FLUOROPHARMA MEDICAL, INC. - FORM 10-Q

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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 September 30, 2012
[ ]	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)


	(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 [ ]

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 [ ]

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	[ ]	Accelerated filer	[ ]

Non-accelerated filer	[ ]	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 [ ] No [X]

As of November 14, 2012, there were 22,510,894 shares of $0.001 par value common stock issued and outstanding.

Table of Contents

FORM 10-Q

FluoroPharma Medical, Inc.

INDEX

		Page
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements		1

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

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation		13

Item 3. Quantitative and Qualitative Disclosures About Market Risk		18

Item 4. Controls and Procedures		18

PART II - OTHER INFORMATION

Item 1. Legal Proceedings		19

Item 1A. Risk Factors		19

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		19

Item 3. Defaults Upon Senior Securities		19

Item 4. Mine Safety Disclosures		19

Item 5. Other Information		19

Item 6. Exhibits		19

Signatures

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2012				December 31, 2011
	(unaudited)
ASSETS

Current Assets:
Cash and cash equivalents		$	776,163			$	3,265,141
Prepaid expenses & other			114,064				50,291
Total Current Assets			890,227				3,315,432

Property and equipment, net			180,060				169,808
Intangible assets, net			56,724				61,155

Total Assets		$	1,127,011			$	3,546,395

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:
Accounts payable		$	79,533			$	341,172
Accrued expenses			63,471				39,232
Total Current Liabilities			143,004				380,404

Commitments & Contingencies

Stockholders’ Equity:
Preferred stock Series A; $0.001 par value, 3,500,000 designated 2,022,321 and 1,924,230 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively (preference in liquidation of $1,721,247 at September 30, 2012)			2,022				1,924
Common stock - Class A - $0.001 par value, 200,000,000 shares authorized, 22,510,894 and 22,310,894 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively			22,512				22,312
Additional paid-in capital			16,620,318				16,015,484
Deficit accumulated in the development stage			(15,660,845	)			(12,873,729	)
Total Stockholders’ Equity			984,007				3,165,991

Total Liabilities and Stockholders’ Equity		$	1,127,011			$	3,546,395

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

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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						June 13, 2003 (inception) to
	2012			2011			2012			2011			Sept. 30, 2012
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Operating Expenses:
General and administrative	$	448,438		$	270,532		$	1,016,322		$	1,794,249		$	5,997,079
Professional fees		208,290			150,088			847,079			490,706			3,985,523
Research and development		344,871			10,272			905,142			255,508			5,548,919
Sales		-			-			-			269			1,292
Other Taxes		746			-			9,695			-			9,695
Amortization		1,477			3,911			4,431			11,733			104,884
Depreciation		4,512			5,811			14,022			17,493			145,106
Total Operating Expenses		1,008,334			440,614			2,796,691			2,569,958			15,792,498

Loss from Operations		(1,008,334	)		(440,614	)		(2,796,691	)		(2,569,958	)		(15,792,498	)

Other Income (Expense):
Interest income		196			-			570			-			4,897
Gain on debt restructuring		-			-			-			-			1,358,127
Loss on disposition of fixed assets		-			-			-			-			(71,550	)
Gain on settlement of Accounts Payable		9,142			-			133,142			113,406			258,032
Interest expense		-			(1,005	)		-			(113,193	)		(316,326	)
Total Other Income (Expense), net		9,338			(1,005	)		133,712			213			1,233,180

Loss Before Provision for Income Taxes		(998,996	)		(441,619	)		(2,662,979	)		(2,569,745	)		(14,559,318	)

Provision for Income Taxes		-			-			-			-			-

Net Loss	$	(998,996	)	$	(441,619	)	$	(2,662,979	)	$	(2,569,745	)	$	(14,559,318	)
														-
Preferred Stock Dividend		(42,721	)		(38,609	)		(124,137	)		(898,863	)		(1,101,527	)
														-
Net Loss Attributable to Common Stockholders	$	(1,041,717	)	$	(480,228	)	$	(2,787,116	)	$	(3,468,608	)	$	(15,660,845	)

Net loss per common share
Basic	$	(0.05	)	$	(0.02	)	$	(0.12	)	$	(0.21	)	$	(1.72	)
Diluted	$	(0.05	)	$	(0.02	)	$	(0.12	)	$	(0.21	)	$	(1.72	)

Weighted Average Shares Used in per Share Calculation:
Basic		22,443,202			20,967,981			22,407,378			16,542,270			9,082,797
Diluted		22,443,202			20,967,981			22,407,378			16,542,270			9,082,797

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

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Nine Months Ended September 30,							June 13, 2003 (inception) to
		2012			2011			September 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:		(unaudited)			(unaudited)			(unaudited)

Net loss		$	(2,662,979	)	$	(2,569,745	)	$	(14,559,318	)
Adjustments to reconcile net loss to net cash used by operating activities
Depreciation and amortization			18,453			20,580			249,990
Issuance of common stock for consulting			110,500			-			133,988
Expenses related to employee stock options			265,354			1,636,187			2,569,533
Amortization of debt discount			-			8,646			19,292
Non-cash fair value of stock options issued to non-employees for consulting			4,642			-			1,374,752
Non-cash fair value of warrants issued to non-employees			73,220			-			73,220
Expenses paid by issuance of preferred stock/ common stock			70,000			127,650			247,650
Loss on fixed asset dispositions			-			-			71,550
Gain on debt and accounts payable settlement			(133,142	)		-			(1,616,159	)
Loss on early extinguishment of debt			-			-			61,419
(Increase) decrease in:
Accounts receivable			-			-			50,000
Prepaid expenses			(63,773	)		(57,770	)		(114,064	)
Increase (decrease) in:
Accounts payable			(114,336	)		(436,361	)		591,783
Accrued expenses			(18,482	)		(298,431	)		516,532
Net Cash Used by Operating Activities			(2,450,543	)		(1,569,244	)		(10,329,832	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for intangible assets			-			(2,500	)		(161,609	)
Net cash received in acquistition			-			69			69
Cash paid for purchase of property and equipment			(38,435	)		(9,732	)		(410,478	)
Net Cash Used by Investing Activities			(38,435	)		(12,163	)		(572,018	)

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, net			-			3,190,929			7,070,348
Proceeds from sale of preferred stock, net			-			1,395,000			1,920,000
Net Cash Provided by Financing Activities			-			4,780,929			11,678,013

Net Increase (Decrease) in Cash and Cash Equivalents			(2,488,978	)		3,199,522			776,163
Cash and Cash Equivalents, Beginning of Period			3,265,141			11,413			-
Cash and Cash Equivalents, End of Period		$	776,163		$	3,210,935		$	776,163

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		$	-		$	835,000		$	2,135,000
Accrued interest – stockholder – settled in common stock		$	-		$	41,180		$	188,569
Preferred stock dividend		$	(124,137	)	$	(898,863	)	$	(1,101,527	)
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 debt and accounts payable related to settlement		$	133,142		$	113,406		$	1,616,159
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 consolidated financial statements.

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

NOTES TO THE 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 subsidiary (“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. Certain prior year amounts in the condensed consolidated financial statements and notes thereto have been reclassified to conform to the current period’s 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 September 30, 2012, the Company has not generated any revenues from 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 September 30, 2012 and December 31, 2011 consisted of computer and office equipment, machinery and equipment, and leasehold improvements 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 are carried at the 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 fifteen years.

Impairments

The Company assesses its long-lived assets, including intangible assets, for possible impairment 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 had occurred as of September 30, 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.

The Company groups its assets and liabilities measured at fair value, in three levels based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price).

Financial instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

The three levels of the fair value hierarchy are as follows:

Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 – Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the financial instrument.

The Company recognizes transfers between levels at the end of the reporting period as if the transfers occurred on the last day of the reporting period.

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.

The Company continues to recognize net operating losses. The estimated net operating loss for the nine months ended September 30, 2012 is $2,700,000, which results in an increase in the deferred tax asset and associated valuation allowance of approximately $1,026,000, using the combined state and federal tax rates of approximately 38%.

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There are no unrecognized tax benefits 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 September 30, 2012 or December 31, 2011, and has not recognized interest and/or penalties in the statement of operations for the periods ended September 30, 2012 and December 31, 2011. Further, the Company currently has no open tax years, subject to audit prior to December 31, 2009.

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. The Company 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 nine months ending September 30, 2012 and September 30, 2011 of $269,996 and $1,636,187 respectively.

A portion of the 2011 expense was the result of changes to the terms of previously granted options in the Merger (see Note 7). The number of shares increased (3-for-2) and the exercise prices decreased.

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		2.26	%		3.90%
Expected volatility		78.53	%		117 %
Dividend yield	none			none
Expected term	5 years			5 years

Loss 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.

Net loss per share is presented as both basic and diluted net loss per share. Basic net loss per share excludes any dilutive effects of options and warrants. Diluted net loss per share includes the impact of potentially dilutive securities. No dilutive effect was calculated for the three and nine months ended September 30, 2012 and 2011 as the Company reported a net loss for each respective period and the effect would have been anti-dilutive. As of September 30, 2012, the Company had outstanding options exercisable for 4,353,428 shares of its common stock, warrants exercisable for 5,243,531 shares of its common stock and preferred stock convertible into 2,,073,792 shares of common stock. As of September 30, 2011, the Company had outstanding options exercisable for 4,101,000 shares of its common stock, warrants exercisable for 4,238,395 shares of its common stock and preferred stock convertible into 2,041,231 shares of common stock.

Research and Development Costs

Research and development costs are expensed as incurred.

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.

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Liquidity

The Company has experienced net losses and negative cash flows from operations since its inception. The Company has sustained cumulative losses since inception of $15,660,845 as of September 30, 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's current cash reserves of approximately $800,000 as of September 30, 2012, 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. The Company continues to actively pursue various funding options, including equity offerings, to obtain additional funds to continue the development of its products and bring them to commercial markets. However, there can be no assurance that the Company will be able to consummate any fund raising transactions on acceptable terms or at all. 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 operations and liquidity.

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 Montclair, NJ. 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.

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 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.

3. 2011 PRIVATE PLACEMENT

During the year ended December 31, 2011, the Company raised aggregate gross proceeds of $7,093,065 pursuant to a Private Placement. The Company entered into subscription agreements for the sale and issuance of an aggregate of 5,481,757 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.

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Significant terms of the Series A preferred stock, as specified in the Certificate of Designation are as follows:

Conversion

Each share of Series A Preferred Stock may, at the holder’s option, convert into Class A common stock (“voluntary conversion”). The conversion rate is equal to the sum of the state value of the preferred shares plus all accrued and unpaid dividends divided by $0.83, the conversion price. Subject to the specified provisions, the Series A Preferred Stock will automatically convert into Class A common stock with an $0.83 conversion price on the Mandatory Conversion Date. As specified in the Certificate of Designation the Mandatory Conversion Date is the first date at least six (6) months after the issuance of the Series A Preferred Stock on which each of the following conditions shall have been satisfied: (x) the Corporation shall have consummated, on or prior to such date, a Qualified Financing for aggregate gross proceeds to the Corporation of $7,000,000, (y) the volume weighted average trading price for the Common Stock for each day on thirty (30) consecutive trading days immediately preceding such date, as published by Bloomberg, must be above a price of $1.50 (“VWAP”) and the trading volume over that period must exceed 1,500,000 shares, and (z) as of such date, all shares of Common Stock issuable upon conversion of the Series A Preferred Stock are registered under the Securities Act of 1933 pursuant to an effective registration statement or are otherwise eligible for sale under Rule 144 of the Act. As of September 30, 2012, no mandatory conversion has taken place as all of the conditions required for conversion have not occurred.

Dividends

(a) Cumulative Preferred Dividends. Each holder of the Series A Preferred Stock shall be entitled to receive cash dividends payable on the Stated Value of the Series A Preferred Stock at a rate of 10% per annum which shall be cumulative, accrue daily from the original issuance date of the Series A Preferred Stock (the “Issuance Date”); provided however, if either (x) the Company shall not have consummated a Qualified Financing with aggregate gross proceeds to the Company of $7,000,000 on or before June 30, 2012, or (y) for any reason, any shares of Common Stock issuable upon conversion of the Series A Preferred Stock are not registered under the Securities Act of 1933 (the “Act”) pursuant to an effective registration statement on or before June 30, 2012 or are not otherwise eligible for sale under Rule 144 of the Act, then, effective July 1, 2012, the rate of dividends on the Series A Preferred Stock shall increase to 12% per annum. As of June 30, 2012, both of the above conditions have been met by the Company and accordingly, the rate of dividends on the Series A Preferred Stock remains at 10% per annum.

(b) Payment of Dividends. The Company shall be required to pay all accrued and unpaid dividends (whether or not declared) in respect of the Series A Preferred Stock semi-annually on each June 30 and December 31 of each calendar year. All such dividends shall be paid in cash; provided, that, at the option of the Company, the Company may pay any accrued and unpaid dividends on the Series A Preferred Stock in the form of additional shares of Series A Preferred Stock, with each share of Series A Preferred Stock being valued for this purpose at the Stated Value in effect on the date of payment.

Liquidation preference

In the event of liquidation, dissolution or winding up of the business of the Company, whether voluntary or involuntary, each holder of Series A Preferred Stock shall be entitled to receive, for each share thereof, out of assets of the Company legally available therefor, a preferential amount in cash, per share of Series A Preferred Stock, equal to (and not more than) the sum of the (x) Stated Value, plus (y) all accrued and unpaid dividends thereon. All preferential amounts to be paid to the holders of Series A Preferred Stock in connection with such liquidation, dissolution or winding up shall be paid before the payment or setting apart for payment of any amount for, or the distribution of any assets of the Company to the holders of the Company's Junior Stock. If upon any such distribution the assets of the Company shall be insufficient to pay the holders of the outstanding shares of Series A Preferred Stock the full amounts to which they shall be entitled, such holders shall share ratably in any distribution of assets in accordance with the sums which would be payable on such distribution if all sums payable thereon were paid in full.

Voting

The holders of the Series A Preferred Stock have the right to one vote for each share of common stock into which such Series A Preferred Stock could then convert.

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 Series 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 accrued $97,110, in relation to the preferred stock dividend, and increased Preferred Stock by 117,001, the number of shares issued in January 2012 in satisfaction of the dividend. For the nine months ended September 30, 2012, the Company has recorded a preferred stock dividend of $124,137. As of September 30, 2012, the Company has issued 98,091 shares of Preferred Stock in satisfaction of the dividends accrued through June 30, 2012 totaling $81,416 and has an accrued liability of $42,721 for the dividends accrued during the three months ended September 30, 2012.

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.

4. COMMITMENTS AND CONTINGENCIES

License Agreements

In the second quarter of 2009, the Company renegotiated three of its cardiac imaging 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. In accordance with the terms of the license, the Company is required to pay MGH an annual license maintenance fee of $30,000. Additionally, upon commercialization, FluoroPharma is required to make specified milestone payments and royalties on commercial sales.

The Company is current with all stipulated obligations and milestones under the cardiac imaging license agreement and the agreement remains in full force and effect. The Company believes that it maintains 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 the Company 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 the Company as it may be unable to commercialize products without exclusivity and would lose its competitive edge for portions of the 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.

Clinical Research Services Agreement

On September 7, 2012, the Company entered into a Clinical Research Services Agreement (“Agreement”) 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. In March 2012 the Company had signed a Letter of Intent (“LOI”) that provided for the pre-payment of $290,271 for the start up services. The Agreement provides for the payment of an aggregate compensation of $346,234 to SGS payable subject to a schedule of milestones relating to the progress of the clinical trial. All fees paid by the Company for the start-up services have been 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 Agreement ensures that a Phase II trial can begin upon production validation.

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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 commenced 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. 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	$	7,800
2013		45,600
2014		45,600
2015		15,200
	$	114,200

Legal Contingencies

The Company may occasionally become subject to legal proceedings and claims that arise in the ordinary course of its business. It is impossible to predict with any certainty the outcome of any disputes that may arise, and the Company cannot predict whether any liability arising from claims and litigation will be material in relation to the Company’s financial position or results of operations. As of September 30, 2012, the Company had no such proceedings or claims.

5. CAPITAL STOCK

All per share references have been restated to reflect the effect of the reverse merger/recapitalization as discussed in note 2.

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 September 30, 2012 and December 31, 2011, 2,022,321 and 1,924,230 shares of Series A preferred stock, respectively, were issued and outstanding.

Common Stock

The Company is authorized to issue 200,000,000 shares of common stock, $0.001 par value, At September 30, 2012 and December 31, 2011, 22,510,894 and 22,310,894 shares of common stock, respectively, were issued and outstanding.

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. In September 2012, the Company issued 70,000 shares of common stock to employees, valued at $1.00 per share, for compensation. The total fair value of these shares, $180,500, is included in operating expenses.

6. STOCK PURCHASE WARRANTS

Common Stock Warrants

The following is a summary of all common stock warrant activity through September 30, 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		437,500	$	0.50 - 0.83	$	0.62
Warrants Expired		(37,500)	$	2.00	$	2.00
Warrants issued and exercisable at September 30, 2012		5,243,531	$	0.50 - $2.00	$	1.16

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During the nine months ended September 30, 2012, the Company issued an aggregate of 160,000 common stock warrants to non-employees for consulting services. The fair value of the warrants, determined using a Black-Scholes option pricing model, was approximately $73,000 and is included in professional fees in the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2012.

In June 2012, the Company exchanged 277,500 common stock options for 277,500 common stock warrants with the same terms resulting in no incremental fair value to be recorded by the Company.

The following represents additional information related to common stock warrants outstanding and exercisable at September 30, 2012:

Exercise Price		Number of Shares Under Warrants		Weighted Average Remaining Contract Life in Years		Weighted Average Exercise Price
$	0.50		277,500		1.55	$	0.50
$	0.83		1,021,028		2.29	$	0.83
$	0.95		86,250		0.44	$	0.95
$	1.00		426,417		6.60	$	1.00
$	1.33		3,432,336		2.75	$	1.33
			5,243,531		2.99	$	1.16

The Company used the Black-Scholes option price calculation to value the warrants granted in 2012 using the following weighted average assumptions: risk-free rate of 2.26%, volatility of 78.53%, and contractual term and exercise price of warrants granted. See Note 1, Summary of Significant Accounting Policies, “Accounting for Share Based Payments.”

7. 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 granted 161,250 shares of restricted stock under the Plan, 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.

Additionally, in September 2012, as per his employment agreement, the Company granted to Mr. Spoor options to purchase 600,000 shares of common stock at $0.84 per share (aggregate fair value of $324,535). The options will vest annually over three years.

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The following is a summary of all common stock option activity during the period ended September 30, 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		976,464		$	0.84
Options forfeited		(790,620)		$	0.27
Options exercised		-			-
Outstanding at September 30, 2012		4,353,428		$	0.66

	Options Exercisable		Weighted Average Exercise Price per Share
Exercisable at December 31, 2011		2,876,714	$	0.58
Exercisable at September 30, 2012		2,575,678	$	0.66

The weighted average fair value of options granted during the nine months ended September 30, 2012 was $0.53.

The following represents additional information related to common stock options outstanding and exercisable at September 30, 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		2.67	$	0.13		15,000	$	0.13
$	0.17		675,000		6.86	$	0.17		675,000	$	0.17
$	0.50		1,402,500		7.82	$	0.50		472,500	$	0.50
$	0.67		318,000		0.25	$	0.67		318,000	$	0.67
$	0.83		376,464		9.66	$	0.83		156,464	$	0.83
$	0.84		600,000		9.99	$	0.84		-	$	0.84
$	0.95		573,000		4.32	$	0.95		573,000	$	0.95
$	1.05		27,750		9.19	$	1.05		-	$	1.05
$	1.17		165,000		5.31	$	1.17		165,000	$	1.17
$	1.33		165,000		6.16	$	1.33		165,000	$	1.33
$	1.40		35,714		8.69	$	1.40		35,714	$	1.40
			4,353,428		6.96	$	0.66		2,575,678	$	0.66

As of September 30, 2012, the weighted average remaining contractual term for fully vested share options (exercisable, above) and options expected to vest (outstanding, above) is 5.22 and 6.96 years, respectively. The aggregate intrinsic value of all of the Company’s options is approximately $1,568,000 and $970,000 for outstanding and exercisable options, respectively.

As of September 30, 2012, there was approximately $1,285,000 of unrecognized compensation cost related to non-vested options, which will be amortized over the remaining life of approximately 2.74 years as of September 30, 2012.

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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.. 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 Montclair, NJ. 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 April 9, 2012, our Board of Directors decided to eliminate Dr. Elmaleh’s status with the Company as an executive officer, but intended to retain his services as a consultant to the Company.

On June 12, 2012, Dr. David Elmaleh resigned his positions as Chairman of our Board and as a director effective on the same day.

On June 14, 2012, Johan M. (Thijs) Spoor, our President and CEO was appointed as Chairman of the Board of Directors of the Company.

On August 22, 2012, Tamara Rhein was appointed as our Chief Financial Officer.

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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 it does not expect any 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 at the time of the grant.

Expected Volatility. The Company based the expected volatility assumption on a volatility index of peer companies as the Company did not have sufficient market information to estimate the volatility of its own stock.

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 expected term of options granted represents the period of time that options are expected to be outstanding. The Company estimated the expected term of stock options by using the simplified method. 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

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The three levels of the fair value hierarchy are as follows:

The Company recognizes transfers between levels at the end of the reporting period as if the transfers occurred on the last day of the reporting period.

Impairments

Management has determined that no impairments had occurred as of September 30, 2012 or 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 AND NINE MONTHS ENDED SEPTEMBER 30, 2012 COMPARED TO THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011

Revenue

There were no operating revenues for the three and nine months ended September 30, 2012 and 2011.

Research and Development Expenses

Research and development expenses were $344,871 and $10,272 for the three months ended September 30, 2012 and 2011, respectively. Research and development expenses were $905,142 and $255,508 for the nine months ended September 30, 2012 and 2011, respectively. The increases were primarily due to increases in clinical trial expenses in 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.

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General and Administrative Expenses

General and administrative expenses were $448,438 and $270,532 for the three months ended September 30, 2012 and 2011, respectively. General and administrative expenses were $1,016,322 and $1,794,249 for the nine months ended September 30, 2012 and 2011, respectively. The nine months ended September 30, 2011 was unusual due to one-time stock expense charges of $1,351,452 related to the Merger, partially offset by increased executive compensation and stock compensation in 2012. We expect general and administrative expenses to increase going forward, in the long term, as we proceed to move our technologies forward toward commercialization.

Professional Fees

Professional fees were $208,290 and $150,088 for the three months ended September 30, 2012 and 2011, respectively. Professional fees were $847,079 and $490,706 for the nine months ended September 30, 2012 and 2011, respectively. Professional fees increased for the three and nine months ended September 30, 2012 primarily due to increased investor relation activity and increased legal expenses.

Interest and Other Income and Expenses, net

Other income (expense), net was $9,339 and $(1,005) for the three months ended September 30, 2012 and 2011, respectively. Other income, net was $133,713 and $213 for the nine months ended September 30, 2012 and September 30, 2011, respectively. The increase in other income is due to a $133,142 gain on settlement of accounts payable for the nine months ended September 30, 2012, of which $9,142 was recorded during the three months ended September 30, 2012.

Liquidity and Capital Resources

We have experienced net losses and negative cash flows from operations since our inception. We have sustained cumulative losses of $15,660,845 as of September 30, 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.

We continue to actively pursue various funding options, including equity offerings, 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 nine months ended September 30, 2012 was $2,450,543, which primarily reflected our net loss of $2,662,979, offset by non-cash expenses of $542,169, an increase in working capital of $196,591 and a non-cash gain on the settlement of accounts payable of $133,142.

Net cash used by investing activities was approximately $38,435 for the nine months ended September 30, 2012, which primarily reflected a purchase of office furniture and leasehold improvements.

There were no financing activities in the nine months ended September 30, 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.

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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 third 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 September 28, 2012, the Company issued 70,000 shares of Common Stock to employees.

The above offering and sale was deemed to be exempt under rule 506 of Regulation D and/or Section 4(2) of the Securities Act,

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
10.1		Employment Agreement effective as of July 30, 2012 between the Company and Johan M. (Thijs) Spoor (Incorporated by reference to current report on Form 8-K filed on August 1, 2012)
10.2		Employment Agreement effective as of August 22, 2012 between the Company and Tamara Rhein ((Incorporated by reference to current report on Form 8-K filed on August 22, 2012)
31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of the Chief Executive Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of the Chief 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*

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

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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: November 14, 2012	/s/ Johan M. (Thijs) Spoor
	Johan M. (Thijs) Spoor
	Chief Executive Officer

Attached files

FLUOROPHARMA MEDICAL, INC. Reports

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