The FN 303 is based on a proof of concept project originated by the Monterey Bay Corporation and designated the XM303 by that company. The development team consisted of designers and researchers from two paintball related design and manufacturing firms—Airgun Designs and Gun F/X Tactical Development, a division of Pro-Team Products.
The proof of concept prototype was named the UBTPS, Under Barrel Tactical Paintball System.
The FN 303 fires a spherical, fin-stabilized projectile. According to FN, the fin-stabilized design provides greater accuracy than a standard paintball round. The forward half of the sphere is a non-toxic granulated bismuth shell designed to fragment on impact to prevent penetration damage. The rear half of the sphere contains one of several color-coded liquid payloads:
Training/Impact (clear): non-toxic glycol base with no additives, used for training and when the impact sting is the preferred deterrent.
Permanent paint (yellow): latex-based polymer paint used to mark suspects for later identification.
Washable paint (pink): water-soluble fluorescent pink pigment in glycol base, similar to standard paintball filling, used to mark suspects short-term.
Oleoresin capsicum (orange): glycol base mixed with 10% OC (pepper spray) at 5 million SHU, used to incapacitate targets.
You can see how they make the projectiles here.