10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For quarterly period ended September 30, 2023

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission file number: No. 0-24368

FLEXPOINT SENSOR SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Delaware	87-0620425
(State of incorporation)	(I.R.S. Employer Identification No.)

5718 W Dannon Way, Suite B, West Jordan, Utah 84081

(Address of principal executive offices)

801-568-5111

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None

Indicate by check mark whether the registrant (1) has filed all 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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).                                                                                 Yes [X] No [ ]

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

Large accelerated filer [ ]   Non-accelerated filer [X] Accelerated filer [ ] Smaller reporting company [X] Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.

Yes [ ] No [X]

The number of shares outstanding of the registrant’s common stock was 125,557,174 as of November 14, 2023.

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TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION

Item 1.	Condensed Financial Statements		4
	Condensed Balance Sheets at September 30, 2023 (Unaudited) and December 31, 2022		5
	Condensed Statements of Operations for the Three and Nine Months Ended		6
		September 30, 2023 and 2022 (Unaudited)
	Condensed Statement of Stockholders’ Equity for the Nine Months Ended		7
		September 30, 2023 and 2022 (Unaudited)
	Condensed Statements of Cash Flows for the Nine Months Ended		8
		September 30, 2023 and 2022 (Unaudited)
	Notes to Condensed Consolidated Financial Statements (Unaudited)		9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3.	Quantitative and Qualitative Disclosure about Market Risk		19
Item 4.	Controls and Procedures		20

PART II: OTHER INFORMATION

Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults upon Senior Securities	20
Item 4	Mine Safety Disclosures	20
Item 5.	Other Information	20
Item 6.	Exhibits	21
Signatures		22

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PART I - FINANCIAL INFORMATION

ITEM 1.  CONDENSED FINANCIAL STATEMENTS

The financial information set forth below with respect to our condensed financial position as of September 30, 2023, the condensed statements of operations for the three and nine months ended September 30, 2023 and 2022, the condensed statement of stockholders’ equity for the nine months ended September 30, 2023 and 2022 and the condensed statements of cash flows for the nine months ended September 30, 2023 and 2022 are unaudited. The information presented below for the condensed financial position as of December 31, 2022 was audited and reported as part of our annual filing of our Form 10-K, filed with Securities and Exchange Commission on April10, 2023. The results of operations for the nine months ended September 30, 2023 and 2022, respectively, are not necessarily indicative of results to be expected for any subsequent periods.

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FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES

 CONDENSED BALANCE SHEETS

	September 30,2023 (Unaudited)	December 31, 2022
ASSETS
Current Assets
Cash and cash equivalents	$                -	$               -
Accounts receivable, net of allowance for bad debts of $103,777 and $103,777	17,042	20,135
Deposits and prepaid expenses	12,027	8,948
Total Current Assets	29,069	29,083
Long-Term Deposits	13,624	13,624
Property and Equipment, net of accumulated depreciation
of $597,173 and $597,173	-	-
Operating lease – Right-of-use asset	210,593	254,519
Goodwill	4,896,917	4,896,917
Total Assets	$   5,150,203	$   5,194,143
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Bank overdraft	$       20,559	$         7,506
Accounts payable	279,159	265,267
Accounts payable – related party	61,960	44,713
Accrued liabilities	2,673,139	2,416,591
Notes payable – due on demand	1,086,910	766,391
Convertible notes payable	180,000	180,000
Convertible notes payable - related party	218,513	218,513
Lease liability – current portion	57,679	57,679
Total Current Liabilities	4,577,919	3,956,660
Lease liability – long-term	156,832	198,064
Total Liabilities	4,734,751	4,154,724
Stockholders' Equity
Preferred stock – $0.001 par value; 1,000,000 shares authorized; no shares issued or outstanding	-	-
Common stock – $0.001 par value; 200,000,000 shares authorized;125,557,174 and 125,557,174 shares issued and outstanding, respectively	125,557	125,557
Additional paid-in capital	31,801,069	31,801,069
Accumulated deficit	(31,511,174)	(30,887,207)
Total Stockholders' Equity	415,452	1,039,419
Total Liabilities and Stockholders' Equity	$    5,150,203	$     5,194,143

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

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FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

		For the Three Months		For the Nine Months
		Ended September 30,		Ended September 30,
	2023		2022	2023	2022
Design, Contract and Testing  Revenue		$    21,594	$    23,957	$     71,358	$     120,896
Operating Costs and Expenses
Cost of revenue		7,466	6,542	21,626	30,726
Administrative and marketing expense		133,095	148,315	432,645	471,573
Research and development expense		55,049	55,665	164,299	171,877
Total Operating Costs and Expenses		195,610	210,522	618,570	674,176
Net Operating Income (Loss)		(174,016)	(186,565)	(547,212)	(553,280)
Other Income and Expenses
Interest expense		(31,310)	(17,948)	(78,254)	(55,544)
Interest income		-	-	-	-
Other income		300	300	1,500	900
Gain (Loss) on conversion/forgiveness of debt		-	-	-	(46,194)
Gain (Loss) on sale of assets		-	-	-	-
Total Other Income (Expense)		(31,010)	(17,648)	(76,754)	(100,838)
Net Income (Loss)		$(205,026)	$(204,213)	$(623,966)	$(654,118)
Basic and Diluted Loss per Common Share		$      (0.00)	$      (0.00)	$      (0.00)	$       (0.01)
Basic and Diluted Weighted-Average Common Shares
Outstanding		125,557,174	125,557,174	125,557,174	122,593,612

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

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FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Nine Months Ended September 30, 2023 and 2022

(UNAUDITED)

	Common Stock		Additional Paid-in Capital	Accumulated Deficit	Total Stockholder Equity
	Shares	Amount
Balance – December 31, 2022	125,557,174	$ 125,557	$ 31,801,069	$ (30,887,207)	$1,039,419
Net loss – three months ended March 31, 2023	-	-	-	(208,844)	(208,844)
Balance - March 31, 2023	125,557,174	$ 125,557	$ 31,801,069	$ (31,096,051)	$ 830,574
Net loss – three months ended June 30, 2023	-	-	-	(210,097)	(210,097)
Balance - June 30, 2023	125,557,174	$ 125,557	$ 31,801,069	$ (31,306,148)	$ 620,478
Net loss – three months ended September 30, 2023	-	-	-	(205,026)	(205,026)
Balance – September 30, 2023	125,557,174	$ 125,557	$ 31,801,069	$ (31,511,174)	$ 415,452

	Common Stock		Additional Paid-in Capital	Accumulated Deficit	Total Stockholder Equity
	Shares	Amount
Balance – December 31, 2021	114,396,242	$ 114,396	$ 31,254,183	$ (30,082,376)	$ 1,286,203
Common stock issued for conversion of debt	11,160,932	11,161	593,081	-	604,242
Net loss – three months ended March 31, 2022	-	-	-	(255,778)	(255,778)
Balance - March 31, 2022	125,557,174	$ 125,557	$ 31,847,263	$ (30,338,151)	$ 1,634,669
Net loss – three months ended June 30, 2022	-	-	-	(194,127)	(194,127)
Balance - June 30, 2022	125,557,174	$ 125,557	$ 31,847,264	$ (30,532,281)	$ 1,440,540
Net loss – three months ended September 30, 2022	-	-	-	(204,213)	(204,213)
Balance – September 30, 2022	125,557,174	$ 125,557	$ 31,847,264	$ (30,736,491)	$ 1,236,329

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

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FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES

 CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Nine Months
	Ended September 30,
	2023	2022
Cash Flows from Operating Activities:
Net loss	$     (623,966)	$     (654,118)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	-	-
Loss (Gain) on conversion of debt	-	46,194
Changes in operating assets and liabilities:
Accounts receivable	3,093	(4,217)
Prepaid expenses and other assets	(3,079)	(10,279)
Right-of-use asset	43,926	-
Accounts payable	13,892	32,757
Accounts payable – related parties	17,247	7,980
Accrued liabilities	256,547	236,479
Lease liability – long-term	(41,232)	-
Net Cash Provided by (Used) in Operating Activities	(333,572)	(345,204)
Cash Flows from Financing Activities:
Proceeds from borrowings under notes payable	343,019	317,776
Proceeds from (payment of) bank overdrafts	13,053	19,226
Advances from related party	-	12,800
Payment on loans payable	(22,500)	(5,000)
Net Cash Provided by Financing Activities	333,572	344,802
Net Change in Cash and Cash Equivalents	-	(402)
Cash and Cash Equivalents at Beginning of Period	-	402
Cash and Cash Equivalents at End of Period	$                -	$                -
Supplemental Cash Flow Information:
Cash paid for income taxes	$                -	$              -
Cash paid for interest	$                -	$              -
Non-cash Investing and Financing Activity
Common stock issued in conversion of notes payable	$                 -	$   604,242

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

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FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

(UNAUDITED)

NOTE 1– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Condensed Interim Financial Statements – The accompanying unaudited condensed financial statements include the accounts of Flexpoint Sensor Systems, Inc. (the “Company”). These financial statements are condensed and, therefore, do not include all disclosures normally required by accounting principles generally accepted in the United States of America. Therefore, these statements should be read in conjunction with the most recent annual financial statements of Flexpoint Sensor Systems, Inc. for the year ended December 31, 2022 included in the Company’s Form 10-K filed with the Securities and Exchange Commission on April 10, 2023. In particular, the Company’s significant accounting principles were presented as Note 1 to the Financial Statements in that report. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying condensed financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying condensed financial statements are not necessarily indicative of the results that may be expected for the full year ending December 31, 2023.

Nature of Operations – Flexpoint Sensor Systems, Inc. (the Company) is located in West Jordan, Utah. The Company’s activities to date have included acquiring equipment and enhancing technology, obtaining financing, limited production and seeking long-term manufacturing contracts. The Company’s operations are in designing, engineering, manufacturing and selling sensor technology and equipment using flexible potentiometer technology. Through September 30, 2023, the Company continued to manufacture products and sensors to fill customer orders and provide engineering and design work.

The COVID-19 Pandemic (“the Pandemic”) has had a dramatic effect on our business as well as the business of our customers. The wide-ranging effects on the world-wide business market has led to a general reluctance for businesses to move forward with entering into major commitments until their future markets have been clarified. Because of this, we have experienced a significant slowdown in the size and number of orders received and, while we cannot predict when the influence of the Pandemic will end, we expect that orders will return to their former levels and increase following a return to normal business operations. We recognize that, with the changes brought by the pandemic, demand for our products may fluctuate in the future. We recognize these risks and are taking every effort to prevent or mitigate them as they arise.

Use of Estimates – The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.  Actual results could differ from those estimates.

Cash and Cash Equivalents – Cash and cash equivalents are considered to be cash and highly liquid securities with original maturities of three months or less.

Fair Value Measurements - The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.

Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or

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model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

The carrying value of the Company’s cash, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.

Accounts Receivable – Trade accounts receivable are recorded at the time product is shipped or services are provided including any shipping and handling fees. Contracts associated with design, development engineering and manufacturing generally require a deposit of 50% of the quoted price prior to the commencement of work. The deposit is considered deferred income until the entire project, or the appropriate portion of the contract to meet scheduled deliveries is completed and shipped, and accepted by the customer, at which time the entire contract price, or the appropriate portion of the contract, is billed to the customer and the deposit applied. The Company has established an allowance for bad debts based on a historical experience and an analysis of risk associated with the account balances. The balance in the allowance account was $103,777 and $103,777 as of September 30, 2023 and December 31, 2022, respectively.

Inventories – The Company has only a small amount of inventory. However, as production levels increase inventories will be carried on the balance sheet. Inventories will be stated at the lower of cost or market or net realizable value. Cost is determined by using the first in, first out (FIFO) method.

Property and Equipment– Property and equipment are stated at cost.  Additions and major improvements are capitalized while maintenance and repairs are charged to operations.  Upon trade-in, sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is recognized. Depreciation is computed using the straight-line method and is recognized over the estimated useful lives of the property and equipment, which range from three to ten years.

Valuation of Long-lived Assets – The carrying values of the Company’s long-lived assets are reviewed for impairment annually and whenever events or changes in circumstances indicate that they may not be recoverable. When projections indicate that the carrying value of the long-lived asset is not recoverable, the carrying value is reduced by the estimated excess of the carrying value over the projected discounted cash flows. Under similar analysis no impairment charge was taken during the nine-month period ended September 30, 2023 and during the year ended December 31, 2022. Impairment tests will be conducted on an annual basis and, should they indicate a carrying value in excess of fair value, additional impairment charges may be required.

Intangible Assets – Costs to obtain or develop patents are capitalized and amortized over the remaining life of the patents, and technology rights are amortized over their estimated useful lives. The Company currently has the right to several patents and proprietary technology.  Patents and technology are amortized from the date the Company acquires or is awarded the patent or technology right, over their estimated useful lives, which range from 5 to 15 years.  An impairment charge is recognized if the carrying amount is not recoverable and the carrying amount exceeds the fair value of the intangible assets as determined by projected discounted net future cash flows. Under similar analysis there was no impairment charge taken during the nine-month period ended September 30, 2023 and during the year ended December 31, 2022.

Research and Development – Research and development costs are recognized as an expense during the period incurred, which is until the conceptual formulation, design, and testing of a process is completed and the process has been determined to be commercially viable.

Lease Obligations – The Company accounts for leases in accordance with ASC 842, Leases. The Company recognizes ROU assets and related lease liabilities on the balance sheet for all leases greater than one year in duration. Operating lease payments are recognized as an expense on a straight-line basis over the lease term in equal amounts of rent expense attributed to each period during the term of the lease. This generally results in rent

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expense in excess of cash payments during the early years of the lease and rent expenses less than cash payments in later years. The difference between rent expense recognized and actual cash payments is typically represented as the spread between the ROU asset and lease liability.

Goodwill– Goodwill represents the excess of the Company’s reorganization value over the fair value of net assets of the Company upon emergence from bankruptcy. Goodwill is not amortized, but is tested for impairment annually, or at interim periods when a triggering event occurs using a fair value approach. According to Accounting Standards Codification (or “ASC”) 350-20 Intangibles – Goodwill and Other, a fair-value-based test is applied at the overall Company level. The test compares the fair value of the Company to the carrying value of its net assets. This test requires various judgments and estimates. The fair value of the Company is allocated to the Company’s assets and liabilities based upon their fair values with the excess fair value allocated to goodwill. An impairment of goodwill is measured as the excess of the carrying amount of goodwill over the determined fair value.

Revenue Recognition – On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers, and all of the related amendments (“new revenue standard”). We have applied the new revenue standard to all contracts as of the date of the initial adoption. The new revenue standard establishes five steps whereby a transaction is analyzed to determine if revenue has been earned and can be recognized. The adoption of the new revenue standard did not have any effect on our financial statements. The vast majority of our sales are made to order, for which orders we require a deposit of 50% of the value of the order. That amount is put in a customer deposit account until the entire order has been manufactured and shipped or the appropriate portion of the project is completed to meet scheduled deliveries, invoiced and shipped. At the ship date, the Company has no further obligations under that portion of the contract and the revenue from the sale is recognized.

A part of our customer base is made up of international customers. The table below allocates revenue between domestic and international customers. The following table presents Flexpoint Sensor Systems revenues disaggregated by region and product type:

Three months ended:		September 30,				September 30,
			2023				2022
		Consumer	Long-term			Consumer	Long-term
Segments		Products	Contract	Total		Products	Contract	Total
Domestic	$	2,869	-	2,869	$	18,454	-	18,454
International		18,725	-	18,725		5,503	-	5,503
	$	21,594	-	21,594	$	23,957	-	23,957
Components	$	10,451	-	10,451	$	6,968	-	6,968
Engineering Services		11,143	-	11,143		16,989	-	16,989
	$	21,594	-	21,594	$	23,957	-	23,957

Nine months ended:		September 30,				September 30,
			2023				2022
		Consumer	Long-term			Consumer	Long-term
Segments		Products	Contract	Total		Products	Contract	Total
Domestic	$	4,045	-	4,045	$	31,728	-	31,728
International		67,313	-	67,313		89,168	-	89,168
	$	71,358	-	71,358	$	120,896	-	120,896
Components	$	30,738	-	30,738	$	91,214	-	91,214
Engineering Services		40,620	-	40,620		29,682	-	29,682
	$	71,358	-	71,358	$	120,896	-	120,896

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Basic and Diluted Loss Per Share – Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period.  Diluted loss per share is computed by dividing net loss by the weighted-average number of common shares and dilutive potential common shares outstanding during the period. At September 30, 2023 and 2022 there were outstanding common share equivalents (options and convertible notes payable) which amounted to 11,973,112 and 11,043,870 of common stock, respectively. These common share equivalents were not included in the computation of diluted earnings per share for the nine-month periods ended September 30, 2023 and 2022 as their effect would have been anti-dilutive, thereby decreasing loss per common share.

Concentrations and Credit Risk - The Company has a few major customers who represent a significant portion of revenue, accounts receivable and notes receivable. During the nine-month period ended September 30, 2023, three customers represented 88% of sales and two customers represented 16% of accounts receivable. The Company has a strong ongoing relationship with these customers with scheduled delivery extending through the year and does not believe this concentration poses a significant risk, as their products are based entirely on the Company’s technologies.

Income Taxes - The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards Board Accounting Codification (ASC) 740: Income Taxes. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets will be reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized

Recent Accounting Pronouncements–On August 20, 2020 the FASB released ASU 2020-06 “Simplified Convertible Instrument Framework”. This pronouncement simplifies the convertible debt accounting framework, eliminating, among other things, the beneficial conversion feature model. The adoption date of this pronouncement is for fiscal years beginning after December 15, 2023, but allows for earlier adoption for fiscal years beginning after December 31, 2020. The Company has elected to adopt this accounting treatment effective January 1, 2021. Its adoption will have a beneficial effect on its financial statements in those instances when the conversion rate set by convertible notes is below the market price on the date the convertible note is issued, as no beneficial conversion expense will be recorded.

The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position and cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its current or future earnings or operations.

NOTE 2– GOING CONCERN

The Company continues to accumulate significant operating losses and has an accumulated deficit of $31,511,174 at September 30, 2023.  These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Management is seeking additional funding to provide operating capital for its operations until such time as revenues are sufficient to sustain our level of operations.  However, there is no assurance that additional funding will be available on acceptable terms, if at all.

NOTE 3 – NOTES PAYABLE

During the nine months ended September 30, 2023, the Company received sixteen payments for a total of $335,509, from two of the convertible note holders as working capital loans to enable the Company to meet its obligations for operating expenses. The advances bear interest at the rate of 10%, but there are no other terms established. While the intent is to memorialize these advances through the issuance of a convertible note, as of the date of this filing that has not been done. Therefore these advances are treated as on demand notes and are included in our current liabilities. Until such agreement is reached, the balance of $1,086,910 as of September 30, 2023 is unsecured and due on demand. At September 30, 2023 there is $79,823 in accrued unpaid interest relating to these notes.

In August 2020 the Company received $50,000 from a large shareholder to meet operating expenses. The shareholder indicated that he would want the $50,000 loan repaid when the Company was in a position to do so. The shareholder subsequently provided an additional $5,000, for a total loan of $55,000. The balance is non-interest

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bearing and due on demand. Periodic payments have been made to reduce the outstanding balance. During the nine months ended September 30, 2023 payments totaling $22,500 were made, leaving a remaining balance of $2,500 which is non-interest bearing and due on demand.

NOTE 4 – CONVERTIBLE NOTES PAYABLE

Convertible Notes Payable

At September 30, 2023, there are notes outstanding with principal balances which total $180,000. Of the notes, $140,000 are convertible notes bearing a 10% annual rate of interest (with a 15% default rate). Of these notes, $100,000 is convertible into shares of common stock at the rate of $0.05 per share and $40,000 is convertible at $0.07 per share. The remaining $40,000 is a convertible note entered into on August 8, 2011 with a former Company Director, at a conversion rate of $0.20 per share. That note was due on December 31, 2015 and bears a default interest rate of 10%. The notes are all in default. At September 30, 2023 there is $165,088 in accrued unpaid interest relating to these convertible notes.

Convertible Note Payable - Related Party

At September 30, 2023, there are notes outstanding with two directors of the Company with balances of $164,257 and $54,257, respectively. The notes bear an 8% annual rate of interest with a 12% default rate and are convertible into shares of restricted common stock. Of the notes, $114,513 is convertible into shares of restricted common stock at $0.07 per share and $104,000 of the notes are convertible at $0.06 per share. All of these notes have a maturity date of June 30, 2023. At September 30, 2023 there is $99,417 in accrued unpaid interest relating to these related party convertible notes.

NOTE 5– STOCK OPTION PLANS

On August 25, 2005, the Board of Directors of the Company approved and adopted the 2005 Stock Incentive Plan (the Plan). The Plan became effective upon its adoption by the Board and continued in effect for ten years, terminating on August 25, 2015.  This plan was approved by the stockholders of the Company at their annual meeting of shareholders on November 22, 2005. Under the Plan, the exercise price for all options issued will not be less than the average quoted closing market price of the Company’s trading common stock for the thirty-day period immediately preceding the grant date plus a premium of ten percent.  The maximum aggregate number of shares that may be awarded under the plan is 2,500,000 shares. The Company continues to utilize the Black-Scholes option-pricing model for calculating the fair value of the options granted as defined by ASC Topic 718, which is an acceptable valuation approach under ASC 718. This model requires the input of subjective assumptions, including the expected price volatility of the underlying stock.

On August 24, 2015, the Board of Directors approved the issuance of options to purchase 2,185,000 shares of the Company’s common stock. Of the total issued, 1,960,000 options were issued to replace options held by directors and employees which were to expire and 225,000 options were issued to new employees. Of the options issued, 640,000 have an option price of $0.14 per share, 500,000 have an option price of $0.15 per share, 995,000 have an option price of $0.20 per share, and 50,000 have an option price of $0.25 per share. Options issued as replacement shall have immediate vesting terms. Options which are not replacements shall vest over a two-year, four-month period in equal installments on the last day of 2015, 2016 and 2017, respectively.

Projected data related to the expected volatility and expected life of stock options is based upon historical and other information, and notably, the Company's common stock has limited trading history. Changes in these subjective assumptions can materially affect the fair value of the estimate, and therefore, the existing valuation models do not provide a precise measure of the fair value of the Company's employee stock options.

Between August 25, 2005 and August 25, 2019, the Company granted options to employees to purchase an aggregate 3,096,000 shares of common stock at exercise prices ranging from $0.15 to $2.07 per share. The options all vested by December 31, 2017 and expire 10 years from the date of grant.

On December 30, 2020 the Board of Directors approved the revaluation of all outstanding stock options, reducing the option price to $0.05 per share. The Company recorded a charge of $8,203 as the result of this change.

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As of the years ended December 31, 2005 through 2020, the Company recognized a total of $2,451,971 of stock-based compensation expense, which includes charges of $8,203 in 2020, leaving $0 in unrecognized expense as of December 31, 2021. There were 1,900,000 employee stock options outstanding at September 30, 2023.  

A summary of all employee options outstanding and exercisable under the plan as of September 30, 2023 is set forth below:

Options	Shares	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at the beginning of period	1,900,000	$0.05	2.65	$              --
Granted	--	--	--	--
Expired	--	--	--	--
Forfeited	--	--	--	--
Outstanding at the end of Period	1,900,000	$                 0.05	1.90	$               --
Exercisable at the end of Period	1,900,000	$                 0.05	1.90	$               --

NOTE 6 – CAPITAL STOCK

Preferred Stock – There are 1,000,000 shares of preferred stock with a par value of $0.001 per share authorized. At September 30, 2023 and December 31, 2022, there were no shares of preferred stock issued or outstanding.

Common Stock – There are 200,000,000 shares of common stock with a par value of $0.001 per share authorized. At September 30, 2023 and December 31, 2022, there were 125,557,174 and 125,557,174 shares of common stock issued and outstanding, respectively. The Company issued 11,160,932 shares of restricted common stock during the year ended December 31, 2022 for the retirement of $445,000 of notes payable and convertible notes, and $103,047 of accrued interest.

NOTE 7– COMMITMENTS AND CONTINGENCIES

The Company currently occupies approximately 8,029 square feet of office and manufacturing space leased from D&M Management, Inc. The building is located in a commercial business district in West Jordan, Utah which consists primarily of high-tech manufacturing firms and it is located adjacent to a major intersection, allowing easy access to Utah’s main interstate highway. The original lease was for $6,787 per month and was for a period of twelve months, with a termination date of August 31, 2022. A new lease for a period of twelve months to commence September 1, 2022 at a monthly rate of $6,657 was entered into on June 20, 2022. The lease has an expiration date of August 31, 2023 and contains a 90-day notice clause if our intent is to either terminate the lease or renew the lease for one additional three-year term. We recognize lease expense on a straight-line basis over the term of the lease.

NOTE 8 – RELATED PARTY TRANSACTIONS

At September 30, 2023, there was $61,960 payable to the Chief Executive Officer. During the nine-months ended September 30, 2023 the Chief Executive Officer provided $15,748 to be used for operating expenses. At December 31, 2022, the Company had amounts of $44,713 payable to its Chief Executive Officer for funds provided to meet the operating expense obligations of the Company.

NOTE 9 – SUBSEQUENT EVENTS

In October and November 2023, the Company received $52,006 in additional funding from holders of convertible notes. There has not been a note written on these funds, and no terms have been agreed to. The funding is to bear interest at the rate of 10% per annum. The Company is recording the receipt of the funding as on demand notes until such time as terms are agreed upon by the parties.

The Company has evaluated all other subsequent events pursuant to ASC Topic 855 and has determined that there are no events that require disclosure as of the date of issuance.

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In this quarterly report references to “Flexpoint", "the Company," “we,” “us,” and “our” refer to Flexpoint Sensor Systems, Inc.

FORWARD LOOKING STATEMENTS

The U.S. Securities and Exchange Commission (“SEC”) encourages reporting companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions.  This report contains these types of statements. Words such as “may,” “expect,” “believe,” “anticipate,” “estimate,” “project,” or “continue” or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements.  You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report.  All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EXECUTIVE OVERVIEW

Flexpoint Sensor Systems, Inc. is a company engaged principally in improving its unique sensor technology, expanding its suite of products, developing new sensor applications, obtaining financing and seeking long-term sustainable manufacturing contracts, licensing agreements and royalty agreements.  Our operations have not yet commenced to a commercially sustainable level and include designing, engineering, manufacturing, licensing and selling sensor technology and products featuring our Bend Sensor^® technology and equipment.

Finalizing long-term, constant revenue generating production contracts with our existing and other customers remains our greatest challenge because our on-going business is dependent on the types of revenues and cash flows generated by such contracts. Cash flow and cash requirement risks are closely tied to and are dependent upon our ability to attract significant long-term production contracts. We must continue to obtain funding to operate and expand our operations so that we can deliver our unique Bend Sensor^® and Bend Sensor^® related technologies and products to the market.  Management believes that even though we are making positive strides forward with our business plan we will need to raise additional operating capital.

Worldwide automakers are faced with the challenge of providing a safer, more energy efficient, longer lasting product that consumers can afford. This has required automakers to search new and innovative ways to lower the overall weight of the vehicle and to improve its fuel efficiencies, while lowering the cost. We continue to experience an increased interest regarding automotive and other potential applications for our sensor technology because they meet this criterion. With its versatility, light weight, single layer construction and the fact that it is currently being used in various safety devices the Bend Sensor^® is positioned well to meet the challenges that the automobile industry is facing.

LIQUIDITY AND CAPITAL RESOURCES

The challenges posed by the Pandemic in the United States and global economies has had a significant effect on our business. During this difficult time, we have worked to ensure that our customers continue to receive quality, personalized service.

The lingering effect of the Pandemic continues to negatively impact our revenue. At this time, it is impossible to accurately predict when this will end. Many of our clients, to protect their employees, have sharply curtailed operations and have most employees working from home. The long-term impact of the Pandemic is difficult to assess at this point, as it will be dependent on how rapidly our clients can resume their business operations and place orders with us for the needed sensors incorporated into their products.

Currently our revenue is primarily from product development, manufacturing and recurring sales with additional contributions to income from design contract, testing and limited production services for prototypes and samples, and is currently not at a level to support our operations.  Depending upon the world returning to some form of normalcy following the end of the Pandemic, we believe, based upon current orders and projected orders over the

15 

next twelve months, that we could be producing sensors under long-term contracts in the future that will help support our existing operations and potential future growth. Management recognizes such contracts usually go through a long negotiation process and there can be no guarantee that we will be successful in our negotiations or that such contracts will be sufficient to support our current operations in the near future.

In the first nine months of 2023, we have relied on the proceeds of advances in the form of on-demand loans from existing shareholders, which funds are accounted for as demand notes. The balances of the non-related party convertible notes have a combined total of $180,000 as of September 30, 2023. The notes have an annual interest rate of 8% to 10% and default rates of 10% to 15%, have various maturity dates, and are secured by the Company’s business assets. The on-demand notes have a principal balance of $1,086,910 at September 30, 2023 and no terms have yet been established for these funds.

Management believes that our current cash burn rate is approximately $60,000 per month and expectations are that it will continue at this rate for the foreseeable future. If the business returns to pre-Pandemic levels, with proceeds from additional convertible notes and estimated revenues for manufacturing, production, engineering design and prototype products should be sufficient to fund the next twelve months of operations. Our auditors have expressed doubt about our ability to continue as a going concern and that we may not realize significant revenue or become profitable within the next twelve months. We will require additional financing to fund our short-term cash needs. We will have to rely on additional debt financing, loans from existing shareholders and private placements of common stock for additional funding. Based upon our anticipated purchase orders over the next twelve months the revenue generated will not be sufficient to cover our operating expenses, based on our current burn rate. However, we cannot assure that we will be able to obtain short-term financing, or that sources of such financing, if any, will continue to be available, and if available, that they will be on terms favorable to us. Nor is there any guarantee that the projected volume of purchase orders will meet the volumes that we anticipate.

As we enter into new agreements, we must ensure that those agreements provide adequate funding for any pre-production research and development and manufacturing costs. If we are successful in establishing agreements with adequate initial funding, management believes that our operations for the long term will be funded by revenues, licensing fees and/or royalties related to these agreements. However, we have formalized only a few agreements during the past four years and there can be no assurance that the agreements will generate sufficient revenues or be profitable in the future or that a desired technological application will be successful enough to produce the volumes and profits necessary to fund our operations.

FINANCIAL OBLIGATIONS AND CONTINGENT LIABILITIES

Our principal commitments at September 30, 2023 consisted of our operating lease of $6,657 per month, and total liabilities of $4,734,751, which includes $180,000 of convertible notes payable. Accrued liabilities at September 30, 2023, were $2,673,138 and were related to payroll, payroll tax liabilities, accrued professional expenses, accrued insurance expense, accrued interest expense on notes and accrued paid time off.

In August 2020 the Company received $50,000 from John Kelly, a large shareholder, to meet operating expenses. Mr. Kelly indicated that he would want the $50,000 repaid when the Company was in a position to do so. Mr. Kelly subsequently provided an additional $5,000, for a total loan of $55,000. This funding has not formally been documented by a note at the time of this filing, and there is no term or interest on the note. In 2022 and 2021 payment of $30,000 was made to reduce the balance. During the nine-month period ended September 30, 2023, additional payments of $22,500 were made, leaving a remaining balance of $2,500.

The Company has received in funding from holders of our convertible notes. These fundings have not yet been memorialized into convertible notes. The only term agreed upon to date is that all funds advanced will bear interest at the rate of 10% per annum from the date of deposit.

The Company has a few major customers who represent a significant portion of revenue and accounts receivable. During the nine months ended September 30, 2023, three customers represented 88% of sales and two customers represented 16% of accounts receivable. The Company has a strong ongoing relationship with these customers with scheduled product deliveries extending through the year from one of the customers with an account receivable and does not believe this concentration poses a significant risk, as their products are based entirely on the Company’s technologies.

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OFF-BALANCE SHEET ARRANGEMENTS

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

CRITICAL ACCOUNTING ESTIMATES

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Estimates of particular significance in our financial statements include goodwill and the annual tests for impairment of goodwill and long-lived assets and valuing stock option compensation.

ASC 350-20 “Intangibles – Goodwill and Other: The Company follows the guidance provided by ASC 350-20. The Company's goodwill represents the excess of its reorganization value over the fair value of the net assets upon emergence from bankruptcy. Goodwill is not amortized; therefore, we test our goodwill for impairment annually or when a triggering event occur using a fair value approach. A fair value-based test is applied at the overall Company level. The test compares the fair value of the Company to the carrying value of its net assets. The test requires various judgments and estimates. During 2022 and for the nine months ended September 30, 2023, the Company recorded no impairment charge to reduce the carrying value of the goodwill to its estimated fair value. As part of the impairment testing performed at December 31, 2022, the Company considered factors such as the global market volatility, variables in the economy, and the overall uncertainty in the markets that has resulted in a decline in the market price of the Company's stock price and market capitalization for a sustained period, as indicators for potential goodwill impairment.

ASC 820 Fair Value Measurement: We test long-lived assets for impairment annually or when a triggering event occurs. Impairment is indicated if undiscounted cash flows are less than the carrying value of the assets. The amount of impairment is measured using a discounted-cash-flows model considering future revenues, operating costs and risk-adjusted discount rate and other factors. The analysis compares the present value of projected net cash flows for the remaining current year and next two years against the carrying value of the long-lived assets. If the carrying values of the long-lived assets exceed the present value of the discounted projected revenues an impairment expense would be recognized in the period and the carrying value of the assets would be adjusted accordingly. Impairment tests are conducted on an annual basis and, should they indicate a carrying value in excess of fair value, a charge may be required.

ASC 718 “Compensation – Stock Compensation: Financial accounting standards require that recognition of the cost of employee services received in exchange for stock options and awards of equity instruments be based on the grant-date fair value of such options and awards and is recognized as an expense in operations over the period they vest. The fair value of the options we have granted is estimated at the date of grant using the Black-Scholes American option-pricing model. Option pricing models require the input of highly sensitive assumptions, including expected stock volatility. In addition, our stock options have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair value estimate.  Management believes the best input assumptions available were used to value the options and that the resulting option values are reasonable. For the nine-month periods ended September 30, 2023 and 2022, we recognized $0 and $0, respectively, of stock-based compensation expense for our stock options and there is no additional unrecognized compensation cost related to employee stock options at the current time.

RESULTS OF OPERATIONS

The Company continues to concentrate its marketing resources on a limited number of customers that have the greatest potential to generate the most short-term revenue while still building relationships with our larger customers. Management believes this approach has the highest potential to bring long-term commercially viable products to market and will provide sustainable cash flow to fund the Company's operations in the future. Currently, overall revenues are not sufficient to sustain our operations. The Pandemic has had a dramatic effect on our business as well as the business of our customers. The wide-ranging effects on the world-wide business market has led to a general reluctance for businesses to move forward with entering into major commitments until their future markets have been clarified. Following a return to normal business operations in the world, management anticipates

17 

that revenues will increase as we continue to execute our long-term business plan and cultivate larger customer bases with our existing product offering. However, until the Pandemic ends and a long-term production contract is in place there is no guarantee that our current customer base will order in sufficient volumes to sustain our operations. Therefore, management continues to work with larger companies and industries and is hopeful that in the near future we will sign a long-term licensing or manufacturing contract.

We recognized revenue from repeat orders from our existing customers, design contract, and development engineering. Revenue is recognized using the ASC 606 five step detailed in Note 1 to the financial statements. Revenue from the sale of a product is recorded at the time of shipment to the customer.  Revenue from the license agreements was recognized in the period the agreement was concluded, as it is a right of use license and the Company has no further obligations to perform under the terms of the agreement. Revenue from research and development engineering contracts is recognized as the services are provided and accepted by the customer. Revenue from contracts to license technology to others is deferred until all conditions under the contract are met and then the sale is recognized as licensing royalty revenue over the remaining term of the contract.

The following discussions are based on the consolidated operations of Flexpoint Sensor Systems, Inc. and should be read in conjunction with our unaudited financial statements for the three and nine months ended September 30, 2023 and 2022, included in Part I, Item 1, above, and the audited financial statements included in the Company’s annual report on Form 10-K for the years ended December 31, 2022 and 2021.

THREE MONTH PERIODS ENDED SEPTEMBER 30, 2023 AND 2022

SUMMARY OF OPERATING RESULTS
	Three-month period ended
	September 30, 2023	September 30, 2022
Manufacturing, design, licensing and contract   revenue	$ 21,594	$ 23,957
Total operating costs and expenses	195,610	210,522
Net other income (expense)	(31,010)	(17,648)
Net loss	(205,026)	(204,213)
Basic and diluted loss per common share	$             (0.00)	$             (0.00)

For the three months ending September 30, 2023, revenue was $21,594, a decrease of $2,363 when compared to the revenue of $23,957 for the same period in 2022.

Of the $195,610 and $210,522 total operating costs and expense for the three months ending September 30, 2023 and 2022, respectively, $55,049 and $55,665 were for direct research and development cost, respectively. For the three months ended September 30, 2023, total operating expenses decreased by $14,912 when compared to the same period in 2022, decreases in insurance, payroll and professional fees comprising the largest part of the decreased expense level in 2023.

Other expense for the three-month period ended September 30, 2023 was $31,010, a $13,362 increase resulting from the $13,362 increase in interest expense.

A net loss of $205,026 was realized for the three months ended September 30, 2023. A net loss of $204,213 was realized for the three-month period ended September 30, 2022.

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NINE MONTH PERIODS ENDED SEPTEMBER 30, 2023 AND 2022

SUMMARY OF OPERATING RESULTS
	Nine-month period ended
	September 30, 2023	September 30, 2022
Manufacturing, design, licensing and contract   revenue	$ 71,358	$ 120,896
Total operating costs and expenses	618,570	674,176
Net other income (expense)	(76,754)	(100,838)
Net loss	(623,966)	(654,118)
Basic and diluted loss per common share	$              (0.00)	$                (0.01)

For the nine months ending September 30, 2023, revenue was $71,358, a decrease of $49,538 when compared to the revenue of $120,896 for the same period in 2022.

Of the $618,570 and $674,176 total operating costs and expense for the nine months ending September 30, 2023 and 2022, respectively, $164,299 and $171,877 were for direct research and development cost, respectively. For the nine months ended September 30, 2023, total operating expenses decreased by $55,606 when compared to the same period in 2022, decreases in insurance and payroll comprising the largest part of the decreased expense level.

Other expense for the nine-month period ended September 30, 2023 was $76,754, a $24,084 decrease resulting primarily from the $46,194 loss on conversion of debt in 2022.

A net loss of $623,966 was realized for the nine months ended September 30, 2023. A net loss of $654,118 was realized for the nine-month period ended September 30, 2022.

The chart below represents a summary of our condensed consolidated balance sheets at September 30, 2023 and December 31, 2022.

SUMMARY OF BALANCE SHEET INFORMATION
	September 30, 2023	December 31, 2022
Cash and cash equivalents	$  -	$ -
Total current assets	29,069	29,083
Total assets	5,150,203	5,194,143
Total liabilities	4,734,751	4,154,724
Accumulated deficit	(31,511,174)	(30,887,207)
Total stockholder’s equity	$           415,452	$      1,039,419

Cash at September 30, 2023 was overdrawn by $20,559, which amount is shown as a liability. At December 31, 2022 there was an overdraft of $7,506. The negative cash is due to the issuance of checks for operating expenses and the delayed receipt of funds to deposit. Our non-current assets are unchanged, as all property and equipment and patents have been fully depreciated.

Total liabilities increased by $580,027 at September 30, 2023 due to the increase of on-demand notes, professional fees and accrued interest.

INFLATION

We do not expect the impact of inflation to have a negative impact on our product sales or our operations for the next twelve months.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

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ITEM 4. CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, we carried out an evaluation of the effectiveness of our disclosure controls and procedures under the supervision and with the participation of our Chief Executive Officer, who also serves as our Principal Financial Officer. Our controls and procedures are designed to allow information required to be disclosed in our reports to be recorded, processed, summarized and reported within the specified periods, and accumulated and communicated to management to allow for timely decisions regarding required disclosure of material information. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. Based upon the evaluation, our Chief Executive Officer concluded that our disclosure controls and procedures were not effective at that reasonable assurance level as of the end of the nine-month period ended September 30, 2023.

The material weaknesses relate to the limited number of persons responsible for the recording and reporting of financial information, the lack of separation of financial reporting duties, and the limited size of our management team in general. We are in the process of evaluating methods of improving our internal control over financial reporting, including the possible addition of financial reporting staff and the increased separation of financial reporting responsibility, and intend to implement such steps as are necessary and possible to correct these material weaknesses

(b) Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the nine months of 2023 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Part I Exhibits

No.	Description
31.1	Certification of Clark M. Mower pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Clark M. Mower pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley

Part II Exhibits

No.	Description
3(i).1	Certificate of Incorporation of Flexpoint Sensor, as amended (Incorporated by reference to exhibit 3.1 for Form 10-QSB, filed August 4, 2006)
3(i).2	Certificate of Amendment to Flexpoint Certificate of Incorporation, dated October 11, 2019 (Incorporated by reference to exhibit 3(i).2 of Form 8-K, filed October 15, 2019)
3.2	Bylaws of Flexpoint Sensor, as amended (Incorporated by reference to exhibit 3.4 of Form 10-QSB, filed May 3, 2004)
10.1	Office Building Lease between Flexpoint Sensor Systems and FGBP, LLC, dated December 9, 2019 (Incorporated by reference to exhibit 10.1 of Form 10-K, filed March 30, 2020)
10.2	Exclusive License Agreement between Flexpoint Sensor Systems and subVo, LLC, dated June 19, 2019. (Incorporated by reference to exhibit 10.2 of Form 10-Q, filed August 14, 2019)
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Label Linkbase Document
101.PRE	XBRL Taxonomy Presentation Linkbase Document

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SIGNATURES

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

FLEXPOINT SENSOR SYSTEMS, INC.

Date: November 14, 2023

/s/ Clark M. Mower

Clark M. Mower

President, Chief Executive Officer and Director,

Principal Financial Officer

22 

EX-31

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Clark M. Mower certify that:

1. I have reviewed this quarterly report on Form 10-Q of Flexpoint Sensor Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

      4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with general accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions);

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 14, 2023                             /s/ Clark M. Mower

Clark M. Mower

Chief Executive Officer

EX-31

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Clark M. Mower, certify that:

       1. I have reviewed this quarterly report on Form 10-Q of Flexpoint Sensor Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

         4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with general accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions);

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 14, 2023                            /s/ Clark M. Mower

Clark M. Mower

Principal Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Flexpoint Sensor Systems, Inc. (the “Company”) for the period ending September 30, 2023 as filed with the Securities and Exchange Commission (the “Report”), I, Clark M. Mower, Chief Executive Officer and Principal Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated: November 14, 2023

/s/ Clark M. Mower

Clark M. Mower

Chief Executive Officer

Principal Financial Officer

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2023	Nov. 14, 2023
Document Information Line Items
Entity Registrant Name	FLEXPOINT SENSOR SYSTEMS, INC.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		125,557,174
Amendment Flag	false
Entity Central Index Key	0000925660
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Document Period End Date	Sep. 30, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	0-24368
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	87-0620425
Entity Address, Address Line One	5718 W Dannon Way
Entity Address, Address Line Two	Suite B
Entity Address, City or Town	West Jordan
Entity Address, State or Province	UT
Entity Address, Postal Zip Code	84081
City Area Code	801
Local Phone Number	568-5111
Title of 12(b) Security	None
Entity Interactive Data Current	Yes

XML

CONDENSED BALANCE SHEETS - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Current Assets
Cash and cash equivalents
Accounts receivable, net of allowance for bad debts of $103,777 and $103,777	17,042	20,135
Deposits and prepaid expenses	12,027	8,948
Total Current Assets	29,069	29,083
Long-Term Deposits	13,624	13,624
Property and Equipment, net of accumulated depreciation of $597,173 and $597,173
Operating lease – Right-of-use asset	210,593	254,519
Goodwill	4,896,917	4,896,917
Total Assets	5,150,203	5,194,143
Current Liabilities
Bank overdraft	20,559	7,506
Accounts payable	279,159	265,267
Accounts payable – related party	61,960	44,713
Accrued liabilities	2,673,139	2,416,591
Notes payable – due on demand	1,086,910	766,391
Convertible notes payable	180,000	180,000
Convertible notes payable - related party	218,513	218,513
Lease liability – current portion	57,679	57,679
Total Current Liabilities	4,577,919	3,956,660
Lease liability – long-term	156,832	198,064
Total Liabilities	4,734,751	4,154,724
Stockholders' Equity
Preferred stock – $0.001 par value; 1,000,000 shares authorized; no shares issued or outstanding
Common stock – $0.001 par value; 200,000,000 shares authorized;125,557,174 and 125,557,174 shares issued and outstanding, respectively	125,557	125,557
Additional paid-in capital	31,801,069	31,801,069
Accumulated deficit	(31,511,174)	(30,887,207)
Total Stockholders' Equity	415,452	1,039,419
Total Liabilities and Stockholders' Equity	$ 5,150,203	$ 5,194,143

XML

CONDENSED BALANCE SHEETS (Parentheticals) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Accounts receivable, allowance for bad debts (in Dollars)	$ 103,777	$ 103,777
Net of accumulated amortization (in Dollars)	$ 597,173	$ 597,173
Preferred stock, par value per share (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	125,557,174	125,557,174
Common stock, shares outstanding	125,557,174	125,557,174

XML

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Design, Contract and Testing Revenue	$ 21,594	$ 23,957	$ 71,358	$ 120,896
Operating Costs and Expenses
Cost of revenue	7,466	6,542	21,626	30,726
Administrative and marketing expense	133,095	148,315	432,645	471,573
Research and development expense	55,049	55,665	164,299	171,877
Total Operating Costs and Expenses	195,610	210,522	618,570	674,176
Net Operating Income (Loss)	(174,016)	(186,565)	(547,212)	(553,280)
Other Income and Expenses
Interest expense	(31,310)	(17,948)	(78,254)	(55,544)
Interest income
Other income	300	300	1,500	900
Gain (Loss) on conversion/forgiveness of debt				(46,194)
Gain (Loss) on sale of assets
Total Other Income (Expense)	(31,010)	(17,648)	(76,754)	(100,838)
Net Income (Loss)	$ (205,026)	$ (204,213)	$ (623,966)	$ (654,118)
Basic and Diluted Loss per Common Share (in Dollars per share)	$ 0	$ 0	$ 0	$ (0.01)
Basic and Diluted Weighted-Average Common Shares Outstanding (in Shares)	125,557,174	125,557,174	125,557,174	122,593,612

XML

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) (Parentheticals) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Diluted Loss per Common Share	$ 0.00	$ 0.00	$ 0.00	$ (0.01)
Diluted Weighted-Average Common Shares Outstanding	125,557,174	125,557,174	125,557,174	122,593,612

XML

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) - USD ($)	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total
Balance at Dec. 31, 2021	$ 114,396	$ 31,254,183	$ (30,082,376)	$ 1,286,203
Balance (in Shares) at Dec. 31, 2021	114,396,242
Common stock issued for conversion of debt	$ 11,161	593,081		604,242
Common stock issued for conversion of debt (in Shares)	11,160,932
Net loss			(255,778)	(255,778)
Balance at Mar. 31, 2022	$ 125,557	31,847,263	(30,338,151)	1,634,669
Balance (in Shares) at Mar. 31, 2022	125,557,174
Balance at Dec. 31, 2021	$ 114,396	31,254,183	(30,082,376)	1,286,203
Balance (in Shares) at Dec. 31, 2021	114,396,242
Net loss				(654,118)
Balance at Sep. 30, 2022	$ 125,557	31,847,264	(30,736,491)	1,236,329
Balance (in Shares) at Sep. 30, 2022	125,557,174
Balance at Mar. 31, 2022	$ 125,557	31,847,263	(30,338,151)	1,634,669
Balance (in Shares) at Mar. 31, 2022	125,557,174
Net loss			(194,127)	(194,127)
Balance at Jun. 30, 2022	$ 125,557	31,847,264	(30,532,281)	1,440,540
Balance (in Shares) at Jun. 30, 2022	125,557,174
Net loss			(204,213)	(204,213)
Balance at Sep. 30, 2022	$ 125,557	31,847,264	(30,736,491)	1,236,329
Balance (in Shares) at Sep. 30, 2022	125,557,174
Balance at Dec. 31, 2022	$ 125,557	31,801,069	(30,887,207)	$ 1,039,419
Balance (in Shares) at Dec. 31, 2022	125,557,174			125,557,174
Net loss			(208,844)	$ (208,844)
Balance at Mar. 31, 2023	$ 125,557	31,801,069	(31,096,051)	830,574
Balance (in Shares) at Mar. 31, 2023	125,557,174
Balance at Dec. 31, 2022	$ 125,557	31,801,069	(30,887,207)	$ 1,039,419
Balance (in Shares) at Dec. 31, 2022	125,557,174			125,557,174
Net loss				$ (623,966)
Balance at Sep. 30, 2023	$ 125,557	31,801,069	(31,511,174)	$ 415,452
Balance (in Shares) at Sep. 30, 2023	125,557,174			125,557,174
Balance at Mar. 31, 2023	$ 125,557	31,801,069	(31,096,051)	$ 830,574
Balance (in Shares) at Mar. 31, 2023	125,557,174
Net loss			(210,097)	(210,097)
Balance at Jun. 30, 2023	$ 125,557	31,801,069	(31,306,148)	620,478
Balance (in Shares) at Jun. 30, 2023	125,557,174
Net loss			(205,026)	(205,026)
Balance at Sep. 30, 2023	$ 125,557	$ 31,801,069	$ (31,511,174)	$ 415,452
Balance (in Shares) at Sep. 30, 2023	125,557,174			125,557,174

XML

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash Flows from Operating Activities:
Net loss	$ (623,966)	$ (654,118)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation
Loss (Gain) on conversion of debt		46,194
Changes in operating assets and liabilities:
Accounts receivable	3,093	(4,217)
Prepaid expenses and other assets	(3,079)	(10,279)
Right-of-use asset	43,926
Accounts payable	13,892	32,757
Accounts payable – related parties	17,247	7,980
Accrued liabilities	256,547	236,479
Lease liability – long-term	(41,232)
Net Cash Provided by (Used) in Operating Activities	(333,572)	(345,204)
Cash Flows from Financing Activities:
Proceeds from borrowings under notes payable	343,019	317,776
Proceeds from (payment of) bank overdrafts	13,053	19,226
Advances from related party		12,800
Payment on loans payable	(22,500)	(5,000)
Net Cash Provided by Financing Activities	333,572	344,802
Net Change in Cash and Cash Equivalents		(402)
Cash and Cash Equivalents at Beginning of Period		402
Cash and Cash Equivalents at End of Period
Supplemental Cash Flow Information:
Cash paid for income taxes
Cash paid for interest
Non-cash Investing and Financing Activity
Common stock issued in conversion of notes payable		$ 604,242

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Condensed Interim Financial Statements – The accompanying unaudited condensed financial statements include the accounts of Flexpoint Sensor Systems, Inc. (the “Company”). These financial statements are condensed and, therefore, do not include all disclosures normally required by accounting principles generally accepted in the United States of America. Therefore, these statements should be read in conjunction with the most recent annual financial statements of Flexpoint Sensor Systems, Inc. for the year ended December 31, 2022 included in the Company’s Form 10-K filed with the Securities and Exchange Commission on April 10, 2023. In particular, the Company’s significant accounting principles were presented as Note 1 to the Financial Statements in that report. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying condensed financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying condensed financial statements are not necessarily indicative of the results that may be expected for the full year ending December 31, 2023.

Nature of Operations – Flexpoint Sensor Systems, Inc. (the Company) is located in West Jordan, Utah. The Company’s activities to date have included acquiring equipment and enhancing technology, obtaining financing, limited production and seeking long-term manufacturing contracts. The Company’s operations are in designing, engineering, manufacturing and selling sensor technology and equipment using flexible potentiometer technology. Through September 30, 2023, the Company continued to manufacture products and sensors to fill customer orders and provide engineering and design work.

The COVID-19 Pandemic (“the Pandemic”) has had a dramatic effect on our business as well as the business of our customers. The wide-ranging effects on the world-wide business market has led to a general reluctance for businesses to move forward with entering into major commitments until their future markets have been clarified. Because of this, we have experienced a significant slowdown in the size and number of orders received and, while we cannot predict when the influence of the Pandemic will end, we expect that orders will return to their former levels and increase following a return to normal business operations. We recognize that, with the changes brought by the pandemic, demand for our products may fluctuate in the future. We recognize these risks and are taking every effort to prevent or mitigate them as they arise.

Use of Estimates – The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.  Actual results could differ from those estimates.

Cash and Cash Equivalents – Cash and cash equivalents are considered to be cash and highly liquid securities with original maturities of three months or less.

Fair Value Measurements - The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.

Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or

model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

The carrying value of the Company’s cash, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.

Accounts Receivable – Trade accounts receivable are recorded at the time product is shipped or services are provided including any shipping and handling fees. Contracts associated with design, development engineering and manufacturing generally require a deposit of 50% of the quoted price prior to the commencement of work. The deposit is considered deferred income until the entire project, or the appropriate portion of the contract to meet scheduled deliveries is completed and shipped, and accepted by the customer, at which time the entire contract price, or the appropriate portion of the contract, is billed to the customer and the deposit applied. The Company has established an allowance for bad debts based on a historical experience and an analysis of risk associated with the account balances. The balance in the allowance account was $103,777 and $103,777 as of September 30, 2023 and December 31, 2022, respectively.

Inventories – The Company has only a small amount of inventory. However, as production levels increase inventories will be carried on the balance sheet. Inventories will be stated at the lower of cost or market or net realizable value. Cost is determined by using the first in, first out (FIFO) method.

Property and Equipment– Property and equipment are stated at cost.  Additions and major improvements are capitalized while maintenance and repairs are charged to operations.  Upon trade-in, sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is recognized. Depreciation is computed using the straight-line method and is recognized over the estimated useful lives of the property and equipment, which range from three to ten years.

Valuation of Long-lived Assets – The carrying values of the Company’s long-lived assets are reviewed for impairment annually and whenever events or changes in circumstances indicate that they may not be recoverable. When projections indicate that the carrying value of the long-lived asset is not recoverable, the carrying value is reduced by the estimated excess of the carrying value over the projected discounted cash flows. Under similar analysis no impairment charge was taken during the nine-month period ended September 30, 2023 and during the year ended December 31, 2022. Impairment tests will be conducted on an annual basis and, should they indicate a carrying value in excess of fair value, additional impairment charges may be required.

Intangible Assets – Costs to obtain or develop patents are capitalized and amortized over the remaining life of the patents, and technology rights are amortized over their estimated useful lives. The Company currently has the right to several patents and proprietary technology.  Patents and technology are amortized from the date the Company acquires or is awarded the patent or technology right, over their estimated useful lives, which range from 5 to 15 years.  An impairment charge is recognized if the carrying amount is not recoverable and the carrying amount exceeds the fair value of the intangible assets as determined by projected discounted net future cash flows. Under similar analysis there was no impairment charge taken during the nine-month period ended September 30, 2023 and during the year ended December 31, 2022.

Research and Development – Research and development costs are recognized as an expense during the period incurred, which is until the conceptual formulation, design, and testing of a process is completed and the process has been determined to be commercially viable.

Lease Obligations – The Company accounts for leases in accordance with ASC 842, Leases. The Company recognizes ROU assets and related lease liabilities on the balance sheet for all leases greater than one year in duration. Operating lease payments are recognized as an expense on a straight-line basis over the lease term in equal amounts of rent expense attributed to each period during the term of the lease. This generally results in rent

expense in excess of cash payments during the early years of the lease and rent expenses less than cash payments in later years. The difference between rent expense recognized and actual cash payments is typically represented as the spread between the ROU asset and lease liability.

Goodwill– Goodwill represents the excess of the Company’s reorganization value over the fair value of net assets of the Company upon emergence from bankruptcy. Goodwill is not amortized, but is tested for impairment annually, or at interim periods when a triggering event occurs using a fair value approach. According to Accounting Standards Codification (or “ASC”) 350-20 Intangibles – Goodwill and Other, a fair-value-based test is applied at the overall Company level. The test compares the fair value of the Company to the carrying value of its net assets. This test requires various judgments and estimates. The fair value of the Company is allocated to the Company’s assets and liabilities based upon their fair values with the excess fair value allocated to goodwill. An impairment of goodwill is measured as the excess of the carrying amount of goodwill over the determined fair value.

Revenue Recognition – On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers, and all of the related amendments (“new revenue standard”). We have applied the new revenue standard to all contracts as of the date of the initial adoption. The new revenue standard establishes five steps whereby a transaction is analyzed to determine if revenue has been earned and can be recognized. The adoption of the new revenue standard did not have any effect on our financial statements. The vast majority of our sales are made to order, for which orders we require a deposit of 50% of the value of the order. That amount is put in a customer deposit account until the entire order has been manufactured and shipped or the appropriate portion of the project is completed to meet scheduled deliveries, invoiced and shipped. At the ship date, the Company has no further obligations under that portion of the contract and the revenue from the sale is recognized.

A part of our customer base is made up of international customers. The table below allocates revenue between domestic and international customers. The following table presents Flexpoint Sensor Systems revenues disaggregated by region and product type:

Three months ended:		September 30,				September 30,
			2023				2022
		Consumer	Long-term			Consumer	Long-term
Segments		Products	Contract	Total		Products	Contract	Total
Domestic	$	2,869	-	2,869	$	18,454	-	18,454
International		18,725	-	18,725		5,503	-	5,503
	$	21,594	-	21,594	$	23,957	-	23,957
Components	$	10,451	-	10,451	$	6,968	-	6,968
Engineering Services		11,143	-	11,143		16,989	-	16,989
	$	21,594	-	21,594	$	23,957	-	23,957

Nine months ended:		September 30,				September 30,
			2023				2022
		Consumer	Long-term			Consumer	Long-term
Segments		Products	Contract	Total		Products	Contract	Total
Domestic	$	4,045	-	4,045	$	31,728	-	31,728
International		67,313	-	67,313		89,168	-	89,168
	$	71,358	-	71,358	$	120,896	-	120,896
Components	$	30,738	-	30,738	$	91,214	-	91,214
Engineering Services		40,620	-	40,620		29,682	-	29,682
	$	71,358	-	71,358	$	120,896	-	120,896

Basic and Diluted Loss Per Share – Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period.  Diluted loss per share is computed by dividing net loss by the weighted-average number of common shares and dilutive potential common shares outstanding during the period. At September 30, 2023 and 2022 there were outstanding common share equivalents (options and convertible notes payable) which amounted to 11,973,112 and 11,043,870 of common stock, respectively. These common share equivalents were not included in the computation of diluted earnings per share for the nine-month periods ended September 30, 2023 and 2022 as their effect would have been anti-dilutive, thereby decreasing loss per common share.

Concentrations and Credit Risk - The Company has a few major customers who represent a significant portion of revenue, accounts receivable and notes receivable. During the nine-month period ended September 30, 2023, three customers represented 88% of sales and two customers represented 16% of accounts receivable. The Company has a strong ongoing relationship with these customers with scheduled delivery extending through the year and does not believe this concentration poses a significant risk, as their products are based entirely on the Company’s technologies.

Income Taxes - The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards Board Accounting Codification (ASC) 740: Income Taxes. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets will be reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized

Recent Accounting Pronouncements–On August 20, 2020 the FASB released ASU 2020-06 “Simplified Convertible Instrument Framework”. This pronouncement simplifies the convertible debt accounting framework, eliminating, among other things, the beneficial conversion feature model. The adoption date of this pronouncement is for fiscal years beginning after December 15, 2023, but allows for earlier adoption for fiscal years beginning after December 31, 2020. The Company has elected to adopt this accounting treatment effective January 1, 2021. Its adoption will have a beneficial effect on its financial statements in those instances when the conversion rate set by convertible notes is below the market price on the date the convertible note is issued, as no beneficial conversion expense will be recorded.

The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position and cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its current or future earnings or operations.

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GOING CONCERN

9 Months Ended

Sep. 30, 2023

Going Concern [Abstract]

GOING CONCERN

NOTE 2– GOING CONCERN

The Company continues to accumulate significant operating losses and has an accumulated deficit of $31,511,174 at September 30, 2023.  These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Management is seeking additional funding to provide operating capital for its operations until such time as revenues are sufficient to sustain our level of operations.  However, there is no assurance that additional funding will be available on acceptable terms, if at all.

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NOTES PAYABLE

9 Months Ended

Sep. 30, 2023

Notes Payable [Abstract]

NOTES PAYABLE

NOTE 3 – NOTES PAYABLE

During the nine months ended September 30, 2023, the Company received sixteen payments for a total of $335,509, from two of the convertible note holders as working capital loans to enable the Company to meet its obligations for operating expenses. The advances bear interest at the rate of 10%, but there are no other terms established. While the intent is to memorialize these advances through the issuance of a convertible note, as of the date of this filing that has not been done. Therefore these advances are treated as on demand notes and are included in our current liabilities. Until such agreement is reached, the balance of $1,086,910 as of September 30, 2023 is unsecured and due on demand. At September 30, 2023 there is $79,823 in accrued unpaid interest relating to these notes.

In August 2020 the Company received $50,000 from a large shareholder to meet operating expenses. The shareholder indicated that he would want the $50,000 loan repaid when the Company was in a position to do so. The shareholder subsequently provided an additional $5,000, for a total loan of $55,000. The balance is non-interest

bearing and due on demand. Periodic payments have been made to reduce the outstanding balance. During the nine months ended September 30, 2023 payments totaling $22,500 were made, leaving a remaining balance of $2,500 which is non-interest bearing and due on demand.

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CONVERTIBLE NOTES PAYABLE

9 Months Ended

Sep. 30, 2023

Convertible Notes Payable [Abstract]

CONVERTIBLE NOTES PAYABLE

NOTE 4 – CONVERTIBLE NOTES PAYABLE

Convertible Notes Payable

At September 30, 2023, there are notes outstanding with principal balances which total $180,000. Of the notes, $140,000 are convertible notes bearing a 10% annual rate of interest (with a 15% default rate). Of these notes, $100,000 is convertible into shares of common stock at the rate of $0.05 per share and $40,000 is convertible at $0.07 per share. The remaining $40,000 is a convertible note entered into on August 8, 2011 with a former Company Director, at a conversion rate of $0.20 per share. That note was due on December 31, 2015 and bears a default interest rate of 10%. The notes are all in default. At September 30, 2023 there is $165,088 in accrued unpaid interest relating to these convertible notes.

Convertible Note Payable - Related Party

At September 30, 2023, there are notes outstanding with two directors of the Company with balances of $164,257 and $54,257, respectively. The notes bear an 8% annual rate of interest with a 12% default rate and are convertible into shares of restricted common stock. Of the notes, $114,513 is convertible into shares of restricted common stock at $0.07 per share and $104,000 of the notes are convertible at $0.06 per share. All of these notes have a maturity date of June 30, 2023. At September 30, 2023 there is $99,417 in accrued unpaid interest relating to these related party convertible notes.

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STOCK OPTION PLANS

9 Months Ended

Sep. 30, 2023

Stock Option Plans [Abstract]

STOCK OPTION PLANS

NOTE 5– STOCK OPTION PLANS

On August 25, 2005, the Board of Directors of the Company approved and adopted the 2005 Stock Incentive Plan (the Plan). The Plan became effective upon its adoption by the Board and continued in effect for ten years, terminating on August 25, 2015.  This plan was approved by the stockholders of the Company at their annual meeting of shareholders on November 22, 2005. Under the Plan, the exercise price for all options issued will not be less than the average quoted closing market price of the Company’s trading common stock for the thirty-day period immediately preceding the grant date plus a premium of ten percent.  The maximum aggregate number of shares that may be awarded under the plan is 2,500,000 shares. The Company continues to utilize the Black-Scholes option-pricing model for calculating the fair value of the options granted as defined by ASC Topic 718, which is an acceptable valuation approach under ASC 718. This model requires the input of subjective assumptions, including the expected price volatility of the underlying stock.

On August 24, 2015, the Board of Directors approved the issuance of options to purchase 2,185,000 shares of the Company’s common stock. Of the total issued, 1,960,000 options were issued to replace options held by directors and employees which were to expire and 225,000 options were issued to new employees. Of the options issued, 640,000 have an option price of $0.14 per share, 500,000 have an option price of $0.15 per share, 995,000 have an option price of $0.20 per share, and 50,000 have an option price of $0.25 per share. Options issued as replacement shall have immediate vesting terms. Options which are not replacements shall vest over a two-year, four-month period in equal installments on the last day of 2015, 2016 and 2017, respectively.

Projected data related to the expected volatility and expected life of stock options is based upon historical and other information, and notably, the Company's common stock has limited trading history. Changes in these subjective assumptions can materially affect the fair value of the estimate, and therefore, the existing valuation models do not provide a precise measure of the fair value of the Company's employee stock options.

Between August 25, 2005 and August 25, 2019, the Company granted options to employees to purchase an aggregate 3,096,000 shares of common stock at exercise prices ranging from $0.15 to $2.07 per share. The options all vested by December 31, 2017 and expire 10 years from the date of grant.

On December 30, 2020 the Board of Directors approved the revaluation of all outstanding stock options, reducing the option price to $0.05 per share. The Company recorded a charge of $8,203 as the result of this change.

As of the years ended December 31, 2005 through 2020, the Company recognized a total of $2,451,971 of stock-based compensation expense, which includes charges of $8,203 in 2020, leaving $0 in unrecognized expense as of December 31, 2021. There were 1,900,000 employee stock options outstanding at September 30, 2023.  

A summary of all employee options outstanding and exercisable under the plan as of September 30, 2023 is set forth below:

Options	Shares	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at the beginning of period	1,900,000	$0.05	2.65	$              --
Granted	--	--	--	--
Expired	--	--	--	--
Forfeited	--	--	--	--
Outstanding at the end of Period	1,900,000	$                 0.05	1.90	$               --
Exercisable at the end of Period	1,900,000	$                 0.05	1.90	$               --

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CAPITAL STOCK

9 Months Ended

Sep. 30, 2023

Capital Stock [Abstract]

CAPITAL STOCK

NOTE 6 – CAPITAL STOCK

Preferred Stock – There are 1,000,000 shares of preferred stock with a par value of $0.001 per share authorized. At September 30, 2023 and December 31, 2022, there were no shares of preferred stock issued or outstanding.

Common Stock – There are 200,000,000 shares of common stock with a par value of $0.001 per share authorized. At September 30, 2023 and December 31, 2022, there were 125,557,174 and 125,557,174 shares of common stock issued and outstanding, respectively. The Company issued 11,160,932 shares of restricted common stock during the year ended December 31, 2022 for the retirement of $445,000 of notes payable and convertible notes, and $103,047 of accrued interest.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 7– COMMITMENTS AND CONTINGENCIES

The Company currently occupies approximately 8,029 square feet of office and manufacturing space leased from D&M Management, Inc. The building is located in a commercial business district in West Jordan, Utah which consists primarily of high-tech manufacturing firms and it is located adjacent to a major intersection, allowing easy access to Utah’s main interstate highway. The original lease was for $6,787 per month and was for a period of twelve months, with a termination date of August 31, 2022. A new lease for a period of twelve months to commence September 1, 2022 at a monthly rate of $6,657 was entered into on June 20, 2022. The lease has an expiration date of August 31, 2023 and contains a 90-day notice clause if our intent is to either terminate the lease or renew the lease for one additional three-year term. We recognize lease expense on a straight-line basis over the term of the lease.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2023

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 8 – RELATED PARTY TRANSACTIONS

At September 30, 2023, there was $61,960 payable to the Chief Executive Officer. During the nine-months ended September 30, 2023 the Chief Executive Officer provided $15,748 to be used for operating expenses. At December 31, 2022, the Company had amounts of $44,713 payable to its Chief Executive Officer for funds provided to meet the operating expense obligations of the Company.

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2023

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 9 – SUBSEQUENT EVENTS

In October and November 2023, the Company received $52,006 in additional funding from holders of convertible notes. There has not been a note written on these funds, and no terms have been agreed to. The funding is to bear interest at the rate of 10% per annum. The Company is recording the receipt of the funding as on demand notes until such time as terms are agreed upon by the parties.

The Company has evaluated all other subsequent events pursuant to ASC Topic 855 and has determined that there are no events that require disclosure as of the date of issuance.

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Accounting Policies, by Policy (Policies)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Condensed Interim Financial Statements

Condensed Interim Financial Statements – The accompanying unaudited condensed financial statements include the accounts of Flexpoint Sensor Systems, Inc. (the “Company”). These financial statements are condensed and, therefore, do not include all disclosures normally required by accounting principles generally accepted in the United States of America. Therefore, these statements should be read in conjunction with the most recent annual financial statements of Flexpoint Sensor Systems, Inc. for the year ended December 31, 2022 included in the Company’s Form 10-K filed with the Securities and Exchange Commission on April 10, 2023. In particular, the Company’s significant accounting principles were presented as Note 1 to the Financial Statements in that report. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying condensed financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying condensed financial statements are not necessarily indicative of the results that may be expected for the full year ending December 31, 2023.

Nature of Operations

Nature of Operations – Flexpoint Sensor Systems, Inc. (the Company) is located in West Jordan, Utah. The Company’s activities to date have included acquiring equipment and enhancing technology, obtaining financing, limited production and seeking long-term manufacturing contracts. The Company’s operations are in designing, engineering, manufacturing and selling sensor technology and equipment using flexible potentiometer technology. Through September 30, 2023, the Company continued to manufacture products and sensors to fill customer orders and provide engineering and design work.

The COVID-19 Pandemic (“the Pandemic”) has had a dramatic effect on our business as well as the business of our customers. The wide-ranging effects on the world-wide business market has led to a general reluctance for businesses to move forward with entering into major commitments until their future markets have been clarified. Because of this, we have experienced a significant slowdown in the size and number of orders received and, while we cannot predict when the influence of the Pandemic will end, we expect that orders will return to their former levels and increase following a return to normal business operations. We recognize that, with the changes brought by the pandemic, demand for our products may fluctuate in the future. We recognize these risks and are taking every effort to prevent or mitigate them as they arise.

Use of Estimates

Use of Estimates – The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.  Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents – Cash and cash equivalents are considered to be cash and highly liquid securities with original maturities of three months or less.

Fair Value Measurements

Fair Value Measurements - The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.

Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or

model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

The carrying value of the Company’s cash, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.

Accounts Receivable

Accounts Receivable – Trade accounts receivable are recorded at the time product is shipped or services are provided including any shipping and handling fees. Contracts associated with design, development engineering and manufacturing generally require a deposit of 50% of the quoted price prior to the commencement of work. The deposit is considered deferred income until the entire project, or the appropriate portion of the contract to meet scheduled deliveries is completed and shipped, and accepted by the customer, at which time the entire contract price, or the appropriate portion of the contract, is billed to the customer and the deposit applied. The Company has established an allowance for bad debts based on a historical experience and an analysis of risk associated with the account balances. The balance in the allowance account was $103,777 and $103,777 as of September 30, 2023 and December 31, 2022, respectively.

Inventories

Inventories – The Company has only a small amount of inventory. However, as production levels increase inventories will be carried on the balance sheet. Inventories will be stated at the lower of cost or market or net realizable value. Cost is determined by using the first in, first out (FIFO) method.

Property and Equipment

Property and Equipment– Property and equipment are stated at cost.  Additions and major improvements are capitalized while maintenance and repairs are charged to operations.  Upon trade-in, sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is recognized. Depreciation is computed using the straight-line method and is recognized over the estimated useful lives of the property and equipment, which range from three to ten years.

Valuation of Long-lived Assets

Valuation of Long-lived Assets – The carrying values of the Company’s long-lived assets are reviewed for impairment annually and whenever events or changes in circumstances indicate that they may not be recoverable. When projections indicate that the carrying value of the long-lived asset is not recoverable, the carrying value is reduced by the estimated excess of the carrying value over the projected discounted cash flows. Under similar analysis no impairment charge was taken during the nine-month period ended September 30, 2023 and during the year ended December 31, 2022. Impairment tests will be conducted on an annual basis and, should they indicate a carrying value in excess of fair value, additional impairment charges may be required.

Intangible Assets

Intangible Assets – Costs to obtain or develop patents are capitalized and amortized over the remaining life of the patents, and technology rights are amortized over their estimated useful lives. The Company currently has the right to several patents and proprietary technology.  Patents and technology are amortized from the date the Company acquires or is awarded the patent or technology right, over their estimated useful lives, which range from 5 to 15 years.  An impairment charge is recognized if the carrying amount is not recoverable and the carrying amount exceeds the fair value of the intangible assets as determined by projected discounted net future cash flows. Under similar analysis there was no impairment charge taken during the nine-month period ended September 30, 2023 and during the year ended December 31, 2022.

Research and Development

Research and Development – Research and development costs are recognized as an expense during the period incurred, which is until the conceptual formulation, design, and testing of a process is completed and the process has been determined to be commercially viable.

Lease Obligations

Lease Obligations – The Company accounts for leases in accordance with ASC 842, Leases. The Company recognizes ROU assets and related lease liabilities on the balance sheet for all leases greater than one year in duration. Operating lease payments are recognized as an expense on a straight-line basis over the lease term in equal amounts of rent expense attributed to each period during the term of the lease. This generally results in rent

expense in excess of cash payments during the early years of the lease and rent expenses less than cash payments in later years. The difference between rent expense recognized and actual cash payments is typically represented as the spread between the ROU asset and lease liability.

Goodwill

Goodwill– Goodwill represents the excess of the Company’s reorganization value over the fair value of net assets of the Company upon emergence from bankruptcy. Goodwill is not amortized, but is tested for impairment annually, or at interim periods when a triggering event occurs using a fair value approach. According to Accounting Standards Codification (or “ASC”) 350-20 Intangibles – Goodwill and Other, a fair-value-based test is applied at the overall Company level. The test compares the fair value of the Company to the carrying value of its net assets. This test requires various judgments and estimates. The fair value of the Company is allocated to the Company’s assets and liabilities based upon their fair values with the excess fair value allocated to goodwill. An impairment of goodwill is measured as the excess of the carrying amount of goodwill over the determined fair value.

Revenue Recognition

Revenue Recognition – On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers, and all of the related amendments (“new revenue standard”). We have applied the new revenue standard to all contracts as of the date of the initial adoption. The new revenue standard establishes five steps whereby a transaction is analyzed to determine if revenue has been earned and can be recognized. The adoption of the new revenue standard did not have any effect on our financial statements. The vast majority of our sales are made to order, for which orders we require a deposit of 50% of the value of the order. That amount is put in a customer deposit account until the entire order has been manufactured and shipped or the appropriate portion of the project is completed to meet scheduled deliveries, invoiced and shipped. At the ship date, the Company has no further obligations under that portion of the contract and the revenue from the sale is recognized.

A part of our customer base is made up of international customers. The table below allocates revenue between domestic and international customers. The following table presents Flexpoint Sensor Systems revenues disaggregated by region and product type:

Three months ended:		September 30,				September 30,
			2023				2022
		Consumer	Long-term			Consumer	Long-term
Segments		Products	Contract	Total		Products	Contract	Total
Domestic	$	2,869	-	2,869	$	18,454	-	18,454
International		18,725	-	18,725		5,503	-	5,503
	$	21,594	-	21,594	$	23,957	-	23,957
Components	$	10,451	-	10,451	$	6,968	-	6,968
Engineering Services		11,143	-	11,143		16,989	-	16,989
	$	21,594	-	21,594	$	23,957	-	23,957

Nine months ended:		September 30,				September 30,
			2023				2022
		Consumer	Long-term			Consumer	Long-term
Segments		Products	Contract	Total		Products	Contract	Total
Domestic	$	4,045	-	4,045	$	31,728	-	31,728
International		67,313	-	67,313		89,168	-	89,168
	$	71,358	-	71,358	$	120,896	-	120,896
Components	$	30,738	-	30,738	$	91,214	-	91,214
Engineering Services		40,620	-	40,620		29,682	-	29,682
	$	71,358	-	71,358	$	120,896	-	120,896

Basic and Diluted Loss per Share

Basic and Diluted Loss Per Share – Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period.  Diluted loss per share is computed by dividing net loss by the weighted-average number of common shares and dilutive potential common shares outstanding during the period. At September 30, 2023 and 2022 there were outstanding common share equivalents (options and convertible notes payable) which amounted to 11,973,112 and 11,043,870 of common stock, respectively. These common share equivalents were not included in the computation of diluted earnings per share for the nine-month periods ended September 30, 2023 and 2022 as their effect would have been anti-dilutive, thereby decreasing loss per common share.

Concentrations and Credit Risk

Concentrations and Credit Risk - The Company has a few major customers who represent a significant portion of revenue, accounts receivable and notes receivable. During the nine-month period ended September 30, 2023, three customers represented 88% of sales and two customers represented 16% of accounts receivable. The Company has a strong ongoing relationship with these customers with scheduled delivery extending through the year and does not believe this concentration poses a significant risk, as their products are based entirely on the Company’s technologies.

Income Taxes

Income Taxes - The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards Board Accounting Codification (ASC) 740: Income Taxes. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets will be reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized

Recent Accounting Pronouncements

Recent Accounting Pronouncements–On August 20, 2020 the FASB released ASU 2020-06 “Simplified Convertible Instrument Framework”. This pronouncement simplifies the convertible debt accounting framework, eliminating, among other things, the beneficial conversion feature model. The adoption date of this pronouncement is for fiscal years beginning after December 15, 2023, but allows for earlier adoption for fiscal years beginning after December 31, 2020. The Company has elected to adopt this accounting treatment effective January 1, 2021. Its adoption will have a beneficial effect on its financial statements in those instances when the conversion rate set by convertible notes is below the market price on the date the convertible note is issued, as no beneficial conversion expense will be recorded.

The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position and cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its current or future earnings or operations.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Schedule of disaggregated revenues

The following table presents Flexpoint Sensor Systems revenues disaggregated by region and product type:

Three months ended:		September 30,				September 30,
			2023				2022
		Consumer	Long-term			Consumer	Long-term
Segments		Products	Contract	Total		Products	Contract	Total
Domestic	$	2,869	-	2,869	$	18,454	-	18,454
International		18,725	-	18,725		5,503	-	5,503
	$	21,594	-	21,594	$	23,957	-	23,957
Components	$	10,451	-	10,451	$	6,968	-	6,968
Engineering Services		11,143	-	11,143		16,989	-	16,989
	$	21,594	-	21,594	$	23,957	-	23,957

Nine months ended:		September 30,				September 30,
			2023				2022
		Consumer	Long-term			Consumer	Long-term
Segments		Products	Contract	Total		Products	Contract	Total
Domestic	$	4,045	-	4,045	$	31,728	-	31,728
International		67,313	-	67,313		89,168	-	89,168
	$	71,358	-	71,358	$	120,896	-	120,896
Components	$	30,738	-	30,738	$	91,214	-	91,214
Engineering Services		40,620	-	40,620		29,682	-	29,682
	$	71,358	-	71,358	$	120,896	-	120,896

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STOCK OPTION PLANS (Tables)

9 Months Ended

Sep. 30, 2023

Stock Option Plans [Abstract]

Schedule of stock option activity

A summary of all employee options outstanding and exercisable under the plan as of September 30, 2023 is set forth below:

Options	Shares	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at the beginning of period	1,900,000	$0.05	2.65	$              --
Granted	--	--	--	--
Expired	--	--	--	--
Forfeited	--	--	--	--
Outstanding at the end of Period	1,900,000	$                 0.05	1.90	$               --
Exercisable at the end of Period	1,900,000	$                 0.05	1.90	$               --

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Percentage of deposit	50.00%
Allowance account	$ 103,777		$ 103,777
Sale of deposit	50.00%
Outstanding common share	11,973,112	11,043,870
Minimum [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Property and equipment, useful lives	3 years
Intangible assets, useful lives	5 years
Maximum [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Property and equipment, useful lives	10 years
Intangible assets, useful lives	15 years
Customer Three [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Risk percentage	16.00%
Sales [Member] | Customer Three [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Risk percentage	88.00%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of disaggregated revenues - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenue, Major Customer [Line Items]
Revenue	$ 21,594	$ 23,957	$ 71,358	$ 120,896
Domestic [Member]
Revenue, Major Customer [Line Items]
Revenue	2,869	18,454	4,045	31,728
International [Member]
Revenue, Major Customer [Line Items]
Revenue	18,725	5,503	67,313	89,168
Components [Member]
Revenue, Major Customer [Line Items]
Revenue	10,451	6,968	30,738	91,214
Engineering Services [Member]
Revenue, Major Customer [Line Items]
Revenue	11,143	16,989	40,620	29,682
Consumer Products [Member]
Revenue, Major Customer [Line Items]
Revenue	21,594	23,957	71,358	120,896
Consumer Products [Member] | Domestic [Member]
Revenue, Major Customer [Line Items]
Revenue	2,869	18,454	4,045	31,728
Consumer Products [Member] | International [Member]
Revenue, Major Customer [Line Items]
Revenue	18,725	5,503	67,313	89,168
Consumer Products [Member] | Components [Member]
Revenue, Major Customer [Line Items]
Revenue	10,451	6,968	30,738	91,214
Consumer Products [Member] | Engineering Services [Member]
Revenue, Major Customer [Line Items]
Revenue	11,143	16,989	40,620	29,682
Long-term Contract [Member]
Revenue, Major Customer [Line Items]
Revenue
Long-term Contract [Member] | Domestic [Member]
Revenue, Major Customer [Line Items]
Revenue
Long-term Contract [Member] | International [Member]
Revenue, Major Customer [Line Items]
Revenue
Long-term Contract [Member] | Components [Member]
Revenue, Major Customer [Line Items]
Revenue
Long-term Contract [Member] | Engineering Services [Member]
Revenue, Major Customer [Line Items]
Revenue

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GOING CONCERN (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Going Concern [Abstract]
Accumulated deficit	$ (31,511,174)	$ (30,887,207)

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NOTES PAYABLE (Details) - USD ($)	1 Months Ended	9 Months Ended
	Aug. 31, 2020	Sep. 30, 2023	Sep. 30, 2022
NOTES PAYABLE (Details) [Line Items]
Accrued unpaid interest		$ 79,823
Loan from related party			$ 12,800
Loan repaid	$ 50,000
Non-interest bearing and due on demand		2,500
Working Capital Loan One [Member]
NOTES PAYABLE (Details) [Line Items]
Notes payable amount		$ 335,509
Note Payable [Member]
NOTES PAYABLE (Details) [Line Items]
Bear interest rate		10.00%
Unsecured Debt [Member]
NOTES PAYABLE (Details) [Line Items]
Notes payable amount		$ 1,086,910
Shareholders [Member]
NOTES PAYABLE (Details) [Line Items]
Non-interest bearing and due on demand		$ 22,500
Shareholders [Member] | Operating Expenses Loan One [Member]
NOTES PAYABLE (Details) [Line Items]
Loan from related party	5,000
Shareholders [Member] | Operating Expenses Loan [Member]
NOTES PAYABLE (Details) [Line Items]
Loan from related party	50,000
Shareholders [Member] | Operating Expenses Loan Total [Member]
NOTES PAYABLE (Details) [Line Items]
Loan from related party	$ 55,000

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CONVERTIBLE NOTES PAYABLE (Details) - USD ($)	9 Months Ended
	Sep. 30, 2023	Aug. 08, 2011
CONVERTIBLE NOTES PAYABLE (Details) [Line Items]
Convertible notes payable, principal amount outstanding	$ 180,000
Convertible Debt [Member]
CONVERTIBLE NOTES PAYABLE (Details) [Line Items]
Convertible notes payable, principal amount outstanding	$ 140,000
Debt instrument, interest rate	10.00%
Debt instrument, default rate	15.00%
Convertible Notes Payable to Related Party [Member] | Director [Member]
CONVERTIBLE NOTES PAYABLE (Details) [Line Items]
Debt instrument, interest rate	8.00%
Debt instrument, default rate	12.00%
Convertible Notes Payable to Related Party [Member] | One Director [Member]
CONVERTIBLE NOTES PAYABLE (Details) [Line Items]
Convertible notes payable, principal amount outstanding	$ 164,257
Convertible Notes Payable to Related Party [Member] | Two Director [Member]
CONVERTIBLE NOTES PAYABLE (Details) [Line Items]
Convertible notes payable, principal amount outstanding	54,257
Convertible Common Stock [Member]
CONVERTIBLE NOTES PAYABLE (Details) [Line Items]
Convertible into shares of common stock	$ 100,000
Debt instrument, conversion price (in Dollars per share)	$ 0.05
Convertible Notes Payable [Member]
CONVERTIBLE NOTES PAYABLE (Details) [Line Items]
Convertible into shares of common stock	$ 40,000
Debt instrument, conversion price (in Dollars per share)	$ 0.07
Debt instrument, maturity date	Dec. 31, 2015
Convertible Notes Payable [Member] | Director [Member]
CONVERTIBLE NOTES PAYABLE (Details) [Line Items]
Debt instrument, interest rate	10.00%
Debt instrument, conversion price (in Dollars per share)		$ 0.2
Convertible notes payable, balance		$ 40,000
Accrued interest	$ 165,088
Restricted Stock [Member] | Convertible Notes Payable to Related Party [Member]
CONVERTIBLE NOTES PAYABLE (Details) [Line Items]
Debt instrument, conversion price (in Dollars per share)	$ 0.07
Convertible notes payable, balance	$ 114,513
Debt instrument, maturity date	Jun. 30, 2023
Accrued interest	$ 99,417
Conversion debt amount	$ 104,000
Convertible notes payable, rest balance conversion price (in Dollars per share)	$ 0.06

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STOCK OPTION PLANS (Details) - USD ($)			1 Months Ended				9 Months Ended	12 Months Ended
	Aug. 24, 2015	Dec. 31, 2005	Dec. 30, 2020	Aug. 25, 2019	Aug. 25, 2015	Aug. 25, 2005	Sep. 30, 2023	Dec. 31, 2020	Dec. 31, 2021
STOCK OPTION PLANS (Details) [Line Items]
Premium percent							10.00%
Issued of options for expire of common shares	225,000
Options granted during period				3,096,000
Exercise price of stock options granted, minimum (in Dollars per share)				$ 0.15
Exercise price of stock options granted, maximum (in Dollars per share)				$ 2.07
Option expiration period				10 years
Stock-based compensation expense (in Dollars)		$ 2,451,971
Unrecognized compensation cost related to employee stock options (in Dollars)									$ 0
Options outstanding							1,900,000
2005 Stock Incentive Plan [Member]
STOCK OPTION PLANS (Details) [Line Items]
Effective term					10 years
Shares authorized							2,500,000
Employee Stock Options [Member]
STOCK OPTION PLANS (Details) [Line Items]
Options outstanding							1,900,000
Stock Options [Member]
STOCK OPTION PLANS (Details) [Line Items]
Option price reduced (in Dollars per share)			$ 0.05
Stock-based compensation expense (in Dollars)			$ 8,203					$ 8,203
Stock Options [Member] | 2005 Stock Incentive Plan [Member]
STOCK OPTION PLANS (Details) [Line Items]
Issuance of options for purchase of common shares	2,185,000
Option vesting period	2 years
Options granted during period						3,096,000
Exercise price of stock options granted, minimum (in Dollars per share)						$ 0.15
Exercise price of stock options granted, maximum (in Dollars per share)						$ 2.07
Option expiration period						10 years
Stock Options [Member] | Exercise Price Range One [Member] | 2005 Stock Incentive Plan [Member]
STOCK OPTION PLANS (Details) [Line Items]
Issuance of options for purchase of common shares	640,000
Exercise price of stock options granted (in Dollars per share)	$ 0.14
Stock Options [Member] | Exercise Price Range Two [Member] | 2005 Stock Incentive Plan [Member]
STOCK OPTION PLANS (Details) [Line Items]
Issuance of options for purchase of common shares	500,000
Exercise price of stock options granted (in Dollars per share)	$ 0.15
Stock Options [Member] | Exercise Price Range Three [Member] | 2005 Stock Incentive Plan [Member]
STOCK OPTION PLANS (Details) [Line Items]
Issuance of options for purchase of common shares	995,000
Exercise price of stock options granted (in Dollars per share)	$ 0.2
Stock Options [Member] | Exercise Price Range Four [Member] | 2005 Stock Incentive Plan [Member]
STOCK OPTION PLANS (Details) [Line Items]
Issuance of options for purchase of common shares	50,000
Exercise price of stock options granted (in Dollars per share)	$ 0.25
Stock Options [Member] | Director [Member] | 2005 Stock Incentive Plan [Member]
STOCK OPTION PLANS (Details) [Line Items]
Issuance of options for purchase of common shares	1,960,000

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STOCK OPTION PLANS (Details) - Schedule of stock option activity	9 Months Ended
	Sep. 30, 2023 USD ($) $ / shares shares
Schedule of Stock Option Activity [Abstract]
Shares Outstanding at the beginning of period | shares	1,900,000
Weighted Average Exercise Price Outstanding at the beginning of period | $ / shares	$ 0.05
Weighted Average Remaining Contractual Life (Years) Outstanding at the beginning of period	2 years 7 months 24 days
Aggregate Intrinsic Value Outstanding at the beginning of period | $
Shares Granted | shares
Weighted Average Exercise Price Granted | $ / shares
Weighted Average Remaining Contractual Life (Years) Granted
Aggregate Intrinsic Value Granted | $
Shares Expired | shares
Weighted Average Exercise Price Expired | $ / shares
Weighted Average Remaining Contractual Life (Years) Expired
Aggregate Intrinsic Value Expired | $
Shares Forfeited | shares
Weighted Average Exercise Price Forfeited | $ / shares
Weighted Average Remaining Contractual Life (Years) Forfeited
Aggregate Intrinsic Value Forfeited | $
Shares Outstanding at the end of Period | shares	1,900,000
Weighted Average Exercise Price Outstanding at the end of Period | $ / shares	$ 0.05
Weighted Average Remaining Contractual Life (Years) Outstanding at the end of Period	1 year 10 months 24 days
Aggregate Intrinsic Value Outstanding at the end of Period | $
Shares Exercisable at the end of Period | shares	1,900,000
Weighted Average Exercise Price Exercisable at the end of Period | $ / shares	$ 0.05
Weighted Average Remaining Contractual Life (Years) Exercisable at the end of Period	1 year 10 months 24 days
Aggregate Intrinsic Value Exercisable at the end of Period | $

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CAPITAL STOCK (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Sep. 30, 2023
Capital Stock [Abstract]
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares outstanding
Preferred stock, shares issued
Common stock, shares authorized	200,000,000	200,000,000
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares outstanding	125,557,174	125,557,174
Common stock, shares issued	125,557,174	125,557,174
Restricted common stock, shares issued	11,160,932
Convertible notes note payable (in Dollars)	$ 445,000
Convertible notes accrued interest (in Dollars)	$ 103,047

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COMMITMENTS AND CONTINGENCIES (Details)		9 Months Ended
	Sep. 01, 2022 USD ($)	Sep. 30, 2023 USD ($) m²
Commitments and Contingencies [Abstract]
Area of office and manufacturing space | ft² (in Square Meters) | m²		8,029
Original lease		$ 6,787
New lease of monthly rate	$ 6,657
Lease expiration date		Aug. 31, 2023

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RELATED PARTY TRANSACTIONS (Details) - Chief Executive Officer [Member] - USD ($)	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
RELATED PARTY TRANSACTIONS (Details) [Line Items]
Payable amount	$ 61,960	$ 44,713
Operating expenses	$ 15,748

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SUBSEQUENT EVENTS (Details) - USD ($)	9 Months Ended
	Sep. 30, 2023	Nov. 30, 2023	Oct. 31, 2023
SUBSEQUENT EVENTS (Details) [Line Items]
Rate per annum	10.00%
Subsequent Event [Member]
SUBSEQUENT EVENTS (Details) [Line Items]
Convertible notes		$ 52,006	$ 52,006