversion of preferred stock
to common stock	(431,250)		(432)		431,250		432		-		-		-
Issuance of common stock to
induce conversion of preferred stock	-		-		34,358		35		(35)		-		-
Issuance of common stock to investor	-		-		1,644,255		1,643		1,564,381		-		1,566,023
Issuance of common stock to employees	-		-		-		-		28,806		-		28,806
Issuance of common stock to non-employees	-		-		-		-		511,888		-		511,888
Net loss	-		-		-		-		-		(1,999,214)		(1,999,214)
BALANCE, December 31, 2006	-		-		4,830,750		4,830		2,860,976		(3,019,936)		(154,130)

Issuance of common stock	-		-		940,587		942		1,249,058		-		1,250,000
Issuance of stock options to employees	-		-		-		-		19,239		-		19,239
Issuance of stock options to non-employees	-		-		-		-		429,391		-		429,391
Net loss	-		-		-		-		-		(2,354,043)		(2,354,043)
BALANCE, December 31, 2007	-		-		5,771,337		5,772		4,558,664		(5,373,979)		(809,543)

Issuance of stock options to employees	-		-		-		-		274,299		-		274,299
Issuance of stock options to non-employees	-		-		-		-		216,779		-		216,779
Net loss	-		-		-		-		-		(2,272,144)		(2,272,144)
BALANCE, December 31, 2008	-		-		5,771,337		5,772		5,049,742		(7,646,123)		(2,590,609)

Issuance of common stock	-		-		4,037,682		4,038		668,909		-		672,947
Issurance of stock options to employees	-		-		-		-		157,933		-		157,933
Non-cash fair value of stock
options to non-employees	-		-		-		-		54,064		-		54,064
Fair value of stockholder debt,
payables, and advances settled in common stock	-		-		2,331,458		2,331		386,246				388,577
Fair value of common stock issued
to settle accounts payable	-		-		564,561		564		103,308		-		103,872
Fair value of common stock options issued
to settle accounts payable
and accrued expenses	-		-		-		-		18,364		-		18,364
Net income	-		-		-		-		-		132,005		132,005
BALANCE, December 31, 2009	-		-		12,705,038		12,705		6,438,566		(7,514,118)		(1,062,847)

Issuance of Common Stock Options to Employees	-		-		-		-		86,985				86,985
Fair Value of Warrants Issued with Convertible Notes Payable									11,818				11,818

Net loss	-		-						-		(954,118)		(954,118)
BALANCE, December 31, 2010	-		-		12,705,038		12,705		6,537,369		(8,468,236)		(1,918,162)

Share Based Compensation	-		-		-		-		1,736,917		-		1,736,917
Fair Value of Warrants Issued with Convertible Notes Payable	-		-		-		-		7,474		-		7,474
Common stock issued in cashless exercise of stock options	-		-		836,250		837		(837)		-		-
Common stock issued on
conversion of notes payable and accrued interest	-		-		1,299,957		1,300		836,299		-		837,599
Common stock issued for
consideration of extension of notes payable	-		-		45,000		45		37,455				37,500
Common stock issued for
deferred compensation					442,892		443		367,157		-		367,600
Preferred and Common stock
issued for cash, net of offering costs of $591,877	1,807,229		1,807		5,481,757		5,482		5,517,290		-		5,524,579
Shares issued upon recapitalization	-		-		1,500,000		1,500		(1,500)		-		-
Recapitalization effect of net assets	-		-		-		-		589				589
Preferred Stock Dividends									880,278		(880,278)		-
Preferred Stock Dividend Accrued	117,001		117						96,993		(97,110)		-
Net loss	-		-		-		-		-		(3,428,105)		(3,428,105)
BALANCE, December 31, 2011	1,924,230		1,924		22,310,894		22,312		16,015,484		(12,873,729)		3,165,991

Share Based Compensation	-		-		-		-		100,023		-		100,023
Preferred Stock Dividend Accrued	48,570		49						40,264		(40,313)		-
Fair value of common stock issued for consulting services					130,000		130		110,370		-		110,500
Net loss	-		-		-		-		-		(813,027)		(813,027)
BALANCE, March 31, 2012	1,972,800	$	1,973		22,440,894	$	22,442	$	16,266,141	$	(13,727,069)	$	2,563,487

The accompanying notes are an integral part of these condensed consolidated financial statements.

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FLUOROPHARMA MEDICAL, INC. and Subsidiary (a development stage company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of FluoroPharma Medical, Inc. and subsidiaries (“FPM”, "FluoroPharma" or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"). Accordingly, the unaudited condensed consolidated financial statements do not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete annual financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring adjustments, considered necessary for a fair presentation. Interim operating results are not necessarily indicative of results that may be expected for the year ending December 31, 2012 or for any other interim period. The unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company and the notes thereto as of and for the year ended December 31, 2011, as included in the Company's Form 10-K filed with the SEC on March 16, 2012.

As of March 31, 2012, the Company has not generated any revenues from the development of its products and is therefore still considered to be a development stage company as defined in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 915 “Development Stage Entities”. The Company is devoting substantially all of its present efforts to research and development of commercially viable products that meet the standards of and are approved by the Food and Drug Administration, raising capital and attracting qualified advisors and personnel to further advance the Company’s goals. The Company has not commenced its planned principal operations, has not generated any revenues from operations and has no assurance of any future revenues. All losses accumulated since incorporation on June 13, 2003 have been considered as part of the Company's development stage activities.

On May 16, 2011, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with FluoroPharma, Inc., a Delaware corporation ("FPI"), and FPI Merger Corporation, a newly formed, wholly owned Delaware subsidiary of FPM ("MergerCo”). Upon closing of the merger transaction contemplated under the Merger Agreement (the "Merger"), on May 16, 2011, MergerCo merged with and into FPI, and FPI, as the surviving corporation, became a wholly owned subsidiary of FPM.

The acquisition was accounted for as a reverse merger using accounting principles applicable to reverse acquisitions whereby the financial statements subsequent to the date of the transaction are presented as a continuation of FPI. Under reverse acquisition accounting FluoroPharma, Inc. (the legal subsidiary) will be treated as the accounting parent (acquirer) and FPM (the legal parent) will be treated as the accounting subsidiary (acquiree). All outstanding shares have been restated to reflect the effect of the recapitalization, which includes a 3 for 2 issuance of FPM shares to FPI shareholders.

Use of Estimates

The accompanying condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, and include certain estimates and assumptions which affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period, including contingencies. Accordingly, actual results may differ from those estimates.

Concentration of Risks

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company primarily maintains its cash balances with financial institutions in federally insured accounts. The Company has not experienced any losses to date resulting from this practice.

Principles of consolidation

The condensed consolidated financial statements include the accounts of the Company and the Subsidiary. Intercompany transactions and balances have been eliminated upon consolidation.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The Company’s property and equipment at March 31, 2012 and December 31, 2011 consisted of computer and office equipment and machinery and equipment with estimated useful lives of three to five years.

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Intangible Assets

The Company’s intangible assets consist of technology licenses and website development costs, and are carried at the legal cost to obtain them. Intangible assets are amortized using the straight-line method over the estimated useful life. Useful lives are as follows: technology licenses, five to 15 years; website development costs, three years.

Impairments

The Company assesses the impairment of long-lived assets, including other intangible assets, whenever events or changes in circumstances indicate that their carrying value may not be recoverable in accordance with ASC Topic 360-10-35, “Impairment or Disposal of Long-Lived Assets.” The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgments, related primarily to the future profitability and/or future value of the assets. The Company records an impairment charge if it believes an investment has experienced a decline in value that is other than temporary.

Management has determined that no impairments were required as of March 31, 2012 or December 31, 2011.

Fair Value of Financial Instruments

The Company's financial instruments primarily consist of cash and cash equivalents and accounts payable. All instruments are accounted for on the historical cost basis, which, due to the short maturity of these financial instruments, approximates the fair value at the reporting dates of these financial statements.

ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1: Quoted prices for identical instruments in active markets accessible at the measurement date.

Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3: Unobservable inputs for the instrument are only used when there is little, if any, market activity for the instrument at the measurement date. Price or valuation techniques require inputs that are both significant to the fair value measurement and unobservable.

Income Taxes

The Company accounts for income taxes and the related accounts under the liability method. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the income tax bases of assets and liabilities. A valuation allowance is applied against any net deferred tax asset if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

There are no unrecognized tax benefit included in the consolidated balance sheets that would, if recognized, affect the effective tax rate.

The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties on its balance sheets at March 31, 2012 or December 31, 2011, and has not recognized interest and/or penalties in the statement of operations for the periods ended March 31, 2012 and December 31, 2011. See Note 8 - Income Taxes. Further, the Company currently has no open tax years, subject to audit prior to December 31, 2008.

Accounting for Share-Based Payments

The Company follows the provisions of ASC Topic 718, which establishes the accounting for transactions in which an entity exchanges equity securities for services and requires companies to expense the estimated fair value of these awards over the requisite service period. FPM uses the Black-Scholes option pricing model in determining fair value. Accordingly, compensation cost has been recognized using the fair value method and expected term accrual requirements as prescribed, which resulted in employee stock-based compensation expense for the three months ending March 31, 2012 and March 31, 2011 of $100,022 and $4,833, respectively, and $2,404,202 for the period from June 13, 2003 (inception) to March 31, 2012.

A portion of the 2011 expense was the result of changes to the terms of previously granted options in the Merger. The number of shares increased (3 for 2) and the exercise prices decreased.

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The Company accounts for share-based payments granted to non-employees in accordance with ASC Topic 505, “Equity Based Payments to Non-Employees.” The Company determines the fair value of the stock-based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

The fair value of each share-based payment is estimated on the measurement date using the Black-Scholes model with the following assumptions:

		2012			2011

Risk-free interest rate		2.74	%		2.69% - 3.90	%
Expected volatility		69	%		72.06% - 117	%
Dividend yield	none			none

Earnings per Share

The Company computes net income (loss) per common share in accordance with ASC Topic 260. Net income (loss) per share is based upon the weighted average number of outstanding common shares and the dilutive effect of common share equivalents, such as options and warrants to purchase common stock, and convertible notes, if applicable, that are outstanding each year.

Basic and diluted earnings per share were the same for the three months ending March 31, 2012 and 2011, respectively, as including common stock equivalents in the calculation of diluted earnings per share would have been antidilutive. As of March 31, 2012, the Company had outstanding options exercisable for 3,749,047 shares of its common stock and warrants exercisable for 4,813,531 shares of its common stock. As of March 31, 2011, the Company had outstanding options exercisable for 3,312,000 shares of its common stock and warrants exercisable for 661,617 shares of its common stock, and notes payable and accrued interest convertible into 1,213,307 shares of common stock.

Research and Development Costs

Research and development costs are expensed as incurred.

Segment Reporting

The Company has determined that it operates in only one segment currently, which is biopharmaceutical research and development.

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

Liquidity

The Company has experienced net losses and negative cash flows from operations since its inception. The Company has sustained cumulative losses of $13,727,069 as of March 31, 2012. The Company has historically financed its operations through issuances of equity and the proceeds of debt instruments. In the past, the Company has also provided for its cash needs by issuing common stock, options and warrants for certain operating costs, including consulting and professional fees.

The Company continues to actively pursue various funding options, including equity offerings and debt financings, to obtain additional funds to continue the development of its products and bring them to commercial markets. There can be no assurance that we will be able to consummate any fund raising transactions on terms acceptable to us or at all.

The Company’s current cash reserves of approximately $2.4 million as of the date of this report, should provide the Company with sufficient cash to fund its operations into 2013. This projection is based on the budgeted monthly operating expenses including projected costs for clinical trials. There can be no assurances, however, that the Company will be able to continue to raise additional capital as may be needed and meet its projections for operating expenses. If the Company is unable to raise additional capital as may be needed and meet its projections for operating expenses, it could have a material adverse effect on its liquidity.

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2. THE MERGER

On May 16, 2011, the Company entered into the Merger Agreement by and among FPM, FPI, and MergerCo. Upon closing of the Merger, on May 16, 2011, MergerCo merged with and into FPI, and FPI, as the surviving corporation, became a wholly owned subsidiary of FPM.

FPM was organized on January 25, 2007 under the laws of the State of Nevada. FPM served as an electronics waste management solution provider, specializing in the collection, retirement, storage and remarketing of excess, damaged or obsolete electronic assets, such as computer, telecommunications and other electronic office equipment.

FPI, a Delaware corporation, is a molecular imaging company headquartered in Boston, MA. FPI was founded in 2003 to engage in the discovery, development and commercialization of proprietary products for the positron emission tomography (PET) market. The Company’s initial focus has been on the development of novel cardiovascular imaging agents that can more efficiently and effectively detect and assess acute and chronic forms of coronary artery disease (CAD). Molecular imaging pharmaceuticals are radiopharmaceuticals that enable early detection of disease through the visualization of subtle changes in biochemical and biological processes.

Pursuant to the terms and conditions of the Merger Agreement:

● All of the outstanding shares of FPI’s common stock prior to the Merger were converted into the right to receive 13,911,011 shares of FPM’s common stock. Accordingly, an aggregate of 13,911,011 shares of our common stock were issued to the shareholders of FPI.

● All of the outstanding warrants to purchase shares of FPI’s common stock prior to the Merger were converted into the right to receive 661,617 warrants to purchase shares of FPM’s common stock. Accordingly, an aggregate of 661,617 warrants to purchase shares our common stock were issued to the warrant holders of FPI with exercise prices ranging from $0.95 to $2.00.

● A subsidiary of the Company merged with and into FPI, with FPI surviving as a wholly owned subsidiary of FPM.

● Immediately before the closing of the Merger, FPM entered into subscription agreements for the sale and issuance of an aggregate of 2,611,375 shares of its common stock, par value $.001 per share and 1,807,229 shares of Series A Preferred Stock, par value $.001 per share in a private placement (the “Private Placement”) at a price of $0.83 per share for aggregate gross proceeds of $2,624,235, plus the conversion of $367,600 of deferred compensation to certain officers and directors of FPI and the automatic exchange at 110% of the outstanding principal amount plus all accrued and unpaid interest (the “Outstanding Balance”) of certain Convertible Promissory Notes issued by FPI with an Outstanding Balance of $614,118. Investors who invested an aggregate minimum of $1,500,000 received Series A Preferred Stock, which have the rights and preferences set forth in a Certificate of Designation of the Relative Rights and Preferences of the Series A Preferred Stock, filed with the Secretary of State of Nevada on May 13, 2011 (the “Certificate of Designation”). The Investors who purchased Series A Preferred Stock received a four year warrant to purchase 50% of the shares purchased and the investors who purchased Common Stock received a four year warrant to purchase 35% of the shares purchased. The warrants are exercisable at an exercise price of $1.33. The Company entered into a registration rights agreement with the investors agreeing to file a registration statement within 60 days of the closing and to have the registration statement declared effective within 150 days of the closing, if the registration statement is not subject to a full review by the SEC and within 180 days of the closing if the registration statement is subject to a full review by the SEC. The registration statement was filed with the SEC on July 18, 2011 and declared effective on November 2, 2011 (see Note 13). Burnham Hill Partners LLC and Monarch Capital Group, LLC served as the placement agents in connection with the Offering. Burnham Hill Partners LLC received cash fees of $206,346 and 401,546 placement agent warrants to purchase shares of the Company’s common stock at a price per share of $0.83. Monarch Capital Group, LLC received cash fees of $21,350 and 36,747 placement agent warrants to purchase shares of the Company’s common stock at a price per share of $0.83.

● In connection with the Merger, the Company’s former majority stockholder agreed to return to treasury for cancellation 9,500,000 shares of the Company’s common stock (the “Stock Cancellation”), resulting in 1,500,000 shares of common stock held by persons who were stockholders of ours prior to the Merger remaining outstanding.

● Following the Closing of the Merger, the Private Placement and the Stock Cancellation there were 18,183,636 shares of the Company’s common stock outstanding.

● At the closing of the Merger, Anna Chalmers resigned as the sole officer and director of the Company. Johan (Thijs) Spoor was appointed as CEO, CFO and President. David R. Elmaleh, Ph.D, was appointed as Chairman of the Board of Directors and Walter Witoshkin, and Peter S. Conti, M.D., Ph.D were appointed as Directors.

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The Company did not have any outstanding options or warrants to purchase shares of capital stock immediately prior to the closing of the Merger. Upon closing of the Merger, the Company issued 2,611,375 shares of common stock and 1,807,229 shares of Series A Preferred Stock in the Private Placement and warrants to purchase 1,817,593 shares of common stock to placement agents in connection with the Private Placement. Prior to the Merger, we adopted the 2011 Equity Incentive Plan (the “2011 Plan”) and reserved 6,475,750 shares of common stock for issuance as awards to officers, directors, employees, consultants and others. Upon closing of the Merger, we issued options to purchase an aggregate of 4,423,500 shares of our common stock with strike prices ranging from $0.13 to $1.33 per share to certain of our post-Merger officers, directors, employees, consultants and others.

The shares of FPM's common stock issued to the former holders of FPI’s common stock in connection with the Merger, and the shares of the Company's common stock and warrants issued in the Private Placement, were not registered under the Securities Act, in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act and Regulation D promulgated under that section, which exempts transactions by an issuer not involving any public offering. These securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. Certificates representing these shares contain a legend stating the restrictions applicable to such shares.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the Merger date:

Cash and cash equivalents	$	69
Other assets		1,005
Total identifiable assets	$	1,074

Accounts payable	$	485
Total identifiable liabilities	$	485

Net identifiable assets	$	589

FPM had a $27,461 note payable which was forgiven prior to the Merger.

3. OTHER BALANCE SHEET INFORMATION

Components of selected captions in the accompanying balance sheets as of March 31, 2012 and December 31, 2011 consist of:

	March 31, 2012			December 31, 2011
Prepaid expenses:
Prepaid insurance	$	14,910		$	37,274
Other		17,253			13,017
Prepaid expenses	$	32,163		$	50,291

Property and equipment:
Computers and office equipment	$	47,820		$	30,421
Machinery and equipment		254,827			254,827
Leasehold improvements		25,171			11,288
Less: accumulated depreciation		(131,802	)		( 126,727	)
Property and equipment, net	$	195,016		$	169,808

Accrued expenses:
Professional fees	$	1,458		$	25,702
Other		5,000			13,530

Accrued expenses	$	6,458		$	39,232

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4. INTANGIBLE ASSETS

Intangible assets as of March 31, 2012 and December 31, 2011 consisted of the following:

	March 31, 2012		December 31, 2011

Technology license	$	117,112	$	117,112
Less: accumulated amortization		(70,328)		( 55,957	)
Intangibles, net	$	59,678	$	61,155

Future amortization will approximate $6,000 for each of the next five years.

See Note 7 for commitments and contingencies associated with the Company’s technology licenses.

5. SHORT-TERM CONVERTIBLE NOTES PAYABLE

The Company issued three short-term convertible promissory notes in January 2011, and two short-term convertible promissory notes in February 2011 for total consideration of $195,000. The notes bear interest at 8%, were convertible into shares of common stock at $0.83 per share (234,000 shares) and the note holders were granted warrants to purchase 23,400 shares of common stock at $0.50 per share, exercisable for 5 years. All notes were due March 31, 2011, but were subsequently extended until September 30, 2011. The notes and accrued interest of $3,765 were converted into 263,424 shares of the Company’s common stock in connection with the Private Placement on May 16, 2011. (see Note 6).

In accordance with ASC Topic 470, the Company allocated the proceeds of all of the above notes to detachable warrants and convertible instruments based upon their relative fair value of the debt instrument without the warrants and the warrants themselves at the time of issuance. The fair value of the warrants was determined following the guidance of ASC Topic 718; using Black-Scholes option model (using a risk free interest rate of 2.43 percent, volatility of 131.11 percent to 151.86 percent, exercise price of $2.00, current market value of $0.75 per share and an expected life of 5 years) with the value allocated to the warrants reflected in Stockholders’ equity and a debt discount. Based upon the respective fair values as of the original agreement dates $7,474 of the $195,000 in total debt was allocated to discounts associated with the common stock purchase warrants. The entire discount was amortized as of September 30, 2011.

Immediately prior to the Merger, the Company had an automatic exchange at 110% of the outstanding principal amount plus all accrued and unpaid interest (the “Outstanding Balance”) of all of the Promissory Notes described above that were issued by FPI with a total Outstanding Balance of $614,118 for 813,984 shares of the Company’s common stock. The difference between the fair market value of the shares issued for the conversion of debt ($61,419) was recognized as additional financing costs.

6. 2011 PRIVATE PLACEMENT

On May 16, 2011, the Company raised aggregate gross proceeds of $2,624,235 pursuant to a Private Placement. The Company entered into subscription agreements for the sale and issuance of an aggregate of 1,354,500 shares of its common stock, par value $.001 per share and 1,807,229 shares of Series A Preferred Stock, par value $.001 per share for a purchase price of $0.83 per share. Investors who invested in the aggregate a minimum of $1,500,000 received Series A Preferred Stock, which has the rights and preferences set forth in the Certificate of Designation. Investors who purchased Series A Preferred Stock received a four year warrant to purchase 50% of the shares purchased and the investors who purchased common stock received a four year warrant to purchase 35% of the shares purchased. The warrants are exercisable at an exercise price of $1.33.

In accordance with ASC Topic 470-20-30-5, the Company allocated the proceeds of the Series A Preferred Stock to detachable warrants and convertible instruments based upon their relative fair value of the preferred stock without the warrants and the warrants themselves at the time of issuance. The fair value of the warrants was determined following the guidance of ASC Topic 718; using Black-Scholes option model (using a risk free interest rate of 3.90 percent, volatility of 116.55 percent, exercise price of $1.33, current market value of $0.83 per share and an expected life of 5 years). The relative fair value of the Series A Warrant totaled $420,648. Using the principles of ASC 470-20-35-7, the Company concluded that the preferred stock discount related to the warrant was analogous to a dividend and is reflected as a dividend upon issuance, since the preferred stock is convertible upon issuance.

After determining the relative fair value of the proceeds attributable to the Series A Preferred Stock, the Company determined the intrinsic value of common stock that would be received, based on the fair value of the Company’s common stock on the date of issuance to the relative fair value of the proceeds attributable to the Series A Preferred Stock to determine whether there was a beneficial conversion feature. The Company concluded that there was a beneficial conversion feature amounting to $420,648, which under the principles of ASC 470-20-35-7, is analogous to a dividend and is reflected as a dividend upon issuance, since the preferred stock is convertible upon issuance.

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In connection with the issuance of the Serics A Preferred Stock, the Company is required to pay a 10% cumulative preferred stock dividend, regardless of whether declared, on each June 30 and December 31. For the year ended December 31, 2011, the Company had accrued $97,110, in relation to the preferred stock dividend, and increased the stated value of the Preferred Stock by 117,001, the number of shares issuable in connection with this preferred stock dividend. These shares were issued in January 2012. For the three months ended March 31, 2012, the Company has accrued $40,313, in relation to the preferred stock dividend, and increased the stated value of the Preferred Stock by 48,570, the number of shares issuable in connection with this preferred stock dividend.

Burnham Hill Partners LLC and Monarch Capital Group, LLC served as the placement agents in connection with the Private Placement. Burnham Hill Partners LLC received cash fees of $206,346 and 411,271 placement agent warrants to purchase shares of the Company’s common stock at a price per share of $0.83. Monarch Capital Group, LLC received cash fees of $21,350 and 38,236 placement agent warrants to purchase shares of the Company’s common stock at a price per share of $0.83.

In addition on May 16, 2011, the Company converted $367,000 of deferred compensation to certain officers and directors of FPI into 597,904 shares of common stock and 155,012 warrants to purchase shares of the Company’s common stock. The conversion price was equal to the per share purchase price paid by the investors in the Private Placement.

Additionally, on May 16, 2011, the Company had an automatic exchange at 110% of the outstanding principal amount plus all accrued and unpaid interest (the “Outstanding Balance”) of certain convertible promissory notes issued by FPI with an outstanding balance of $614,118 for 813,984 shares of the Company’s common stock and 284,894 warrants to purchase shares of the Company’s common stock.

All of the Investors represented that they were “accredited investors,” as that term is defined in Rule 501(a) of Regulation D under the Securities Act, and the sale of the securities was made in reliance on exemptions provided by Regulation D and Section 4(2) of the Securities Act of 1933, as amended.

In connection with the closing of the Private Placement, the Company entered into a registration rights agreement with the investors agreeing to file a registration statement within 60 days of the closing and to have the registration statement declared effective within 150 days of the closing, if the registration statement is not subject to a full review and within 180 days of the closing if the registration statement is subject to a full review. The Company filed a registration statement with the SEC on July 18, 2011, which was declared effective by the SEC on November 2, 2011.

On June 21, 2011, the Company completed an additional closing of the 2011 Private Placement. In connection with this closing, the Company sold an aggregate of 1,976,351 shares of the Company’s common stock and 691,722 warrants to purchase the Company’s common stock. The Company received net proceeds of $1,496,777 after payment of an aggregate of $88,064 of commissions to the placement agents and $55,530 in legal fees. $50,000 of the gross proceeds from this closing were received by the company on July 6, 2011. In connection with this closing, the Company also issued warrants to purchase 197,635 shares of common stock to the placement agents as additional compensation for their services.

On June 30, 2011, the Company completed an additional closing of the 2011 Private Placement. In connection with this closing, the Company sold an aggregate of 259,337 shares of the Company’s common stock and 90,768 warrants to purchase the Company’s common stock. The Company received net proceeds of $180,083 after payment of an aggregate of $18,568 of commissions to the placement agents and $16,599 in legal fees. In connection with this closing, the Company also issued warrants to purchase 25,934 shares of common stock to the placement agents as additional compensation for its services.

On July 18, 2011, the Company completed an additional closing of the 2011 Private Placement. In connection with this closing, the Company sold an aggregate of 674,699 shares of the Company’s common stock and 236,145 warrants to purchase the Company’s common stock. The Company received net proceeds of $530,099 after payment of an aggregate of $39,200 of commissions to the placement agents and $6,400 in legal fees. In connection with this closing, the Company also issued warrants to purchase 67,470 shares of common stock to the placement agents as additional compensation for its services.

On December 13, 2011, the Company completed an additional closing of the 2011 Private Placement. In connection with this closing, the Company sold an aggregate of 1,204,820 shares of the Company’s common stock and 421,687 warrants to purchase the Company’s common stock. The Company received net proceeds of $925,000 after payment of an aggregate of $70,000 of commissions and $5,000 in legal fees. In connection with this closing, the Company also issued warrants to purchase 120,482 shares of common stock. The commissions and warrants issued were related to the tail agreement in conjunction with the original placement agent agreement dated May 16, 2011.

On December 16, 2011, the Company completed an additional closing of the 2011 Private Placement. In connection with this closing, the Company sold an aggregate of 12,051 shares of the Company’s common stock and 4,218 warrants to purchase the Company’s common stock. The Company received net proceeds of $10,002.

As of December 31, 2011, the Company raised aggregate gross proceeds of $7,093,065 pursuant to the 2011 Private Placement.

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7. COMMITMENTS AND CONTINGENCIES

License Agreements

In the second quarter of 2009, the Company renegotiated three of its technology licenses with Massachusetts General Hospital (MGH) into one exclusive technology license. The renegotiated license stipulates the Company meet certain obligations, including, but not limited to, raising an aggregate $2 million in capital by the second quarter of 2010; and meeting certain development milestones relating to clinical trials and filings with the FDA. MGH has the right to cancel or make non-exclusive certain licenses on certain patents should the Company fail to meet stipulated obligations and milestones. Additionally, upon commercialization, FluoroPharma is required to make specified milestone payments and royalties on commercial sales. Effective June 21, 2011, MGH extended the capital raise requirement through the second quarter of 2011, which requirement the Company met with the closing of a private placement offering in May 2011.

In the fourth quarter of 2011, the Company further renegotiated the exclusive technology license. The renegotiated license extends the timelines for the development milestones by two years in exchange for a $20,000 payment. MGH has the right to cancel or make non-exclusive certain licenses on certain patents should the Company fail to meet stipulated obligations and milestones. Additionally, upon commercialization, FluoroPharma is required to make specified milestone payments and royalties on commercial sales.

We are current with all stipulated obligations and milestones under the License agreement and the agreement remains in full force and effect. We believe that we maintain a good relationship with MGH and will be able to obtain waivers or extension of our obligations under the license agreement, should the need arise. If MGH were to refuse to provide us with a waiver or extension of any our obligations or were to cancel or make the license non-exclusive, this would have a material adverse impact on our business as we may be unable to commercialize products without exclusivity and we would lose our competitive edge for portions of our patent portfolio.

All of the Company’s other license agreements stipulate certain annual license fees and development milestone payments in addition to royalty payments upon commercialization.

Executive Employment Contract

The Company has an employment contract with a key Company executive that provides for the continuation of salary and the grant of certain options to the executive if terminated for reasons other than cause, as defined in that agreement. The contract also provides for a $1 million bonus should the Company execute transactions as specified in the contract, including the sale of substantially all of the Company’s assets or stock or a merger transaction, any of which resulting in compensation to the Company’s stockholders aggregating in excess of $50 million for such transaction.

Lease agreement

In July 2011, the Company entered into a three-year lease for office space which commences May 1, 2012 and expires on April 30, 2015. The annual minimum lease payments over this three-year period for this office space are $45,600 per year plus common area costs. In conjunction with this agreement, the Company paid $5,700 as a security deposit and an additional $25,171 for leasehold improvements. The future minimum lease payments through April 30, 2015 are as follows:

Year ending December 31, 2012	$	30,400
2013		45,600
2014		45,600
2015		15,200
	$	136,800

Legal Contingencies

We may occasionally become subject to legal proceedings and claims that arise in the ordinary course of our business. It is impossible for us to predict with any certainty the outcome of any disputes that may arise, and we cannot predict whether any liability arising from claims and litigation will be material in relation to our financial position or results of operations. As of March 31, 2012 the Company had no such proceedings or claims.

8. INCOME TAXES

We are subject to taxation in the U.S. and the Commonwealth of Massachusetts. At March 31, 2012 and December 31, 2011, FPI had gross deferred tax assets calculated at an expected blended rate of 38% of approximately $5,444,000 and $5,130,000, respectively, principally arising from net operating loss carry-forwards for income tax purposes of approximately $10,4,000. As management of FPI cannot determine that it is more likely than not that the Company will realize the benefit of the deferred tax asset, a valuation allowance of approximately $5,444,000 and $5,130,000 has been established at March 31, 2012 and December 31, 2011, respectively.

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The significant components of the Company’s net deferred tax assets (liabilities) at March 31, 2012 and December 31, 2011 are as follows:

	March 31, 2012			December 31, 2011
Gross deferred tax assets:
Net operating loss carry-forwards	$	3,771,000		$	3,503,965
Stock based expenses		1,438,000			1,396,526
Tax credit carry-forwards		222,134			222,134
All others		13,139			13,139
		5,444,273			5,135,764
Gross deferred tax liabilities:
Deferred tax asset valuation allowance		(5,444,273	)		(5,135,764	)
Net deferred tax asset (liability)	$	-		$	-

At March 31, 2012, the Company has net operating loss carry-forwards for income tax purposes of approximately $10,400,000, which expire in the years 2023 through 2031. This reflects permanent differences and estimated temporary differences between book and tax losses. The net change in the allowance account from December 31, 2011 to March 31, 2012 was an increase of approximately $308,000 for the period ended March 31, 2012.

Due to the reverse merger/recapitalization, the Company is restricted in the future use of net operating loss and tax credit carry-forwards generated by FPM before the effective date of the merger. Both of the separate loss years’ net operating losses will be subject to possible limitations concerning changes of control and other limitations under the Internal Revenue Code. The net operating loss carry-forwards are subject to annual limitations which are cumulative until they expire. The Company is in the process of determining the annual allowable net operating loss deduction should the Company generate taxable income. Since both of the companies which were parties to the share exchange have substantial valuation allowances against any components of deferred taxes, management believes that no material differences in tax allocations will arise from the share transaction.

The accounting for the tax benefits of acquired deductible temporary differences and net operating loss carry-forwards, which are not recognized at the acquisition date because a valuation allowance is established and which are recognized subsequent to the acquisition, will be applied first to reduce to zero any goodwill and other non-current intangible assets related to the acquisition. Any remaining benefits would be recognized as a reduction of income tax expense in future periods.

Topic 740 in the Accounting Standards Codification (ASC 740) prescribes recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. At March 31, 2012, the Company had taken no tax positions that would require disclosure under ASC 740.

Pursuant to ASC 740, income taxes are provided for based upon the liability method of accounting. Under this approach, deferred income taxes are recorded to reflect the tax consequences on future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard imposed by ASC 740 to allow recognition of such an asset.

With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2004. Further, the Company currently has no open tax years, subject to audit prior to December 31, 2008.

9. CAPITAL STOCK

All per share references have been restated to reflect the effect of the reverse merger/recapitalization as discussed in note 1.

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock, $0.001 par value; 3,500,000 shares have been designated Series A Preferred Stock. At March 31, 2012 and December 31, 2011, 1,972,800 and 1,924,230 shares of Series A preferred stock, respectively, were issued and outstanding.

Common Stock

The Company has authorized 200,000,000 shares of its common stock, $0.001 par value, At March 31, 2012 and December 31, 2011, the Company had issued and outstanding 22,440,894 and 22,310,894, respectively, shares of its common stock.

In March 2012 the Company issued 130,000 shares of common stock, valued at $0.85 per share, for services performed pursuant to a consulting agreement.

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10. STOCK PURCHASE WARRANTS

Common Stock Warrants

All issuances of common stock warrants during the year ending December 31, 2010 were related to certain short-term convertible notes payable.

The following is a summary of all common stock warrant activity through March 31, 2012:

	Number of Shares		Exercise Price		Weighted Average
	Under Warrants		Per Share		Exercise Price

Warrants issued and exercisable at December 31, 2010		638,217	$	0.95- $2.00	$	1.11
Warrants Granted		4,238,764	$	0.83 - $1.33	$	1.23
Warrants Expired		(41,250)	$	2.00	$	2.00

Warrants issued and exercisable at December 31, 2011		4,843,531	$	0.95 - $2.00	$	1.21
Warrants Granted		-		-		-
Warrants Expired		(30,000)	$	2.00	$	2.00
Warrants issued and exercisable at March 31, 2012		4,813,531	$	0.95 - $2.00	$	1.21

The following represents additional information related to common stock warrants outstanding and exercisable at March 31, 2012:

Exercise Price		Number of Shares Under Warrants		Weighted Average Remaining Contract Life in Years		Weighted Average Exercise Price
$	0.83		861,028		4.22	$	0.83
$	0.95		86,250		0.94	$	0.95
$	1.00		426,417		2.10	$	1.00
$	1.33		3,432,336		4.24	$	1.33
$	2.00		7,500		0.12	$	2.00
			4,813,531		3.98	$	1.21

The Company used the Black-Scholes option price calculation to value the warrants granted in 2011 using the following assumptions: risk-free rate of 3.90%, volatility ranging from 70% to 117%, and actual term and exercise price of warrants granted. See Note 1, Summary of Significant Accounting Policies, “Accounting for Share Based Payments.”

11. COMMON STOCK OPTIONS

On February 11, 2011, the Company adopted its 2011 Equity Incentive Plan (“the Plan”) under which 6,475,750 shares of common stock were reserved for issuance under options or other equity interests as set forth in the Plan. Under the Plan, options are available for issuance to employees, officers, directors, consultants and advisors. The Plan provides that the Board of Directors will determine the exercise price and vesting terms of each option on the date of grant. Options granted under the Plan generally expire ten years from the date of grant.

In connection with the Merger, the Company exchanged issued and outstanding stock options in FPI for stock options in FPM with substantially the same terms. Pursuant to the Merger, the shares of FPI were modified for the exchange ratio of 3 for 2 whereby the exchange ratio was applied to the original exercise price of the option and the common shares underlying the option. In connection with this modification to the terms of the stock options, the Company recorded a one-time charge of $1,351,452 to stock option expense.

In May 2011, prior to the Merger, the Company granted Johan (Thijs) Spoor, the Company’s CEO, options to purchase 400,000, shares of common stock in the Company at $0.75 per share (aggregate fair value of $200,763). Mr. Spoor’s options will vest annually over four (4) years. These options were adjusted for the exchange ratio and post merger the options are exercisable into 600,000 shares of common stock at $0.50 (aggregate fair value of $671,520) per share with one-quarter vesting annually.

Additionally, in May 2011, the Company issued 450,000 shares of common stock, to a director of the Company, as a cashless exercise of 900,000 Stock Options. Immediately following the Merger, FPM issued 161,250 shares of common stock, to another director of the Company, in the cashless exercise of 215,000 (pre-merger FluoroPharma, Inc. options) options issued to a director of the Company.

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The following is a summary of all common stock option activity during the period ended March 31, 2012:

	Shares Under Options Outstanding			Weighted Average Exercise Price

Outstanding at December 31, 2010		4,616,000		$	0.47
Options granted		666,584		$	0.57
Options forfeited		-
Options exercised		(1,115,000	)	$	0. 55
Outstanding at December 31, 2011		4,167,584		$	0.62
Options granted		91,463		$	0.82
Options forfeited		(510,000)		$	0.14
Options exercised		-			-
Outstanding at March 31, 2012		3,749,047		$	0.62

	Options Exercisable		Weighted Average Exercise Price per Share
Exercisable at December 31, 2011		2,876,714	$	0.58
Exercisable at March 31, 2012		2,638,177	$	0.65

The weighted average fair value of options granted during the quarter ended March 31, 2012 was $0.48.

The following represents additional information related to common stock options outstanding and exercisable at March 31, 2012:

		Outstanding						Exercisable
				Weighted
				Average		Weighted				Weighted
				Remaining		Average				Average
Exercise Price		Number of		Contract Life		Exercise		Number of		Exercise
Price		Shares		in Years		Price		Shares		Price

$	0.13		15,000		3.17	$	0.13		15,000	$	0.13
$	0.17		675,000		7.36	$	0.17		675,000	$	0.17
$	0.50		1,680,000		7.29	$	0.50		600,000	$	0.50
$	0.67		318,000		0.75	$	0.67		318,000	$	0.67
$	0.82		91,463		9.89	$	0.82		91,463	$	0.82
$	0.95		573,000		4.82	$	0.95		573,000	$	0.95
$	1.05		30,870		9.69	$	1.05		-	$	1.05
$	1.17		165,000		5.81	$	1.17		165,000	$	1.17
$	1.33		165,000		6.67	$	1.33		165,000	$	1.33
$	1.40		35,714		9.19	$	1.40		35,714	$	1.40
			3,749,047		6.36	$	0.59		2,638,177	$	0.65

The weighted average remaining contractual term for fully vested share options (exercisable, above) and options expected to vest (outstanding, above) is 5.28 and 6.36 years, respectively. The aggregate intrinsic value of all of the Company’s options is approximately $782,000.

As of March 31, 2012, there was approximately $910,000 of unrecognized compensation cost related to non-vested options. Weighted average period of non-vested stock options was 8.39 years as of March 31, 2012.

The Company used the Black-Scholes option price calculation to value the options granted in 2012, using the following assumptions: risk-free rate of 2.74%; volatility range of 69%; average term of five (5) years and exercise price of options granted. See Note 1, Summary of Significant Accounting Policies, “Accounting for Share Based Payments.” Options granted to consultants and other non-employees are recorded at fair value at the date of grant and subsequently adjusted to fair value at the end of each reporting period until such options vest, and the fair value of the options, as adjusted, is amortized to consulting expense over the related vesting period.

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12. SUBSEQUENT EVENTS

The Company evaluated events occurring subsequent to March 31, 2012, identifying those that are required to be disclosed as follows:

On April 9, 2012, the Board of Directors of FluoroPharma Medical, Inc. (the “Company”) decided to eliminate Dr. Elmaleh’s status with the Company as an executive officer, but intends to retain his services as a consultant to the Company. Dr. Elmaleh will also continue to serve as a director of the Company and as Chairman of the Board.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This report contains forward-looking statements. These forward-looking statements include, without limitation, statements containing the words “believes,” “anticipates,” “expects,” “intends,” “projects,” “will,” and other words of similar import or the negative of those terms or expressions. Forward-looking statements in this report include, but are not limited to, expectations of future levels of research and development spending, general and administrative spending, levels of capital expenditures and operating results, sufficiency of our capital resources, our intention to pursue and consummate strategic opportunities available to us, including sales of certain of our assets. Forward-looking statements subject to certain known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to those described in “Risk Factors” of the reports filed with the Securities and Exchange Commission.

CORPORATE OVERVIEW

We are a biopharmaceutical company specializing in discovering, developing and commercializing molecular imaging pharmaceuticals with initial applications in the area of cardiology. Molecular imaging pharmaceuticals are radiopharmaceuticals that enable early detection of disease through the visualization of subtle changes in biochemical and biological processes. We currently have two clinical-stage molecular imaging pharmaceutical product candidates: CardioPET and BFPET. Additionally we have identified potential candidates that may be useful in the detection and/or treatment of vulnerable plaque.

The Company was organized January 25, 2007 under the laws of the State of Nevada. The Company served as an electronics waste management solution provider, specializing in the collection, retirement, storage and remarketing of excess, damaged or obsolete electronic assets, such as computer, telecommunications and other electronic office equipment.

FluoroPharma Inc. (“FPI”), a Delaware corporation, is a molecular imaging company headquartered in Boston, MA. FPI was founded in 2003 to engage in the discovery, development and commercialization of proprietary products for the positron emission tomography (PET) market. The Company’s initial focus has been on the development of novel cardiovascular imaging agents that can more efficiently and effectively detect and assess acute and chronic forms of coronary artery disease (CAD). Molecular imaging pharmaceuticals are radiopharmaceuticals that enable early detection of disease through the visualization of subtle changes in biochemical and biological processes.

On May 16, 2011, the Company entered into the Merger Agreement by and among the Company, FPI, and MergerCo. Upon closing of the Merger on May 16, 2011, MergerCo merged with and into FPI, and FPI, as the surviving corporation, became a wholly owned subsidiary of the Company.

From and after the Merger, our business is conducted through our wholly owned subsidiary FPI. The discussion of our business in this prospectus is that of our current business which is conducted through FPI.

Recent Development

On March 1, 2012, the Company entered into a Letter of Intent (“LOI”) with SGS Life Science Services (“SGS”), a company with its registered offices in Belgium, for clinical research services relating to the Company’s CardioPET Phase II study. The Phase II trial will be an open label trial designed to assess the safety and diagnostic performance of CardioPET as compared to myocardial perfusion imaging and angiography as a truth standard of background disease. The services to be provided under the LOI include start-up activities for the set-up of the trial, clinical regulatory affairs and review of IMPD, commencing on March 1, 2012 through June 1, 2012. The LOI contemplates the entry into a definitive contract and provides for the payment of an aggregate compensation of $290,272 to SGS, $174,163 of which was paid upon execution of the LOI and the balance to be paid within 30 days of the receipt of an invoice. All fees paid by the Company for the start-up services will be credited to fees provided for in the definitive contract. Immediately before entry into the LOI, the Company engaged FGK Representative Service GmbH to serve as the Company’s sponsor in compliance with the laws governing clinical trials conducted in the European Union. The LOI and a definitive agreement ensure that a Phase II trial can begin upon production validation.

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Our Product Candidates

BFPET

BFPET ([18F]-labeled cationic lipophilic tetraphosphonium) is a novel blood flow imaging agent being developed by FluoroPharma for use in conjunction with stress-testing for the detection of ischemic (reversibly damaged) and infarcted (irreversibly damaged) tissue within the myocardium in patients with suspected or proven chronic coronary artery disease (CAD). BFPET has been designed to enter the myocardial cells of the heart muscle in direct proportion to blood flow and membrane potential—the two most important physiological indicators of adequate blood supply to the heart. BFPET has been designed to effectively differentiate among those cells of the myocardium that are ischemic, infarcted and those that are healthy. Because ischemic and infarcted cells take up significantly less BFPET than normal healthy myocardial cells, the signal emitted by BFPET is inversely proportional to the extent of myocardial injury. Therefore, as a result of BFPET’s use, we believe ischemic heart tissue can be more reliably detected using BFPET. We anticipate that BFPET will primarily be used in conjunction with stress-testing for patients with known or suspected chronic CAD. If approved, BFPET will represent the first molecular imaging blood flow agent commercialized for use in the cardiovascular segment of the PET imaging market.

BFPET has completed Phase I trials and is entering Phase II trials to assess its efficacy in CAD subjects.

CardioPET

CardioPET (Trans-9-[18F]-Fluoro-3, 4-Methyleneheptadecanoic Acid) is a novel molecular imaging agent in development by FluoroPharma for the assessment of myocardial metabolism. We intend to develop CardioPET for use in the following areas: (a) detection of ischemic and infarcted tissue in patients with suspected or proven forms of acute and chronic CAD, including those that cannot undergo stress-testing; and (b) Cardiac Viability Assessment (CVA), for the prediction of functional improvement prior to, or following revascularization in patients with acute CAD, including myocardial infarction.

FluoroPharma believes that CardioPET may be ideal for CVA through its ability to specifically identify jeopardized but viable myocardium—that is, heart tissue that has suffered an acute episode of ischemia, but is still viable.

Identifying viable myocardium, also referred to as hibernating or stunned myocardium, from non-viable scar tissue is crucial because it is well documented that revascularization in patients with substantial viable myocardium results in improved left ventricular dysfunction and survival. Importantly, CardioPET, if approved, may have several significant advantages for assessing cardiac viability using PET, and would represent the first imaging agent available in the U.S. for use in patients with acute and chronic CAD that cannot undergo stress-testing. CardioPET is designed to provide the metabolic component for CVA. Accordingly, it may be used with either BFPET or other blood flow agents in performing CVA.

CardioPET has completed Phase I trials and is entering Phase II trials to assess its efficacy in CAD subjects.

VasoPET

FluoroPharma is developing VasoPET, Diadenosine-5’5’’’-P1, P4-tetraphosphate (Ap4A) analogs, such as P2, P3-monochloromethylene diadenosine 5’, 5’’’-P1, P4-tetraphosphate (Ap2CHClp2A), as novel molecular imaging agent for the detection of “vulnerable” coronary artery plaque in patients with CAD. VasoPET, if approved, would represent the first PET cardiac product to reliably image inflamed plaque and therefore may differentiate between vulnerable and stable coronary artery plaque. VasoPET has not entered human trials yet.

The rupture of atherosclerotic plaques and the subsequent formation of thrombi are currently recognized as the primary mechanisms of myocardial and cerebral infarctions. Therefore, the detection of vulnerable plaque in atherosclerotic lesions is a desirable goal—and to date remains both a significant unmet clinical objective and a large unaddressed market opportunity.

Coronary artery plaques grow over time and progressively narrow the lumen of the coronary artery until blood flow to the heart diminishes to a critical level. The decrease in blood flow causes symptoms of chest pain (angina), at first during exercise and then progressively during rest. Rupture of the plaque and/or clot formation overlying the plaque may then result in myocardial ischemia and/or myocardial infarction. Coronary artery plaque that is “vulnerable” is differentiated from its “stable” form by a large lipid-rich atheromatous core, a thin fibrous cap, and infiltration by inflammatory cells such as macrophages. The risk factor for rupture (and subsequent heart attack) is currently thought to be independent of plaque size and arterial narrowing, but rather is thought to correlate more with the presence of inflammation.

Recent Accounting Pronouncements

Management has evaluated all recently issued or newly applicable pronouncements and determined that there was no material impact on the Company’s financial statements.

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Critical Accounting Policies

This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) and have been consistently applied in the preparation of the financial statements.

Accounting for Share-Based Payments

We follow the provisions of ASC Topic 718, which establishes the accounting for transactions in which an entity exchanges equity securities for services and requires companies to expense the estimated fair value of these awards over the requisite service period. The Company uses the Black-Scholes option pricing model in determining fair value. Accordingly, compensation is recognized using the fair value method and expected term accrual requirements as prescribed.

The fair value of each share based payment is estimated on the measurement date using the Black-Scholes model with the following assumptions, which are determined at the beginning of each year and utilized in all calculations for that year:

Risk-Free Interest Rate. The interest rate used is based on the yield of a U.S. Treasury security as of the beginning of the year.

Expected Volatility. The Company calculates the expected volatility based on historical volatility of its former parent company.

Dividend Yield. The Company has never paid cash dividends, and does not currently intend to pay cash dividends, and thus has assumed a 0% dividend yield.

Expected Term. For options, the Company uses the option term as the expected term. For warrants, the Company uses the actual term of the warrant.

Pre-Vesting Forfeitures. Estimates of pre-vesting option forfeitures are based on Company experience. The Company will adjust its estimate of forfeitures over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of compensation expense to be recognized in future periods.

Fair Value of Financial Instruments

ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 : Quoted prices for identical instruments in active markets accessible at the measurement date.

Level 2 : Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 : Unobservable inputs for the instrument are only used when there is little, if any, market activity for the instrument at the measurement date. Price or valuation techniques require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).

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Impairments

The Company assesses the impairment of long-lived assets, including other intangible assets, whenever events or changes in circumstances indicate that their carrying value may not be recoverable in accordance with ASC Topic 360-10-35, “Impairment or Disposal of Long-Lived Assets.” The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgments, related primarily to the future profitability and/or future value of the assets. The Company holds investments in companies having operations or technologies in areas that are within or adjacent to our strategic focus when acquired, all of which are privately held and whose values are difficult to determine. The Company records an investment impairment charge if it believes an investment has experienced a decline in value that is other than temporary.

Management has determined that no impairments were required during the three months ended March 31, 2012 or for the year ended December 31, 2011.

Research and Development Costs

Research and development costs are expensed as incurred. The cost of intellectual property purchased from others that is immediately marketable or that has an alternative future use is capitalized and amortized as intangible assets. Capitalized costs are amortized using the straight-line method over the estimated economic life of the related asset.

Use of Estimates

The accompanying financial statements are prepared in conformity with GAAP in the United States of America, and include certain estimates and assumptions which affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results may differ from those estimates.

RESULTS OF OPERATIONS – THREE MONTHS ENDED MARCH 31, 2012 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2011

Revenue

There were no operating revenues for the three months ended March 31, 2012 and 2011.

Research and Development Expenses

Research and development expenses were $295,295 and $0 for the three months ended March 31, 2012 and 2011, respectively. The increase was primarily due to increases in clinical trial expenses in the three month period ended March 31, 2012. We expect research and development expenses to continue to increase in future periods as we continue our clinical studies of our lead candidates in cardiology and pursue our strategic opportunities.

General and Administrative Expenses

General and administrative expenses were $278,047 and $17,033 for the three months ended March 31, 2012 and 2011, respectively. The increase was due to increased payroll, and legal and accounting fees in connection with cash received from our equity financings in 2011. We expect general and administrative expenses to increase going forward, in the long term, as we proceed to move our technologies forward toward commercialization.

Interest and Other Income and Expenses, net

Other income, net was $124,187 for the three months ended March 31, 2012. Other expenses, net was $25,176 for the three months ended March 31, 2011. The decrease in interest expense is mainly due to the change in notes payable issued for the purposes of bridge financing. We do not expect interest expense to increase unless the Company is unable to raise additional capital through an equity financing or a partnering arrangement. These amounts are offset by a $124,000 gain on settlement of accounts payable for the year ended December 31, 2011.

Liquidity and Capital Resources

We have experienced net losses and negative cash flows from operations since our inception. We have sustained cumulative losses of $13,727,069 as of March 31, 2012.. We have historically financed our operations through issuances of equity and the proceeds of debt instruments. In the past, we have also provided for our cash needs by issuing common stock, options and warrants for certain operating costs, including consulting and professional fees. During the year ended December 31, 2011, we raised approximately $7,100,000 through a private placement of our common stock and warrants.

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We continue to actively pursue various funding options, including equity offerings and debt financings, to obtain additional funds to continue the development of our products and bring them to commercial markets. However, there can be no assurance that we will be successful in our efforts to raise additional capital.

The Company believes that the successful growth and operation of its business is dependent upon its ability to do any or all of the following:

●	obtain adequate sources of debt or equity financing to pay unfunded operating expenses and fund long-term business operations; and

●	manage or control working capital requirements by controlling operating expenses.

There can be no assurance that the Company will be successful in achieving its long-term plans as set forth above, or that such plans, if consummated, will enable the Company to obtain profitable operations or continue in the long-term as a going concern.

Net cash used in operating activities for the three months ended March 31, 2012 was $847,221, which primarily reflected our net loss of $813,027, changes in working capital and a gain on settlement of accounts payable of $124,000.

Net cash used by investing activities was approximately $31,283 for the three months ended March 31, 2012, which primarily reflected a purchase of office furniture and leasehold improvements.

There were no financing activities in the three months ended March 31, 2012.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements, including unrecorded derivative instruments that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. We have certain warrants and options outstanding but we do not expect to receive sufficient proceeds from the exercise of these instruments unless and until the trading price of our common stock is significantly greater than the applicable exercise prices of the options and warrants and mainly following any necessary registering of underlying securities.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not Applicable.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

At the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms, and (ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer, or officers performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting

There have been no changes in our internal controls over financial reporting during our first fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

Item 1A. Risk Factors.

Not Applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On March 19, 2012, the Company issued 130,000 shares of Common Stock in connection with a consulting agreement.

The above offering and sale was deemed to be exempt under rule 506 of Regulation D and/or Section 4(2) of the SecuritiesAct, No advertising or general solicitation was employed in offering the securities. The offering and sale was made to a limited number of persons, all of whom were accredited investors, our business associates or our executive officers, and transfers of the securities were restricted by us in accordance with the requirements of the Securities Act. In addition to representations by the above-referenced persons, we have made independent determinations that all of the above-referenced persons were accredited or sophisticated investors, were capable of analyzing the merits and risks of their investment, and understood the speculative nature of their investment. Furthermore, all of the above-referenced persons were provided with access to our SEC filings.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.

Exhibit No.		Title of Document
31.1		Certification of the Principal Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of the Principal Executive Officer and Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document*
101.SCH		XBRL Schema Document*
101.CAL		XBRL Calculation Linkbase Document*
101.LAB		XBRL Label Linkbase Document*
101.PRE		XBRL Presentation Linkbase Document*
101.DEF		XBRL Definition Linkbase Document*

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SIGNATURES

In accordance with the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FluoroPharma Medical, Inc.

Date: May 15, 2012
	/s/ Johan M. (Thijs) Spoor
	Johan M. (Thijs) Spoor
	Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial and Accounting Officer

FLUOROPHARMA MEDICAL, INC. - FORM 10-Q - May 15, 2012

Attached files

FLUOROPHARMA MEDICAL, INC. Reports