10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2023

or

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

For the transition period ___to___

Commission file number: No. 0-24368

FLEXPOINT SENSOR SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation)	87-0620425 (I.R.S. Employer Identification No.)
5718 W Dannon Way, Suite B, West Jordan, Utah (Address of principal executive offices)	84081 (Zip Code)
Registrant’s telephone number, including area code:   801-568-5111

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered under Section 12(g) of the Act: Common Stock

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.

Yes [ ] No [X]

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.

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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. [ ]

Indicate by checkmark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. [ ]

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. [ ]

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). [ ]

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 aggregate market value of 122,137,236 shares of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold ($0.0174), as of the last business day of the registrant’s most recently completed second fiscal quarter (June 30, 2023) was approximately $2,125,188.

The number of shares outstanding of the registrant’s common stock, as of March 31, 2024, was 125,557,174.

Documents incorporated by reference: None

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TABLE OF CONTENTS

PART I

Item 1.	Business	4
Item 1A.	Risk Factors	12
Item 1C.	Cybersecurity	12
Item 2.	Properties	12
Item 3.	Legal Proceedings	13
Item 4.	Mine Safety Disclosure	13

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases of Equity Securities	13
Item 6.	Reserved	14
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 8.	Financial Statements and Supplementary Data	18
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	33
Item 9A.	Controls and Procedures	33
Item 9B.	Other Information	33
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	34

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	34
Item 11.	Executive Compensation	35
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	36
Item 13.	Certain Relationships and Related Transactions, and Director Independence	38
Item 14.	Principal Accounting Fees and Services	38

PART IV

Item 15.	Exhibits, Financial Statement Schedules	39
Signatures		40

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

FORWARD LOOKING STATEMENTS

The U.S. Securities and Exchange Commission (“SEC”) encourages 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.

PART I

ITEM 1.  BUSINESS

HISTORICAL DEVELOPMENT

Flexpoint Sensor Systems, Inc. was incorporated in the state of Delaware in June 1992 as Nanotech Corporation.  In April 1998, Nanotech changed the company name to Micropoint, Inc. and in July 1999 Micropoint changed its name to Flexpoint Sensor Systems, Inc. Flexpoint was forced to seek bankruptcy protection on July 3, 2001, and filed a voluntary petition for reorganization pursuant to Chapter 11 of the United States Bankruptcy Code. On February 24, 2004, the bankruptcy court confirmed Flexpoint's Plan of Reorganization.   We used fresh-start reporting and all assets of Flexpoint Sensor Systems, Inc. were restated to reflect their reorganization value, which approximated the fair value at the date of reorganization.

BUSINESS OVERVIEW

Flexpoint Sensor Systems, Inc. (“Flexpoint”, or “Company”), is principally engaged in designing, engineering and manufacturing bend sensor technology and products using its patented Bend Sensor^® technology, (a flexible potentiometer technology). We continue to make further improvements to our technologies, manufacturing and developing fully integrated devices and related products that we have been marketing and selling to a variety of companies in diverse industries. We are negotiating and signing agreements, including licensing agreements, purchase orders and contracts that have provided some revenues and have proven that our sensors are more durable, adaptable and cost effective than any other product currently on the market.

The Company owns six patents, including patents on specific devices that use the Bend Sensor^® and we have exclusive rights through licensing agreements to other patents and devices. We are continuing to develop and enhance our intellectual properties that could result in additional patents being filed. The Company currently manufactures, and has jointly developed, at least thirty products that are being sold and supplied to current customers and we continue to receive orders for custom prototype sensors as well as our standard sensors. We are continuing to develop and enhance our intellectual properties that could result in additional patents being filed.

The COVID-19 Pandemic (“the Pandemic”), and its continuation and resurgence, 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 led to either a slowdown or a general reluctance for businesses to move forward with entering into major commitments until their future markets have been clarified. Because of this, we experienced a significant slowdown in the size and number of orders received.However, we have recently experienced an upturn in orders and we expect that orders will return to their former levels and even increase during the year.

During 2023 we focused our marketing efforts on a number of larger domestic and international companies that have applications which have the potential to greatly increase the volume of sensors we are currently manufacturing.As of the date of this report, the Company had anumber of global commercial partners covering a variety of different products. In coordination with its partners, the Company introduced several new products during the last two years. Management believes this growth in sales channels will allow the Company to grow at an increasingly accelerated rate over the next several quarters.

Our sales and marketing efforts have been targeted toward the development of new relationships with clients while maintaining and strengthening relationships already developed with several Tier 1 (major) suppliers in the automotive, health and AR/VR industries.

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We have built and shipped orders to a number of these companies to enable them to test the utilization of our sensors into their existing, new and developing product lines.

The Company continues to develop relationships in a number of application fields. Flexpoint has established relationships with several medical IoT vendors. These include companies like Neofect and Gloreha; all with a focus on medical rehabilitation with a different approach. Products from these companies range from gloves to prosthetics to virtual reality, all with the intention of improving medical health or medical rehab. On December 15, 2022 the Company announced successful delivery of significant glove orders, with additional orders from top innovative medical rehabilitative equipment leader Idrogenet/Gloreha.

We also announced that Flexpoint continues to work with Resellers/Channel partners such as PayPal, Woo Commerce, DiGi Key, Amazon, and from orders placed on our website. We are working to increase this market area as it provides effective and significant growth and scale.

In addition to the sale of our products and engineering and design services, we also may consider generating revenues through licensing our unique technology for field of use or territory. We will attempt to negotiate each license agreement to contain a provision for either first right of refusal to manufacture, or royalty provisions for specific products or applications, or both. We have continued to concentrate our marketing efforts on sensors and electronics which we consider to be quick-to-market production orders, and on engineering services that have generated limited, but immediate, revenues that have provided cash flow and name recognition. We have also continued our marketing efforts in the automotive industry. Due to the size and the numerous regulations inherent in the automotive industry, it requires a significantly longer time to develop and acquire approvals for new technologies. However, as there are high volumes and long-term contracts associated within the automotive industry, we anticipate that this industry will potentially generate significant long-term revenue streams.

We continue to work with Tier 1 automotive suppliers on a variety of products that are in various stages of development and implementation. Both the medical and automotive industries have undergone significant changes over the past several years. This changing environment has created delays in the implementation of the automotive and medical devices and therefore, over the past several years, we have focused our limited resources and marketing efforts on sensors and products that, in the aggregate, will generate a smaller dollar volume than those anticipated from our medical or automotive devices, but have a quicker pathway to market and have generated needed limited, but immediate, cash flow while providing additional name and product recognition that we believe will provide long term benefits. Based upon the current interest in our sensors from both the automotive and medical industries, we anticipate that over the next twelve months, we will begin producing larger repeatable volumes of sensors and devices in these focus industries.

PRINCIPAL PRODUCTS

Bend Sensor ^®Technology

The Company owns the patent rights to our Bend Sensor^® technology. The Bend Sensor^® is a flexible potentiometer; the bend sensor consists of a coated substrate, such as plastic, that changes electrical conductivity as it is bent in a consistent manner. Electronic systems connect to this sensor and measure in detail the amount of bending or movement that occurs in a predictable manner.  Certain applications of the Bend Sensor^® potentiometer have been patented (See “Patents and Intellectual Property,” below).

A typical potentiometer functions through the means of metal contacts swiping or rubbing across a resistive element. Our Bend Sensor^® potentiometer is a single layer with no mechanical assembly which makes it more reliable and significantly smaller, lighter in weight and usually less expensive than mechanical potentiometers.  Management believes many sensor applications can be improved using our technology and that the use of our technology will result in new products and new sensor applications, including the USB Bend Sensor^® kit, which has found application in a wide range of products since its introduction in 2015.

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.  Our operations have not yet commenced to a commercially sustainable level and include designing, engineering, manufacturing and selling sensor technology and products featuring our Bend Sensor^® technology and equipment.

We have developed the following applications and devices using the Bend Sensor^® technology and are currently marketing these items:

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Glove Systems

In the rapidly growing and emerging wearables space, Flexpoint has recently received additional purchase orders from multiple glove manufacturers across various market sub-segments, including medical, gaming and virtual reality. The “speed to market” commercialization plans of these companies are driving this increased order volume. Flexpoint is aggressively going after this evolving market. The Pandemic has slowed the orders and, while we cannot predict when the influence of the Pandemic will end, we have seen a recent increase in both the size and number of orders and expect this pattern to continue and increase throughout the remainder of 2024 following a return to business. In aggregate, Bend Sensor® wearables order volumes are expected to number in the tens of thousands in 2024. The wearables market segment is clearly one where our technology is easily adapted and truly illustrates our technological differentiation. Flexpoint’s willingness and ability to customize sensors for these innovative companies and deliver them at a competitive price pointallows us to deliver real value to our customers.

The Company’s Bend Sensor® continues to be a part of the world’s most trending sectors, one being the VR/AR market. The VR/AR industry is predicted to reach more than $25 billion by 2025 and show steady growth, thereafter. We previously announced on-time delivery of several orders and receipt of additional orders.

In June of 2022 we announced significant growth and high demand for the Flexpoint Glove Bend Sensor. This sensor has been well developed over the years and is now highly sought after by the large Virtual Reality (VR) companies and their markets. The Company currently has 20 different customers ordering the patented Bend sensor with approximately 10 of these being major companies giving us reoccurring orders. Our largest companies being Manus and a Pacific Rim Supplier.

The Company began receiving Glove Sensor orders during the first quarter of 2022 with approximately $35,000 additional orders in May. We are now seeing significantly larger orders of the Glove Sensor from larger companies on a reoccurring basis and believe that this revenue source will continue to grow.

In July of 2022 we announced the on-time delivery of the previously announced orders from top virtual reality leaders, Manus VR and Neofect. Flexpoint's Bend Sensor® continues to be highly sought after as the Virtual Reality (VR) market accelerates and the demand for innovative medical equipment grows.

In November of 2022 we announced receipt of additional glove orders from virtual reality leaders Manus VR and Idrogenet/Glohrea.

In December of 2022 we announced delivery and receipt of additional orders from Idrogenet/Gloreha.

In February of 2023 we announced that we had delivered all the sensors under the previously announced record orders from Manus and that we expect to receive additional orders early this year. The announcement also indicated that the virtual reality market is expected to grow at a rate of 18% annually and reach in excess of $60 Billion by 2028.

Also included in that announcement was that Flexpoint had recently supplied sensors to Idrogenet/Gloreha, (Italy), and is in the process of completing an additional significant order for them which is expected to ship later this month. We are also producing sensors for Neofect, a Korean company. These sensors are for rehabilitation devices sold throughout Europe.

Manus VR has many clients of large industries such as Netflix, Google, and Rolls Royce. Manus VR is widely known for its role in virtual reality gaming and recently announced its newest design, Manus Polygon. Manus Polygon is a tracking system that eliminates the need for any kind of full-body suit, providing a full-body solution for enterprise VR. Manus Polygon is the latest in real-time software to enable fluid full-body motion within any virtual environment.

In September of 2023 we announced delivery of additional orders to Manus VR, a top virtual reality leader, and to innovative medical rehabilitative equipment leader Idrogenet/Gloreha. Flexpoint's Bend Sensor® continues to be highly sought after as the Virtual Reality (VR) market and the innovative medical equipment markets as they accelerate and grow. These orders were in addition to the orders previously announced.

Other

These ground-breaking glove systems, combined with unique, leading edge software applications, also adapt to a wide range of other applications, including health rehabilitation, unmanned systems control, smartphone interaction and professional training across multiple industries. In addition to producing an array of Bend Sensors^®, the Company is under agreement to supply integrated assemblies comprised of multiple sensor types and associated electronics.

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In the VR/VA market space, orders of increasing size and frequency were received during 2023 and additional orders are expected in 2024 from Manus VR Idrogenet and Neofect as they strive to fulfill production orders. It is expected that these orders will increase as the impact of the Pandemic enables businesses to resume normal operations.

Finalizing long-term, constant revenue generating production contracts with our existing and additional 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.

Automotive Products

For the past several years, we have been in negotiations with several Tier 1 suppliers and OEMs and have proved the benefit and capabilities of the Bend Sensor^® technology in the automotive industry.

In May 2021, Flexpoint announced that they had formalized a Joint Development and Supply Agreement between Flexpoint Sensor Systems, Inc. and De Amertek Corporation. The companies will work together and collaborate to develop electronics with integrated sensor technologies for an occupant classification system and other automotive products. We are currently collaborating on three separate projects with domestic and foreign automotive manufacturers. De Amertek is a leading designer and manufacturer of microelectronics and one of the most specialized sources of custom-made electronic modules. Headquartered in Chicago, IL, its world-class manufacturing facility and supply chain network exceeds customer expectations in quality, delivery, service and time to market. De Amertek is making way for futuristic developments and setting trends in the technology world.

In July 2021 we announced that we are continuing to work closely with a Fortune 50 automotive company on the integration of a system utilizing Flexpoint’s patented Bend Sensor® technology which was included in a patent issued to the major automotive manufacturer. By utilizing Flexpoint’s technology, this manufacturer, along with Flexpoint, has created an innovative application for automobiles and trucks which allows them to optimize the ride quality of the vehicle. Flexpoint is actively working with the manufacturer on implementation of this new technology in vehicles.

In August 2021 we announced that the Company has entered into an agreement with a leading manufacturer of autonomous vehicles for the design and production of an impact detection system utilizing Flexpoint’s patented Bend Sensor® technology. This manufacturer is a significant player in autonomous vehicle development and production. The initial order will be delivered within 45 days with the probability of larger scale production occurring during 2022.

In September 8, 2021, we announced that they have recently entered into a new agreement with a major automotive manufacturer for the design and production of parts to be utilized in the finalization of an innovative application of Flexpoint’s technology for cars and trucks to maximize the ride quality of the vehicle. We believe this application will provide significant cost savings over existing systems and lead to widespread application of this technology.

In August of 2022 we announced delivery of sensors under the second purchase order for an impact detection system for an autonomous vehicle manufacturer. We later announced additional interest from another manufacturer of autonomous vehicles in our OCS system.

Additionally, in August of 2022 we announced that we have seen significant market interest and the recent adoption of a variety of sensor applications including the Flexpoint seat occupancy sensor and the companies’ more sophisticated, Occupant Classification System (OCS), along with integration of the Impact Detection System. We are currently working with both North American and foreign automotive manufacturers on these systems. These companies include Fortune 500 automotive manufacturers as well as new, well financed companies in the EV and Autonomous Driving vehicle market spaces. We look forward to announcing production agreements with our partners and their anticipated production schedules as the agreements are formalized. We are also working on entering into an arrangement with a large after-market seller for seat products.

In October of 2022 we announced completion of deliveries under the second purchase order for an Impact Detection System. As previously announced Flexpoint has entered into an agreement with a leading US based manufacturer/OEM to provide an impact detection system for their autonomous vehicles in the United States. An autonomous vehicle is a driverless vehicle that is capable of sensing its environment and moving safely with little or no human input.

In November of 2022 we announced completion and delivery of the previous order and receipt of an order for delivery of additional sensors for an impact detection sensor for the manufacturer of autonomous vehicle that we have been working with.

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In February of 2023 we announced that Flexpoint has entered into an agreement with a company to provide an impact detection system for their autonomous vehicles in the United States beginning next year. Production of the vehicles is scheduled to begin in 2025 and ramp up over the next several years.

In October we announced the delivery of sensors for an Impact Detection System to a leading manufacturer in the growing autonomous vehicle industry. As previously announced Flexpoint has entered into an agreement with a leading US based manufacturer/OEM to provide custom Bend® Sensors for an impact detection system for autonomous vehicles in the United States. An autonomous vehicle is a driverless vehicle that is capable of sensing its environment and moving safely with little or no human input. By strategically placing Flexpoint’s patented impact detection sensor in key impact areas of the vehicle, we are able to play a vital role in the advancement of autonomous vehicles in the marketplace. Production of the vehicles is scheduled to begin in 2025 and ramp up over the next several years. Once production begins, purchase orders will begin escalating over the next several years.

We have continued to produce and deliver additional sensors for this manufacturer during 2023 and into 2024 as they move toward production of their vehicles.

Flow Control Applications

Our flexible sensor has proven to be an extremely robust and durable flow control switch. The Bend Sensor^® product allows for the measurement of liquid and air flow and has been tested to over 35 million cycles without failure. The Company is currently working with a global leader in cleaning, sanitizing, food safety products who have been testing the Bend Sensor^® as a measuring and dispensing device for their harsh chemical products.  When the Bend Sensor^® device is placed in a flow stream, it can measure if flow is occurring, or it can measure the amount of flow that is occurring. The fact that our design incorporates a single layer flexible device allows it to effectively operate in many harsh environments. While other technologies are affected by dirt, dust, and liquids, the Bend Sensor^® product is able to reliably operate in those environments.  An international supplier of integrated tinting solutions is interested in a similar dispensing system for its paint manufacturers, retail chains and plastic producers. We continue to receive inquiries from a variety of industries for flow applications. In July of 2022 we announced the delivery of specialized sensors for detection of over pressure rising in hydraulic systems and has delivered Flexpoint’s Bend Sensors to a global manufacturer of rupture discs, pressure and vacuum-relief valves, and other safety-critical pressure-relief products. We received an additional order for delivery in the first quarter of 2023 and in mid to late 2023 we received an additional order for sensors and expect to continue to receive orders for this and related products from this manufacturer.

In September of 2023 we announced that Flexpoint recently received an order for a specialized sensor for detection of over pressure rising in hydraulic systems and has delivered Flexpoint’s Bend Sensors® to a global manufacturer of rupture discs, pressure and vacuum-relief valves, and other safety-critical pressure-relief products. The Bend Sensor® technology works extremely well in harsh types of environments. Because of the Bend Sensor’s fast reaction, chemical resistance, and temperature tolerance this is an excellent application for these types of technologies.

In addition to the above custom sensors, Flexpoint also recently received a repeat order for delivery of sensors that have been part of this company’s product line for some years. Manufacture and delivery of this order is staged to take place with a two-stage delivery schedule. The first delivery will take place this quarter with the second delivery to occur before the end of the year.

Monitoring Systems

In October, 2018, the Company announced it had signed a five-year manufacturing and supply agreement with Counted LLC. Counted LLC conceived of a medication delivery monitoring system and dispensing monitoring system. Flexpoint designed and produced the monitoring system with Flexpoint features, Flexpoint technology and Flexpoint designed electronics to track and report the dispensing of medications in real time. The information has the potential to be transmitted to physicians, pharmacists and government agencies. Prototypes have been built and successfully tested with additional production and testing continuing. Counted LLC has recently raised capital to complete the development and testing of necessary software to bring the product to market.

In July of 2022 we announced the advancement of the pill dispensing application to work with wireless communication protocols. In September we announced that there has been a significant increase in efforts to complete development of the Pill Pack for prescription tracking. This effort slowed from the lack of development funding.

Interest in development of this product has recently renewed.

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Swell Sensor

On July 25, 2019, the Company announced that they had filed a provisional patent for the new “Swell Sensor” or Battery Expansion Sensor, (“BXS”), designed to detect and stop a Lithium ion or Lithium Polymer battery from charging or discharging, preventing a thermal runway; one of the major ways battery fires occur.

Li-ion and Li-polymer batteries are used today in everything from phones to electric cars. Flexpoint’s technology included in the provisional patent provides a method to protect these batteries, their products and those who use them every day, measuring the expansion or swelling of the battery effectively stopping a potentially dangerous state.

Batteries become over-heated, over charged, or simply fail due to old age. When this occurs, it’s possible for the inner cells of the battery to outgas a flammable electrolyte mixture, causing the battery to swell. The Flexpoint BXS Sensor addresses the swollen battery effect, as batteries are designed to contain as a failsafe the measure of out gassing. The Flexpoint Swell Sensor detects the condition, effectively shutting down the short circuit. Without this type of detection, some batteries can eventually reach temperatures over 1000º F.Designed to detect the dangerous expansion and stop a Lithium ion or Lithium polymer battery from charging or discharging, the Flexpoint battery expansion sensor was created to prevent thermal runaway (this is how most battery fires occur). The battery expansion sensor can detect a swollen battery and take appropriate action, effectively shutting it down and sending a notice to the user that the battery is no longer safe.

The Company is currently collaborating with Fortune 100 companies involving the battery expansion sensor. The overall testing phases range from six to nine months. With confidentiality agreements in place, Flexpoint is now in development with these and other companies to integrate the Battery Expansion Sensor into their products.

During a conference call announcing operating results for the second quarter of 2020 representatives of the Company announced that with the agreements that had been signed and the projects they were pursuing, it was transitioning from a development company to a sales and marketing company. This represents a significant change for the Company. The Company continues to negotiate additional significant orders with major revenue potential as the bend sensor gains global awareness.

Other Applications

Management believes the potential market for our technology includes using the technology to replace or upgrade existing devices used in industrial control systems, medical equipment and instrumentation, computer peripherals, automotive transmission equipment, commercial vending equipment and other devices.  We have developed, or are developing:

● a rupture disc/bursting disc utilizing the Bend Sensor^® as the detection/alarm element of a ruptured disc device;

● video gaming devices; and

● other sports applications

We intend to further identify applications of our technology in numerous fields and industries.  A core marketing strategy is to seek applications of our technology for products used by customers that emphasize functionality, reliability, quality, and user convenience.

BUSINESS STRATEGY

Due to the many potential applications of our technology and our limited financial and other resources, management made the decision to focus our marketing efforts on a few products that can be brought to market quickly, will provide maximum exposure for the technology and will generate additional orders for products from a growing customer base. This has required us to coordinate our product design, manufacturing, distribution and service strategies in a long-term business model, while still generating short term revenues. Another strategic marketing strategy has been to develop a standard line of sensor products with corresponding hardware, electronics and software to facilitate ease of implementation of our technology into a customer's existing system.

Our standard product line is expected to be sold directly to the customer and through manufacturer's representatives and distributors and on-line sales channels. We have also expanded our product offering to include substantially complete value-added assemblies, which includes the electronics and software. We continue to consider the licensing of our technology and/or products or strategic partnership arrangements that will generate sufficient revenues to sustain our operations. We anticipate selling primarily to OEM or Tier 1 suppliers for worldwide distribution.  For our international customers, we anticipate selling and distributing our products through various manufacturer representatives and distributors.

Since our intended customers are typically technology companies, the design phase of the sales cycle is extremely important and considerably longer than in other industries. The original equipment manufacturers typically approach us with a conceptual product

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and request that we assist in the initial engineering, design, development and production of a working prototype from which we generate limited revenues. The prototype is then tested in the environment in which the ultimate product will be placed.  During this process, the customer is in frequent contact with our application and electrical engineers. Customers also meet with internal sales and support individuals to discuss marketing and distribution channels and strategies for the end consumer products.

We also have added value by expanding our sensor product lines to include circuit boards, enclosures, etc. and have moved toward a fully integrated product while validating and showing the versatility of our Bend Sensor^® technology. As mentioned above we currently have several such fully developed products that will directly compete with existing products in the automotive industry. We have also used like designs to develop similar products in other industries, thus leveraging the initial engineering and design work. We believe our products provide great reliability and functionality and can be implemented at a lower overall cost to the customer. These fully integrated products will create a much larger value-added profit margin for us. However, there is no assurance that such profit margins will be achieved or that these products will be produced in volumes sufficient to generate significant revenue in the near future.

MARKETING AND SALES

Our products are being marketed directly to manufacturers or distributors and we offer our automotive products primarily to original equipment manufacturers (“OEM’s”), either directly or through Tier 1 suppliers, or through collaborative efforts with other specialized suppliers. Our primary marketing objectives are to continue to generate demand for our products, enhance name and product recognition and support OEM’s and manufactures. As we gain success in branding our name and product recognition, we believe the successful use of our products by OEM’s and Tier 1 suppliers will generate additional demand for higher quantity orders of our existing products. We also anticipate that the success of our existing products will allow us to successfully introduce new products and applications to the market.

Due to limited resources our sales strategy depends on a few OEM’s and manufacturers and, were we to lose their business, it will have a significant adverse effect on our results of operations until alternative distribution channels can be established.  We may consider contractual commitments to OEM’s and Tier 1 suppliers in exchange for fees and/or royalties.  In addition, because we sell on a limited basis directly to end users, we are dependent, in part, on the OEM’s for information about retail product sales and demand for sensor technology.  Accordingly, any rapid cessation of purchases or a switch to other companies' products by end users may not be immediately evident to us and could result in increased product returns.

We have enhanced our website at www.flexpoint.com to include videos on our current projects and also intend to market our products through the use of other social media, and by developing a field sales force which includes direct marketing employees in strategic areas and potentially manufacturer’s representatives nationwide to generate OEM and Tier 1 supplier customers.  As our market grows, we anticipate expanding our distribution network throughout the world.  There can be no assurance that we will be successful in developing such a sales force or in expanding our distribution network.

MANUFACTURING AND DISTRIBUTION

Automobile manufacturers, Tier 1 suppliers and many international companies require all parts to be manufactured in ISO/TS-16949 certified facilities. IS0/TS-16949 is a Quality Management System that contains the specific requirements for the application of ISO 9001:2000 for automotive production and relevant service part organization.  TS-16949 is based on ISO requirements 9001:2000 but contains additional requirements that are specific to the automotive industry.  These additions are considered automotive “interpretations” by the ISO community of accreditation bodies and registrars. TS-16949 is a common supplier quality standard for Fiat Chrysler Automobiles, Ford Motor Company, and General Motors Corporation. TS-16949 applies to suppliers of production materials, production and service parts, heat treating, painting and plating and other finishing services. It does not, therefore, apply to all suppliers of the major automotive companies.

When volumes dictate, our goal will be to either qualify our production line and facility as an ISO/TS 16949 production line and facility as it is required for manufacturing automotive and related parts, or to enter into manufacturing agreements with other qualified manufacturers. We may qualify our production line and facilities. We have entered into an agreement with the Walker Component Group to assist in meeting these qualifications now. The Walker Component Group is a well-established manufacturing company with expertise and certifications, including ISO 9001:2008, ROHS and REACH certifications that will dramatically enhance Flexpoint’s assembly infrastructure and assist to market products such as those that have been developed with HTK Engineering and InterTek. With numerous Fortune 100 clients, the Walker Component Group will add considerable experience, prestige, and confidence to every project that it enters into with Flexpoint. This agreement will increase the marketability of our products to automotive Tier 1 and major parts suppliers.

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SOURCE OF RAW MATERIALS

The Bend Sensor^® product consists of a coated substrate, such as plastic, that changes in electrical conductivity as it is bent. Electronic systems connect to the sensor and measure with fine detail the amount of bending or movement that occurs. The single layer design of the Bend Sensor^® eliminates many of the problems associated with conventional sensors such as dust, dirt, liquids, heat or pressure. Depending on the application an over-laminate or over-molding may also be applied to the sensors for added environmental protection. Due to its unique construction and the ability to use multiple types of substrates, all raw materials needed to produce the Bend Sensor^® are readily available and therefore the Company is not reliant on a single supplier.

COMPETITION

The sensor business is highly competitive, and competition is expected to continue to increase.  We will compete directly with firms that have longer operating histories, more experience, substantially greater financial resources, greater size, more substantial research and development and marketing organizations, established distribution channels and are better situated in the market.  We do not yet have an established long-term customer base that orders products on a constant basis and we will encounter a high degree of competition as we develop a larger customer base.

To management's knowledge, technology similar to our technology is currently in production by other competitors. Management believes that our products will be sufficiently distinguishable from the existing products so that it will not compete directly with existing sensor products.  Certain force transducer sensors and fiber optic sensors are comparable to our Bend Sensor^® technology; however, management believes that the force transducer sensor is not as reliable as our Bend Sensor^® technology and that the fiber optic sensors are not as cost effective as our Bend Sensor^® technology.  As this new area grows, additional manufacturers may attempt to introduce similar products and competition could intensify.

In the medical electronics field, our competitors are the potentiometer manufacturers.  In the auto seat field, our competitors are numerous capacitive, piezo, infrared, force sensor resister and ultrasonic sensor manufacturers.  Such competitors may use their economic strength and relationships to influence the market to continue to buy their existing products.  One or more of these competitors could use their resources to improve their current products or develop new products that may compete more effectively with our products.  New competitors may emerge and may develop products and capabilities which compete directly with our products.  No assurance can be given that we will be successful in competing in the industries identified or in other industries that would benefit from our Bend Sensor^® technology.

We intend to compete by offering products that have enhanced value, added features, ease of use, functionality, compatibility, reliability, comparable price, quality and support.  Management also believes our intellectual property provides an advantage over current competitors.  Although management believes that our products will be well received in the various sensor markets because of their innovative features, performance characteristics and cost-effective pricing, there can be no assurance that comparable or superior products incorporating more advanced technology or other features or having better price or performance characteristics will not be introduced by competitors with greater resources than ours.

PATENTS AND INTELLECTUAL PROPERTY

We regard certain of our designs as proprietary and attempt to protect them with patents and by restricting disclosure of the designs as trade secrets.  We have six issued or pending patents for our Bend Sensor^® technology and have exclusive rights to additional patents and intellectual property and are in the process of preparing additional patents for new types of sensors and devices using our technology. Due to the joint development of the medical bed product, we believe we also have claims and protection under the patents filed for this specific application.  Patents do expire and it will be necessary for us to file patents in the United States and in various foreign countries for each application we develop so that it is protected from competition.   We also have products that use our unique sensor technology, and we are exploring the viability of filing new patents based on the enhancements and the specific applications or value-added products.  We must file patents on any technology for which we develop enhancements that contain material improvements to the original technology, thereby extending the original life of our original patents.  We are aware of three potentially conflicting patents which we believe will not affect our current or planned use of our technology.

There can be no assurance that the protection provided by patents and patent applications, if issued, will be broad enough to prevent competitors from introducing similar products or that such patents, if challenged, will be upheld by the courts of any jurisdiction.  Patent infringement litigation, either to enforce our patents or defend us from infringement suits, is expensive and could divert resources from other planned uses.  

11 

Patent applications filed in foreign countries and patents in those countries are subject to laws and procedures that differ from those in the United States.  Patent protection in foreign countries may be different from patent protection under United States laws and may not be as favorable to us.  We also attempt to protect our proprietary information through the use of confidentiality agreements and by limiting access to our facilities.  There can be no assurance that our program of patents, confidentiality agreements and restricted access to our facilities will be sufficient to protect our proprietary technology.

Management believes that because of the rapid pace of technological change in our markets, legal protection of our proprietary information is less significant to our competitive position than factors such as continuing product innovation in response to evolving industry standards, technical and cost-effective manufacturing expertise, effective product marketing strategies and customer service. Without legal protection, however, it may be possible for third parties to commercially exploit the proprietary aspects of our products.

MAJOR CUSTOMERS

Currently, we have a limited customer base and for the year ending 2023 three customers represented approximately 86% of the Company’s revenue.

EMPLOYEES

As of the date of this filing we have three full-time employees, one part-time employee, and we employ three to five subcontractors and multiple consultants. Until we are under full production with some of our products, we will continue to use subcontractors and consultants which helps to keep our overall labor cost to a minimum. Our employees are not presently covered by any collective bargaining agreement.  We have not experienced any work stoppages and believe that our relations with our employees are good.

AVAILABLE INFORMATION

Additional information is available on our website at www.flexpoint.com

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, we are not required to provide the information for this Item.

ITEM 1C. CYBERSECURITY

As a Company with a single-officer operation and no formal cybersecurity policies in place, we recognize the importance of safeguarding our digital assets and protecting sensitive information. While we strive to maintain the security of our systems and data, our resources and infrastructure are limited. We rely on basic security measures, such as password protection and firewalls to mitigate potential risks.

Given the nature of our operations and size, we may be more susceptible to cybersecurity threats. We acknowledge the possibility of breaches or unauthorized access to our systems, which could result in the loss or compromise of sensitive information. Any such incident could have a material adverse effect on our business, financial condition, and reputation.

We are committed to continuously evaluating and enhancing our cybersecurity measures as our business evolves. However, investors should be aware that our current capabilities may not fully address all cybersecurity risks. We encourage investors to consider the inherent risks associated with our limited resources and lack of formal cybersecurity policies when evaluating our Company.

ITEM 2.   PROPERTIES

We currently occupy 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 lease is for a period of twelve months with a 90-day notice clause if our intent is to renew the lease for additional periods.

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ITEM 3.  LEGAL PROCEEDINGS

We are not a party to any legal proceedings as of the date of this filing.

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable to our operations.

PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES

MARKET INFORMATION

Our common stock is quoted on the OTC Bulletin Board under the symbol “FLXT.”  Any over-the-counter market quotations in this trading system reflect inter-dealer prices, without retail mark-up, mark-downs, or commissions, and may not necessarily represent actual transactions.

Our shares are subject to Section 15(g) and Rule 15g-9 of the Securities and Exchange Act, commonly referred to as the “penny stock” rule. The rule defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. These rules may restrict the ability of broker-dealers to trade or maintain a market in our common stock and may affect the ability of shareholders to sell their shares.  Broker-dealers who sell penny stocks to persons other than established customers and accredited investors must make a special suitability determination for the purchase of the security.  Accredited investors, in general, include individuals with assets in excess of $1,000,000 (not including the value of their personal residence) or annual income exceeding $200,000 or $300,000 together with their spouse, and certain institutional investors.  The rules require the broker-dealer to receive the purchaser’s written consent to the transaction prior to the purchase and require the broker-dealer to deliver a risk disclosure document relating to the penny stock prior to the first transaction.  A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the security.  Finally, monthly statements must be sent to customers disclosing recent price information for the penny stocks.

HOLDERS

As of February 29, 2024 we had approximately 481 stockholders of record of our common stock, which does not include “street accounts” of securities brokers. Our transfer agent is Standard Registrar & Transfer Co., Inc., located in Salt Lake City, Utah.

DIVIDENDS

We have not paid cash or stock dividends and have no present plan to pay any dividends.  We intend to retain any earnings to finance the operation and expansion of our business and the payment of any cash dividends on our common stock is unlikely.  However, our board of directors may revisit this matter from time to time and may determine our earnings, financial condition, capital requirements and other factors allow the payment of dividends.

RECENT SALES OF UNREGISTERED SECURITIES

On March 15, 2022, Capital Communications converted two notes into shares of the Company’s restricted common stock. One note was entered into on April 10, 2018 in the amount of $200,000 which had a principal balance of $210,000 and interest accrued but unpaid of $74,775. The second note was entered into on September 10, 2020 in the amount of $245,000 and had accrued and unpaid interest of $28,271. Both notes provide for conversion rates at $0.05 per share. The conversion resulted in the issuance of 11,160,931 shares of restricted common stock. The conversion is reported in the results of the year ended December 31, 2022. We relied on an exemption from the registration requirements provided by Section 4(a) (2) of the Securities Act.

ISSUER PURCHASE OF SECURITIES

None.

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ITEM 6. RESERVED

ITEM 7. 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 for new and innovative ways to lower the overall weight of the vehicle and to improve its fuel efficiency, 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

Currently our revenue is primarily from design contracts, testing and production services for prototypes and samples and recurring business, and is not to a level to support our operations.  However, we believe, based upon current orders and projected orders over the next twelve months, that we could be producing sensors under long-term contracts 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.

For the past twelve months we have relied on the proceeds of convertible loans from existing shareholders and proceeds from sales. During 2023 and 2022, the Company secured financing to fund its operations by issuing additional convertible notes to Capital Communications LLC, First Equity Holdings and officers, the balances of which were $180,000 and $180,000 as of December 31, 2023 and 2022, respectively, net of $-0- and $455,000 in notes converted to shares of restricted common stock in 2022. The notes have an annual interest rate of 10% and default rate of 15%, have various maturity dates, and are secured by the Company’s business assets. The Company also received funds under the Paycheck Protection Program.

Management believes that our current cash burn rate is approximately $60,000 per month and that proceeds from additional convertible notes and estimated revenues for engineering design and prototype products will 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 current purchase orders and anticipated purchase orders over the next twelve months our projected revenues by the end of 2024 are anticipated to cover our projected operating expenses, based on our current burn rate. However, we cannot assure you 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.

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It is also possible that in the short term we may have to continue to issue common stock to pay for services and agreements rather than use our limited cash resources. Any issuance of common stock will likely be pursuant to exemptions provided by federal and state securities laws. The purchasers and manner of issuance will be determined according to our financial needs and the available exemptions. We also note that if we issue more shares of our common stock our shareholders may experience dilution in the value per share of their common stock.

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.

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. This process has been impacted by the recent Pandemic and we are unable to determine what the long-term effect of these impacts will be at this time. 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.

COMMITMENTS AND CONTINGENCIES

Our principal commitments at December 31, 2023 consist of total current liabilities of $4,765,242, which includes $398,513 in convertible notes.

We currently occupy 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 lease is for a period of twelve months with a 90-day notice clause if our intent is to renew the lease for additional periods. We pay $6,787 per month for this lease.

Our total current liabilities include accounts payable of $253,419 related to normal operating expenses, including health insurance, utilities, production supplies, legal expenses, and travel expenses.  Accrued liabilities at December 31, 2023, were $2,892,967 and were related to payroll tax liabilities, tax expenses, accrued interest, investor relations consulting, and accrued Paid Time Off, a combination vacation-sick leave policy, and amounts due to related parties.

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.

RESULTS OF OPERATIONS

The following discussions are based on the operations of Flexpoint Sensor Systems, Inc., and should be read in conjunction with our audited financial statements for the years ended December 31, 2023 and 2022.  These financial statements are included in this report at Part II, Item 8, below.

SUMMARY OF OPERATING RESULTS
	For the year ended	For the year ended
	December 31, 2023	December 31, 2022
Engineering, contract, licensing and testing revenue	$            105,686	$           151,156
Total operating costs and expenses	(776,137)	(880,406)
Net other income (expense)	(114,488)	(75,582)

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Net loss	(784,939)	(804,832)
Basic and diluted loss per common share	$               (0.06)	$               (0.06)

Our revenue for 2023 decreased $45,470 as compared to 2022. The decrease resulted from lower product sales and development fees. The decrease of our revenue was primarily the result of world-wide impacts from the Covid 19 crisis including delays in manufacturing orders for the wearable and toy industries, design and development engineering, prototype products and sales of our fully integrated products. Revenue from research and development engineering and prototype product contracts is generally recognized as the services are provided and accepted by the customer. Revenue from the sale of a product is recorded at the time of shipment to the customer. Management anticipates that revenue will increase as we continue to provide engineering services and our customers continue to order more frequently and in larger quantities.

Total operating costs and expenses were $776,138 in 2023 compared to $880,406 in 2022. Administrative and marketing expenses for 2023 were $101,814 lower, a reduction of payroll expense of $25,022 and $59,206 reduction in insurance expense being the major contributors. As we are working to commercialize products and establish distribution channels, we are also working to bring greater efficiencies and cost reductions to our operations.

For the year ending December 31, 2023 net other expense was $114,488. This compares to net other expense of $75,582 in 2022. Other expense in 2023 is comprised primarily of interest expense of $116,288. Other expense of $75,582 in 2022 was comprised primarily of $76,782 in interest expense.

As we continued to mature into a manufacturing company our engineering design and production revenues increased. As we expand and sell our existing suite of products, and as we grow the relationship with our customers, we expect this trend to continue in the future. We are not able to guarantee that our operating losses will be reduced in the short term. The chart below presents a summary of our balance sheets at December 31, 2023 and 2022.

SUMMARY OF BALANCE SHEET INFORMATION
	Year ended December 31, 2023	Year ended December 31, 2022
Cash and cash equivalents	$                   -	$               -
Total current assets	51,039	29,083
Total assets	5,223,784	5,194,143
Total liabilities	4,969,302	4,154,722
Accumulated deficit	(31,672,144)	(30,887,205)
Total stockholder’s equity	$       254,482	$ 1,039,421

Cash and cash equivalents were$-0- in 2023 and 2022. Until such time as our revenue increases, cash to fund our operations will be our most critical factor. As we expand our customer base and product offerings, we will need to raise additional operating capital during 2024. It is expected that this will be accomplished by securing additional loans from related parties and existing shareholders, through the private placement of stock, or through the licensing of our technology. We anticipate that we will need to raise approximately $500,000 to $800,000 in funding to support our existing operations and our anticipated growth during 2024.

Our current assets increased to $51,039 during the year ending December 31, 2022 compared to $29,083 during the same period in 2022. This increase is primarily due to increases of $24,239 in accounts receivable. Our fixed assets and patents and proprietary technology are all fully amortized.  

Accrued liabilities increased at December 31, 2023 by $361,373 when compared to December 31, 2022. The increase is primarily due to the accrual of interest expense related to notes payable and accrued consulting fees. Total liabilities increased by $814,580 at December 31, 2023 due to the aforementioned increased in accrued liabilities and notes payable due on demand.

TRANSACTIONS WITH RELATED PARTIES

At December 31, 2023 and 2022, the Company had accounts payable of $58,717 and $44,713 to its Chief Executive Officer for reimbursement of various operating expenses paid by him and a loan which he made the Company. It also had accounts payable of $4,000 to the Chairman of the Board for funds provided the Company for operating expenses.

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During 2019, the Company and the Company’s CEO and the Chairman of the Board agreed to convert $17,000 and $22,000, respectively, of accounts payable into convertible debt bearing 8% annual interest (with a 12% default rate) and are convertible into shares of common stock at the rate of $0.06 per share. At December 31, 2023 there are related party convertible notes outstanding with principal balances of $164,257 and $54,257 which are due to the CEO and the Chairman of the Board of the Company, respectively. Of the total balance, $114,514 are convertible notes bearing an 8% annual rate of interest (with a 12% default rate) and are convertible into shares of common stock at the rate of $0.07 per share and $104,000 are convertible notes bearing 8% annual interest (with a 12% default rate) and are convertible into shares of common stock at the rate of $0.06 per share. All the convertible notes payable related parties have a maturity date of March 31, 2024. 

The Company filed an amendment to our Articles of Incorporation whereby the shareholders approved an increase in the number of shares of common stock authorized. With the filing of the amendment the Company now has sufficient authorized shares to issue to convert all convertible notes and stock options and therefore no longer needs to treat those financial instruments as derivatives. The notes are secured by the business equipment of the Company.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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 financial statements and accompanying notes.  Estimates of particular significance in our financial statements include goodwill and the annual tests for impairment of goodwill and valuing stock option compensation.

We annually test long-lived assets for impairment or when a triggering event occurs. Impairment is indicated if undiscounted cash flows are less than the carrying value of the assets.  The analysis compared 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. Under similar analysis no impairment charge was taken during the twelve months ended December 31, 2023 or the twelve months ended December 31, 2022. Impairment tests will be conducted on a regular basis and, should they indicate a carrying value in excess of fair value, additional charges may be required.

We account for stock options under Statement of Financial Accounting Standards, Accounting Standards Codification Topic 718, Stock Compensation. The pronouncement requires 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.  Also, 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 years ended December 31, 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 that will be recognized based upon the current grants issued.

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ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

	Page
Reports of Independent Registered Public Accounting Firms	19
Balance Sheets – December 31, 2023 and 2022	20
Statements of Operations for the Years Ended December 31, 2023 and 2022	21
Statements of Stockholders’ Equity for the Years Ended December 31, 2023 and 2022	22
Statements of Cash Flows for the Years Ended December 31, 2023 and 2022	23
Notes to Financial Statements	24 - 32

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Flexpoint Sensor Systems, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Flexpoint Sensor Systems, Inc. (“the Company”) as of December 31, 2023 and 2022, and the related statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022 and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has net losses and an accumulated deficit. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Potential for Goodwill Impairment — Refer to Note 1 to the financial statements.

Critical Audit Matter Description

The Company tests goodwill for impairment at least annually via comparison of the fair value of the Company to the carrying value of the Company’s net assets. An impairment of goodwill is measured as the excess of the carrying amount of goodwill over the determined fair value. Management has determined that there is one reporting unit and that use of the market capitalization model at year end is appropriate. Auditing management’s assessment as to whether impairment is required is highly judgmental.

How the Critical Audit Matter Was Addressed in the Audit

Our principal audit procedures to evaluate management’s assessment consisted of the following, among others: 

● We evaluated management’s processes and determinations underlying the estimation (including the market capitalization model) and whether they are in compliance with ASC 350 Intangibles – Goodwill and Other.

● Performed an independent calculation to determine whether there is indication that impairment is required and compared to management’s conclusions.

● We evaluated the relevance and reliability of the data used for calculations.

Fruci & Associates II, PLLC - PCAOB #05525

We have served as the Company’s auditor since 2023.

Spokane, Washington

April 8, 2024

19 

FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES

 BALANCE SHEETS

	December 31,
	2023	2022
ASSETS
Current Assets
Cash and cash equivalents	$                -	$               -
Accounts receivable, net of allowance of $103,777 and $103,777	44,374	20,135
Deposits and prepaid expenses	6,665	8,948
Total Current Assets	51,039	29,083
Long-Term Deposits	13,624	13,624
Property and Equipment, net of accumulated depreciation
of $597,174 and $597,174	-	-
Patents and Proprietary Technology, net of accumulated
amortization of $974,045 and $974,045	-	-
Operating lease – Right-of-use asset	262,204	254,519
Goodwill	4,896,917	4,896,917
Total Assets	$    5,223,784	$    5,194,143
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Bank overdraft	$        11,315	$          7,506
Accounts payable	253,419	265,267
Accounts payable – related party	62,717	44,713
Accrued liabilities	2,777,959	2,416,589
Lease liability – current portion	59,404	57,679
Notes payable – due on demand	1,201,915	766,391
Convertible notes payable	180,000	180,000
Convertible notes payable to related party	218,513	218,513
Total Current Liabilities	4,765,242	3,956,658
Lease liability – long-term	204,060	198,064
Total Liabilities	4,969,302	4,154,722
Commitments and contingencies
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 shares 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	(31,672,144)	(30,887,205)
Total Stockholders' Equity	254,482	1,039,421
Total Liabilities and Stockholders' Equity	$    5,223,784	$    5,194,143

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

20 

FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES

STATEMENTS OF OPERATIONS

	For the Years
	Ended December 31,
	2023	2022
Engineering, Contract and Testing Revenue	$     105,686		$     151,156
Operating Costs and Expenses
Cost of revenue	33,525		36,258
Administrative and marketing	519,107		620,921
Research and development	223,505		223,227
Total Operating Costs and Expenses	776,137		880,406
Loss from operations	(670,451)		(729,250)
Other Income (Expense)
Interest expense	(116,288)		(76,782)
Other income	1,800		1,200
Net Other Income (Expense)	(114,488)		(75,582)
Net Loss	$   (784,939)		$   (804,832)
Basic and Diluted Loss Per Common Share	$        (0.06)		$        (0.06)
Basic and Diluted Weighted-Average
Common Shares Outstanding	125,557,114		123,294,410

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

21 

FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES

STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Years Ended December 31, 2023 and 2022

	Common Stock		Additional		Total
			Paid-in	Accumulated	Stockholder
	Shares	Amount	Capital	Deficit	Equity
Balance - December 31, 2021	114,396,242	$114,396	$31,254,182	$(30,082,373)	$ 1,286,205
Common stock issued in full settlement of convertible note conversion	11,160,932	11,161	546,887	-	558,048
Net loss	-	-	-	(804,832)	(804,832)
Balance – December 31, 2022	125,557,174	125,557	31,801,069	(30,887,205)	1,039,421
Net loss	-	-	-	(784,939)	(784,939)
Balance - December 31, 2023	125,557,174	$125,557	$31,801,069	$(31,672,144)	$ 254,482

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

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FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES

 STATEMENTS OF CASH FLOWS

	For the Years
	Ended December 31,
	2023	2022
Cash Flows from Operating Activities:
Net loss	$ (784,939)	$ (804,832)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of Right-of-Use Asset	7,686	19,011
Changes in operating assets and liabilities:
Accounts receivable	(24,239)	(11,217)
Deposits and prepaid expense	2,283	(15,093)
Accounts payable	(11,848)	38,820
Accounts payable – related party	18,004	24,232
Lease liability	(7,650)	(11,130)
Accrued liabilities	361,370	440,910
Net Cash Used in Operating Activities	(439,333)	(319,295)
Cash Flows from Financing Activities:
Proceeds from (payments to) bank overdraft	3,809	7,506
Proceeds from (payments to) note payable	(17,500)	(10,000)
Proceeds from borrowings under convertible note payable	453,024	321,391
Net Cash Provided by Financing Activities	439,333	318,897
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	$             -	$            -
Supplemental Disclosure on Noncash Investing and Financing Activities
Initiation of operating lease	$             -	$ 273,530
Conversion of note payable and accrued interest to common stock to be issued	$             -	$ 558,048

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

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FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

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, entering into licensing agreements, production and seeking long-term manufacturing contracts. The Company’s operations are in designing, engineering, manufacturing, licensing and selling sensor technology and equipment using flexible potentiometer technology. Through December 31, 2023 the Company continued to manufacture products and sensors to fill customer orders and provide engineering and design work.

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 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 a highly liquid security 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 generally recorded at the time product is shipped or services are provided including any shipping and handling fees. Contracts associated with design and development engineering 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 is completed and accepted by the customer, at which time the entire contract price is billed to the customer and the deposit applied. The Company has established an allowance for bad debts based on historical experience and an analysis of risk associated with the account balances. The balance in the allowance account was $103,777 and $103,777 in the years ended December 31, 2023 and 2022, respectively.

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Inventories – The Company does not currently have 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.

Going Concern– The Company suffered losses of $784,939 and $804,832 during the years ended December 31, 2023 and 2022, respectively.  At December 31, 2023, the Company had an accumulated deficit of $31,672,144. These matters raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

From 2008 through 2023 the Company raised approximately $7.0 million, which includes $453,024 raised in 2023, in additional capital, including accrued interest, through the issuance of long and short-term notes to related and other parties. All of the notes had an annual interest rate of 10% or 15% and were secured by the Company’s business equipment. The notes also had a conversion feature for restricted common shares ranging from $0.05 to $0.20 per share with maturity dates of December 31, 2018 through March 31, 2021. Management continues to work with investor groups to provide funds for the Company’s operations until its operations produce a positive cash flow.

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 year ended December 31, 2023. 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 year ended December 31, 2023.

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.

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 on December 31, 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.

As the Company consists of only one reporting unit, and is publicly traded, management estimates the fair value of its reporting unit utilizing the Company’s market capitalization, multiplying the number of actual shares outstanding by the market price on December 31, as reflected on NASDAQ National Market. As the Company is traded on a public exchange, the stock price is subject to fluctuations and the fair value test could be impacted by lower stock prices.

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

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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. At the ship date the Company has no further obligations under the contract and the revenue from the sale is recognized.

Following are the five steps of revenue recognition to be considered in determining the recognition of revenue:

Identify the contract with the customer. A contract with a customer exists when: (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the good to be transferred or the services to be provided and identifies the payment terms related to these goods or services; (ii) the contract has commercial substance and (iii) we determine that collection of substantially all consideration for goods transferred or services rendered is probable based on the customer’s intent and ability to pay the promised consideration. We do not have significant costs to obtain contracts with customers.

Identify the performance obligations in the contract. Generally, our contracts with customers do not include multiple performance obligations to be completed or a period of time. Our performance obligations generally relate to delivering specialized sensors to a customer, subject to the shipping terms of the contract. Limited warranties are provided, under which we typically accept returns and provide either replacement sensors or refunds. We do not have significant returns. We do not offer extended warranty or service plans.

Determine the transaction price. Payment by the customer is due under customary fixed payment terms, and we evaluate if collectability is reasonably assured. Our contracts do not typically contain a financing component, except possibly in a licensing agreement. Revenue is recorded at the contract sales price. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues.

Allocate the transaction price to performance obligations in the contract. We typically do not have multiple performance obligations in our contracts with customers. As such, we generally recognize revenue upon transfer of the product to the customer’s control at contractually stated pricing.

Recognize revenue when or as we satisfy a performance obligation. We generally satisfy performance obligations at a point in time upon either shipment or delivery of goods or upon completion of all services detailed in the contract, in accordance with the terms of each contract with the customer. We do not have significant service revenue.

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:

			December 31,							December 31,
					2023						2022
			Consumer		Long-term					Consumer	Long-term
Segments			Products		Contract		Total			Products	Contract		Total
Domestic	$	54,439		-		54,439		$	11,655			-	11,655
International		51,247		-		51,247			139,501			-	139,501
	$	105,686		-		105,686		$	151,156			-	151,156
Components	$	61,383		-		61,383		$	115,086			-	115,086
Engineering Services		44,303		-		44,303			36,070			-	36,070
	$	105,686		-		105,686		$	151,156			-	151,156

Stock-Based Compensation –The Company, in accordance with ASC 718, Compensation – Stock Compensation, records all share-based payments to employees at the grant-date fair value of the equity instruments issued. In accordance with ASC 718-10-30-9, Measurement Objective – Fair Value at Grant Date, the Company uses the closing price of the stock, as quoted by NASDAQ, on the date of the grant. The Company believes this pricing method provides the best estimate of the fair value of the consideration given. Compensation cost is recognized over the requisite service period.

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 December 31, 2023 and

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2022, there were outstanding common share equivalents (options and convertible notes payable) which amounted to 15,619,175 and 14,862,493, respectively, from convertible notes and 1,900,000 from options for common stock. These common share equivalents were not included in the computation of diluted loss per share 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 year ended December 31, 2023, three customers represented 86% of salesand two customers represented 95% of accounts receivable. A customer who is utilizing our technology for commercialization in shoes represented 80% of accounts receivable at December 31, 2022. The Company has a strong relationship with these customers and does not believe this concentration poses a significant risk, as their products are based entirely on the Company’s technologies. During 2022, five customers constituted 88% of the sales.

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 - In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses”. The ASU sets forth a “current expected credit loss” (“CECL”) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This ASU was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. In November 2019, the FASB issued ASU 2019-10 which deferred the effective date to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted this new guidance effective January 1, 2023 and has applied it using a modified retrospective method. The adoption of this standard had no material impact on our financial statements or disclosures.

The Company has reviewed all FASB-issued ASU accounting pronouncements and interpretations thereof that have effective dates during the period reported and in future periods. The Company has carefully considered the new pronouncements that alter previous GAAP and does not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management and certain standards are under consideration.

NOTE 2 – PROPERTY AND EQUIPMENT

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.  Depreciation expense was $-0- and $-0- for the years ended December 31, 2023 and 2022, respectively, and is included in the administrative and marketing expense on the statement of operations.

No impairment was recognized during the twelve months ended December 31, 2023. Property and equipment at December 31, 2023 and 2022 consisted of the following:

December 31,	2023	2022
Machinery and equipment	$        543,249	$       543,249
Office equipment	40,455	40,455
Furniture and fixtures	13,470	13,470
Total Property and Equipment	597,174	597,174
Less: Accumulated depreciation	(597,174)	(597,174)
Net Property and Equipment	$                -0-	$               -0-

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NOTE 3 – INTANGIBLE ASSETS

Intangible Assets – The components of intangible assets at December 31, 2023 and 2022 were as follows:

December 31, 2023	Gross Carrying Amount	Accumulated Amortization	Net Carrying Amount
Patents	$                174,963	$               174,963	$                      -
Proprietary Technology	799,082	799,082	-
Total Amortizing Asset	$               974,045	$               974,045	$                      -
December 31, 2022	Gross Carrying Amount	Accumulated Amortization	Net Carrying Amount
Patents	$               174,963	$               174,963	$                      -
Proprietary Technology	799,082	799,082	-
Total Amortizing Asset	$               974,045	$               974,045	$                      -

Patent amortization was $-0- and $-0- for the year ended December 31, 2023 and 2022, respectively. Amortization related to proprietary technology was $-0- and $-0- for the years ended December 31, 2023 and 2022.  Patent and proprietary technology amortization is charged to operations.

There will be no amortization expense for each of the next three years, as the patents became fully amortized in 2019.

NOTE 4– INCOME TAXES

There was no provision for, or benefit from, income tax during the years ended December 31, 2023 and 2022,respectively.  The components of the net deferred tax asset as of December 31, 2023 and 2022, including temporary differences and operating loss carry forwards that arose prior to reorganization from bankruptcy, are as follows:

December 31,	2023	2022
Operating loss carry forwards	$           9,387,426	$           9,222,589
Origination and amortization of interest on convertible notes	932,622	932,622
Allowance for doubtful accounts	158,389	158,389
Change in derivative liabilities	107,270	107,270
Options issued for services	653,545	653,545
Total Deferred Tax Assets	$         11,239,252	$         11,074,415
Valuation allowance	(11,239,252)	(11,074,415)
Net Deferred Tax Asset	$                      --	$                      --

Federal and state net operating loss carry forwards at December 31, 2023 and 2022 were $25,746,697, and $24,961,758, respectively. A portion of the net operating loss carry forwards includes losses incurred prior to February 24, 2004, when a change of greater than 50% in ownership of the Company occurred. As a result of the change of ownership, only a portion of the net operating loss carry forwards incurred prior to the change becomes available each year. The net operating loss carry forwards began to expire in 2020.

The following is a reconciliation of the amount of benefit that would result from applying the federal statutory rate to pretax loss with the provision for income taxes for the years ended December 31, 2023 and 2022, respectively:

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For the Years Ended December 31,	2023	2022
Tax at statutory rate (21%)	$      (164,837)	$      (209,256)
Options issued for services	-	-
Origination and amortization of interest on convertible notes	-	-
Allowance for doubtful accounts	-	-
Change in derivative liabilities	-	-
Change in valuation allowance	164,837	209,256
Provision for Income Taxes	$                    --	$                    --

Under FASB ASC 740-10-05-6, tax benefits are recognized only for the tax positions that are more likely than not be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in the company's tax return that do not meet these recognition and measurement standards.

The Company's policy is to recognize potential interest and penalties accrued related to unrecognized tax benefits with the income tax expense. For the years ended December 31, 2023, and 2022, the Company did not recognize any interest or penalties in its Statement of Operations, nor did it have any interest or penalties accrued in its balance sheet at December 31, 2023 and 2022 relating to unrecognized benefits.

The tax years 2023, 2022, 2021 and 2020 remain open to examination for federal income tax purposes and by other major taxing jurisdictions to which the Company is subject.

The Company does not reflect a deferred tax asset in its financial statements, but includes that calculation and valuation in its footnotes. We are still analyzing the impact of certain provisions of the Act and refining our calculations. The Company will disclose any change in the estimates as it refines the accounting for the impact of the Act.

NOTE 5 – NOTES PAYABLE

On Demand Notes – Third Parties

On December 31, 2023 there are on demand notes the Company entered into which total $1,201,915. Of that total, $1,054,415 are with Capital Communications, $95,000 with First Equity, $45,000 with Empire Fund, all of which bear annual interest of 10%, and $7,500 with John Kelly, which is non-interest bearing. At December 31, 2022 there were on demand notes totaling $766,391. All of these notes are due on demand. At December 31, 2023, there is $83,970 in accrued interest relating to these notes.

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Convertible Notes Payable – Third Parties

At December 31, 2023 there are convertible notes outstanding with principal balances which total $180,000, compared to convertible notes of $180,000 at December 31, 2022. Of the notes, $140,000 are convertible notes bearing a 10% annual rate of interest (with a 15% default rate) and are convertible into shares of common stock at the rate of $0.05 per share. The remaining $40,000 is a convertible note entered into on August 8, 2011 with a former Company Director. That note was due on December 31, 2015, and bears a default interest rate of 10% and is convertible at $0.20 per share.

In March 2022, the holder of $455,000 in convertible notes and $103,046 in accrued interest notified the Company of their intent to convert the debt into 8,419,547 shares of common stock. The note holder agreed to waive default interest in exchange for a reduced conversion price of $0.05 per share and the Company issued 11,160,932 shares of its restricted common stock in full settlement of its obligations.

Convertible Note Payable - Related Parties

Between July 1, 2016 and August 28, 2018, the Company issued promissory notes totaling $125,000 to officers of the Company. Additionally, on July 12, 2017 two officers assumed responsibility for $54,513 of debt owed by the Company. The officers made monthly payments against those debts until the obligation was paid in full.

At December 31, 2023 there are related party convertible notes outstanding with principal balances of $164,257 and $54,256 which are due to the CEO and the Chairman of the Board of the Company, respectively. Of the total balance, $114,514 are convertible notes bearing an 8% annual rate of interest (with a 12% default rate) and are convertible into shares of common stock at the rate of $0.07 per share and $104,000 are convertible notes bearing 8% annual interest (with a 12% default rate) and are convertible into shares of common stock at the rate of $0.06 per share. All the convertible notes payable related parties have a maturity date of March 31, 2024. The holders of the notes will extend the maturity dates of these notes.

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 December 31, 2023 and 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 December 31, 2023 and 2022 there were 125,557,174 shares of common stock issued. During the year ended December 31, 2022, the Company issued 11,160,932 shares of restricted common stock for the conversion of $455,000 of convertible notes payable and $103,046 of accrued interest.

NOTE 7– 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

30 

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 2023, the Company recognized a total of $2,451,971 of stock-based compensation expense, which includes charges of $8,203 in 2020 and $-0- in 2019, leaving $0 in unrecognized expense as of December 31, 2022. There were 1,900,000 and 1,900,000 employee stock options outstanding at December 31, 2023 and 2022, respectively.  

A summary of all employee options outstanding and exercisable under the plan as of December 31, 2023, and changes during the year then ended 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	1.65	$               --
Exercisable at the end of Period	1,900,000	$                 0.05	1.65	$               --

NOTE 8–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 lease is for $6,787 per month and is for a period of twelve months with a 90-day notice clause if our intent is to renew the lease for additional periods. Minimum payments under the lease for the current term and assuming the lease renewal for an additional three years is as follows:

2024	$    83,103
2025	85,596
2026	88,164
2027	59,948
Total payments	$  316,811
Imputed interest	(53,347)
Lease liability as of period end	263,464
Short-term lease liability	(59,404)
Lease liability – long term	$  204,060

We recognize lease expense on a straight-line basis over the term of the lease.

	For the Year 2023
Lease expense	$81,722

Our building lease does not specify an implicit rate of interest. Therefore, we estimate our incremental borrowing rate, which is defined as the interest rate we would pay to borrow on a collateralized basis, considering such factors as length of lease term and the risks of the economic environment in which the leased asset operates. As of December 31, 2023, the following disclosures for remaining lease term and incremental borrowing rates were applicable:

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	December 31, 2023
Weighted average remaining lease term	3.67 years
Weighted average discount rate	5%

NOTE 9 – RELATED PARTY TRANSACTIONS

At December 31, 2023 and 2022, the Company had accounts payable of $62,717 and $44,713, respectively, to its Chief Executive Officer for reimbursement of various operating expenses paid by him and a loan which he made the Company. It also owed $4,000 at December 31, 2023 to its Chairman of the Board for funds provided the Company for operating expenses.

At December 31, 2023 and 2022 there are related party convertible notes outstanding with principal balances of $164,257 and $54,257 which are due to the CEO and the Chairman of the Board of the Company, respectively. Of the total balance, $114,514 are convertible notes bearing a 8% annual rate of interest (with a 12% default rate) and are convertible into shares of common stock at the rate of $0.07 per share and $104,000 are convertible notes bearing 8% annual interest (with a 12% default rate) and are convertible into shares of common stock at the rate of $0.06 per share. All the convertible note payable related parties have a maturity date of March 31, 2024.  

The Company filed an amendment to their Articles of Incorporation whereby the shareholders approved an increase in the number of shares of common stock authorized. With the filing of the amendment the Company now has sufficient authorized shares to convert all convertible notes and stock options and therefore no longer needs to treat those financial instruments as derivatives. The notes are secured by the business equipment of the Company.

NOTE 10 - SUBSEQUENT EVENTS

Subsequent to December 31, 2023, the Company has received an additional $90,524 in funding from an investor. The fundings have not yet been reduced to a formalized convertible note; therefore, there are no terms for interest rate or maturity date associated with these funds.

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

32 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE

The Company has had no disagreements with its independent registered public accounting firms with respect to accounting practices or procedures or financial disclosure.

ITEM 9A.  CONTROLS AND PROCEDURES

As of the end of the period covered by this Annual Report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer, who also acts as our Principal Financial Officer, of the effectiveness of our disclosure controls and procedures. 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 has concluded that our disclosure controls and procedures were not effective at that reasonable assurance level as of the end of the period December 31, 2023 for the reasons discussed below.

Management’s Annual Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States. The policies and procedures include:

• maintenance of records are in reasonable detail to accurately and fairly reflect the transactions and dispositions of assets,

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors, and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

Our Chief Executive Officer evaluated the effectiveness of our internal control over financial reporting as of the end of the period December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework - 2013. Based on this evaluation, our Chief Executive Officer concluded that as of the end of the fiscal year December 31, 2023, our internal control over financial reporting was not effective at that reasonable assurance level.

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.

Changes in Internal Control over Financial Reporting. There have been no changes in internal control over financial reporting during the year ended December 31, 2023 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

33 

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

None; not applicable.

PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

DIRECTORS AND EXECUTIVE OFFICERS

Our directors and executive officers are listed below, with their respective ages, positions and biographical information.  Our bylaws provide that the directors shall be divided into three classes.  A class of directors shall be elected for a one-year term, a class of directors for a two-year term and a class of directors for a three-year term.  At each succeeding annual meeting of stockholders, successors to the class of directors whose term expires at that meeting shall be elected for a three-year term.  On December 28, 2018 our shareholders elected John A. Sindt for a three-year term and Clark M. Mower for a two-year term. We currently have a vacancy in the one-year term. Our executive officers are chosen by our board of directors and serve at its discretion. There are no family relationships between or among any of our directors and executive officers.

Name	Age	Position Held	Director Term of Office
Clark M. Mower	77	President, CEO and Director	From December 2018to next shareholder meeting
John A. Sindt	79	Chairman of the Board	From December 2018 to next shareholder meeting

Clark M. Mower --Mr. Mower was appointed President and CEO in January 2005.  He was appointed as Director, President and CEO of Sensitron in February 2005.  In December 2018 he was elected to serve a two-year term as a director. He formerly served as Senior Vice President - Mergers and Acquisitions - Merchant Energy Group for El Paso Energy Corporation (NYSE: EP).  From August 2002 through 2004 he was the managing member of Polaris Energy,LLC, a non-affiliated consulting company to energy related mergers and acquisition.  From August 2002 to July 2004, he was a management committee member for Saguaro Power Company, a non-affiliated company operating a 100 megawatts power plant in Henderson, Nevada.  Prior to that he served as President and Chief Executive Officer of Bonneville Pacific Corporation (a public company) for eight years until El Paso Corporation acquired Bonneville Pacific Corporation in October 1999.

John A. Sindt --Mr. Sindt has served as a director of the Company since 1999 and in December 2018 he was elected to serve a three year term. He served as President and Chief Executive and Financial Officer from 2001 to 2004.  He served as Secretary/Treasurer from January 2005 through July 2005.  Mr. Sindt also served as the Chairman of the Board of Sensitron, one of our former subsidiaries.  He was employed from 1965 to late 2019 as a Salt Lake County, Utah Constable. He has also served as President, Corporate Secretary and Director for the National Constables Association.  

During the past ten years none of our executive officers have been involved in any legal proceedings that are material to an evaluation of their ability or integrity; namely: (1) filed a petition under federal bankruptcy laws or any state insolvency laws, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; (2) been convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) been the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from or otherwise limiting his/her involvement in any type of business, securities or banking activities; or (4) been found by a court of competent jurisdiction in a civil action, by the SEC or the Commodity Futures Trading Commission to have violated any federal or state securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated.

AUDIT COMMITTEE

Our audit committee consists of our Board of Directors. Our audit committee has a charter and management believes Mr. Mower qualifies as an audit committee financial expert because of his extensive experience in finance. Based upon the definition of independent director under NASDAQ Stock Market Rule 5605(a) (2), Mr. Mower is not independent of management.

34 

OTHER COMMITTEES

We do not have a standing nominating committee for directors or a compensation committee. Our entire board of directors, including Messrs. Mower and Sindt, act as our nominating and compensation committee.

CODE OF ETHICS

We adopted a Business Ethics and Code of Conduct in November 2000.  Upon written request we will provide a copy of the Business Ethics and Code of Conduct to any person without charge.  Address your request to:

Shareholder Communications

Flexpoint Sensor Systems, Inc.

5718West Dannon Way, Suite B

West Jordan Utah 84081

ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Compensation Objectives -- Our compensation philosophy is to align executive compensation with the interests of stockholders, attract, retain and motivate a highly competent team of executives, and link pay to performance.

Base Salary -- Base salaries for our executives depend on the scope of their responsibilities and their performance. Base salary is designed to compensate the executives for services rendered during the year. These salaries are compared to amounts paid to the executive’s peers outside our Company. As we have not yet established a Compensation Committee, salary levels are typically reviewed annually by the Board of Directors performance review process, with increases based on the assessment of the performance of the executive.

Long-term Compensation -- The Board of Directors determined that long-term incentive compensation would be in the form of stock options granted. We have a stock option plan and implemented which has been approved by the shareholders to provide long-term compensation to directors and employees of the company.

Perquisites - The only material perquisite provided to our executive officers is reimbursement for use of a personal automobile while engaged on company business.

Retirement Benefits - We have no retirement benefits currently in place. It is the intent of the company to add such benefits at a future date.

Employee agreements - We have not entered into employment contracts with our executive officers and their compensation is determined at the discretion of our board of directors.

Termination and Change of Control Payments -- The Company does not currently have employment agreements with its executive officers and there are no agreements providing for severance should a change of control take place

SUMMARY COMPENSATION TABLE

The following table shows the compensation paid to our Chief Executive Officer, Principal Financial Officer, and our most highly compensated executive officer for the last two fiscal years:

Name and Principal Position	Year	Salary ($)	Option Awards (1) ($)	All Other Compensation ($)	Total ($)
Clark M. Mower, President, CEO, PFO and Director	2023 2022	$ 72,000 $ 72,000	$0 $0	$ 0 $ 0	$ 72,000 $ 72,000

(1) Represents value of options granted computed in accordance with FASB ASC Topic 718.

35 

Because the Company did not meet its projected revenues during the year ending December 31, 2014, Mr. Mower continued to voluntarily take a reduced salary through the end of 2023.

OUTSTANDING EQUITY AWARDS

The following table shows outstanding equity awards granted to our named executive officers as of December 31, 2023.

	Option Awards
Name (a)	Number of Securities Underlying Unexercised Options (#) Exercisable (b)	Number of Securities Underlying Unexercised Options (#) Unexercisable (c)	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d)	Option Exercise Price ($) (e)	Option Expiration Date (f)
Clark M. Mower, CEO, President and Director	500,000 600,000	0 0	0 0	$0.05 $0.05	8/25/25 8/25/25

DIRECTOR COMPENSATION

We do not have any standard arrangement for compensation of our directors for any services provided as a director, including services for committee participation or for special assignments.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND RELATED STOCKHOLDER MATTERS

SECURITIES UNDER EQUITY COMPENSATION PLANS

The following table lists the securities authorized for issuance under any equity compensation plans approved by our shareholders and any equity compensation plans not approved by our shareholders as of December 31, 2023.  This chart also includes individual compensation arrangements described below.

EQUITY COMPENSATION PLAN INFORMATION
Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	1,900,000	$ 0.05	0
Equity compensation plans not approved by security holders	0	$0.00	0
Total	1,900,000	$ 0.05	0

36 

2005 Stock Incentive Plan

On August 25, 2005, our Board adopted the Flexpoint Sensor Systems, Inc. 2005 Stock Incentive Plan (the “Plan”).  The purposes of the Plan were to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to employees, directors and consultants, and to promote the success of our business.

The Plan became effective upon its adoption by the Board and continued in effect for a term of ten (10) years. The Plan expired August 25, 2015. The maximum aggregate number of shares of common stock that could be sold under the Plan was 2,500,000 shares. The term of each option and its exercise price was stated in an option agreement; provided that the term does not exceed ten (10) years from the date of grant.  The plan provided that a grant of a stock option to an employee shall have an exercise price of no less than 110% of the fair market value per share on the date of grant.  As a condition of the grant, vesting or exercise of an option granted under the Plan, the participant shall be required to satisfy any applicable federal, state, local or foreign withholding tax obligations that may arise in connection with the grant, vesting or exercise of the option or the issuance of shares.

Pursuant to the Plan, on August 24, 2015, the Board approved the surrender and cancellation of 1,540,000 options granted to five officers and employees and in exchange granted options to purchase 1,960,000 to those individuals. In addition, the Board granted options to purchase 225,000 shares to two employees.

In December 2020, the Board of Directors approved the revaluing of all outstanding stock options to $0.05 per share.

BENEFICIAL OWNERSHIP

The following table lists the beneficial ownership of our outstanding common stock by our management and each person or group known to us to own beneficially more than 5% of our voting common stock.  Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.  Based on these rules, two or more persons may be deemed to be the beneficial owners of the same securities.  Except as indicated by footnote, the persons named in the table below have sole voting power and investment power with respect to the shares of common stock shown as beneficially owned by them.  The percentage of beneficial ownership is based on 125,557,174 shares of common stock outstanding as of March 31, 2024, plus an aggregate of 1,300,000 shares which the following persons may acquire within 60 days by the exercise of rights, warrants and/or options.

CERTAIN BENEFICIAL OWNERS

MANAGEMENT
Name of beneficial owner	Amount and nature of beneficial ownership	Percent of class
Clark M. Mower	1,989,100 (1)	1.56%
John A. Sindt	1,402,266 (2)	1.10%
Directors and officers as a group	3,419,938	2.67%

(1)          Represents 889,100 shares held and vested options to purchase 1,100,000 shares.

(2) Represents 1,202,266 shares held and vested options to purchase 200,000 shares. 

37 

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

TRANSACTIONS WITH RELATED PARTIES

The following information summarizes transactions we have either engaged in since the beginning of the last two completedfiscal years, or propose to engage in, involving our executive officers, directors, more than 5% stockholders, or immediate family members of these persons. These transactions were negotiated between related parties without “arm’s length” bargaining and, as a result, the terms of these transactions may be different than transactions negotiated between unrelated persons.

At December 31, 2023 and 2022, the Company had accounts payable of $58,717 and $44,713, respectively, owed to Clark Mower, Chief Executive Officer, for reimbursement of various operating expenses paid by him and a loan which he made the Company. The Company also owed John Sindt $4,000 at December 31, 2023 for funds provided to meet operating expenses.

At December 31, 2023 and 2022 there are related party convertible notes outstanding with principal balances of $164,257 and $54,257 which are due to the Mr. Mower and Mr. Sindt, respectively. Of the total balance, $114,514 are convertible notes bearing a 8% annual rate of interest (with a 12% default rate) and are convertible into shares of common stock at the rate of $0.07 per share and $104,000 are convertible notes bearing 8% annual interest (with a 12% default rate) and are convertible into shares of common stock at the rate of $0.06 per share. All the convertible note payable related parties has a maturity date of March 31, 2024.  

The Company filed an amendment to their Articles of Incorporation whereby the shareholders approved an increase in the number of shares of common stock authorized. With the filing of the amendment the Company now has sufficient authorized shares to convert all convertible notes and stock options and therefore no longer needs to treat those financial instruments as derivatives. The notes are secured by the business equipment of the Company.

DIRECTOR INDEPENDENCE

An independent director is defined under NASDAQ Stock Market Rule 5605(a) (2). This rule defines persons as "independent" who are neither officers nor employees of the company and have no relationships that, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying out their responsibilities as directors. We do not currently have a director who qualifies as independent.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

ACCOUNTANT FEES

The Company has selected Fruci & Associates II, PLLC as its independent public accounting firm, effective with the audit of our 2022 financial results. Fees paid and to be paid are:

1) Audit Fees - The aggregate fees incurred for professional services rendered by our principal accountant for the audit of our annual financial statements ending December 31, 2022 were $20,000. Fees to be paid for the audit of our annual financial statements ending December 31, 2023, and the three quarterly reviews will be $30,500.

2) Audit-Related Fees. $0 and $0.

3) Tax Fees. $0 and $0.

4) All Other Fees. $0.

PRE-APPROVAL POLICIES

Our audit committee makes recommendations to our board of directors regarding the engagement of an auditor. Our board of directors approves the engagement of the auditor before the firm renders audit and non-audit services.  Our audit committee does not rely on pre-approval policies and procedures.

38 

PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1) Financial Statements

The audited financial statements of Flexpoint Sensor Systems, Inc. are included in this report under Item 8 on pages 17 to 32.

(a)(2) Financial Statement Schedules

All financial statement schedules are included in the footnotes to the financial statements or are inapplicable or not required.

(a)(3) Exhibits

The following documents have been filed as part of this report

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(ii)	Bylaws of Flexpoint Sensor, as amended (Incorporated by reference to exhibit 3.4 of Form 10-QSB, filed May 3, 2004)
4.6	Description of Securities
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)
10.3	Form of Notice of Stock Option Grant, dated August 24, 2015 (Incorporated by reference to exhibit 10.4 of Form 10-K, filed April 14, 2016)
20.2	Audit Committee Charter (Incorporated by reference to Schedule 14A, filed October 27, 2005)
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
32.1	Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
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

39 

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FLEXPOINT SENSOR SYSTEMS, INC.

Date: April 8, 2024                                                        By: /s/ Clark M. Mower            

Clark M. Mower, President

In accordance with Section 13 or 15(d) of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: April 8, 2024                                                        /s/ Clark M. Mower             

Clark M. Mower

President

Chief Executive Officer

Principal Financial Officer

Director

Date: April 8, 2024                                                        /s/ John A. Sindt

John A. Sindt

Chairman of the Board

40 

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 annual report on Form 10-K 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 statement made, in light of the circumstances under which 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 our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us 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 caused 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 generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our 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 registrant’s board of directors (or persons performing the equivalent function):

(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:  April 8, 2024 /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 annual report on Form 10-K 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 statement made, in light of the circumstances under which 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 our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us 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 caused 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 generally accepted accounting principles

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our 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 registrant’s board of directors (or persons performing the equivalent function):

(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: April 8, 2024   /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 Annual Report of Flexpoint Sensor Systems, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Annual Report”), Clark M. Mower, Chief Executive Officer and Principal Financial Officer, certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Annual 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 our Annual Report fairly presents, in all material respects, our financial condition and result of operations.

Dated: April 8, 2024                                                      /s/ Clark M. Mower

Clark M. Mower

Chief Executive Officer

Principal Financial Officer

XML

Cover - USD ($)	12 Months Ended
	Dec. 31, 2023	Mar. 31, 2024	Jun. 30, 2023
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Entity Interactive Data Current	Yes
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Document Fiscal Period Focus	FY
Documents Incorporated by Reference [Text Block]	None
Entity Information [Line Items]
Entity Registrant Name	FLEXPOINT SENSOR SYSTEMS, INC.
Entity Central Index Key	0000925660
Entity File Number	0-24368
Entity Tax Identification Number	87-0620425
Entity Incorporation, State or Country Code	DE
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
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Entity Contact Personnel [Line Items]
Entity Address, Address Line One	5718 W Dannon Way
Entity Address, Address Line Two	Suite B
Entity Address, City or Town	West Jordan
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Entity Phone Fax Numbers [Line Items]
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XML

BALANCE SHEETS - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Current Assets
Cash and cash equivalents
Accounts receivable, net of allowance of $103,777 and $103,777	44,374	20,135
Deposits and prepaid expenses	6,665	8,948
Total Current Assets	51,039	29,083
Long-Term Deposits	13,624	13,624
Property and Equipment, net of accumulated depreciation of $597,174 and $597,174
Patents and Proprietary Technology, net of accumulated amortization of $974,045 and $974,045
Operating lease – Right-of-use asset	262,204	254,519
Goodwill	4,896,917	4,896,917
Total Assets	5,223,784	5,194,143
Current Liabilities
Bank overdraft	11,315	7,506
Accounts payable	253,419	265,267
Accrued liabilities	2,777,959	2,416,589
Lease liability – current portion	59,404	57,679
Notes payable – due on demand	1,201,915	766,391
Convertible notes payable	180,000	180,000
Total Current Liabilities	4,765,242	3,956,658
Lease liability – long-term	204,060	198,064
Total Liabilities	4,969,302	4,154,722
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 shares 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	(31,672,144)	(30,887,205)
Total Stockholders' Equity	254,482	1,039,421
Total Liabilities and Stockholders' Equity	5,223,784	5,194,143
Related Party
Current Liabilities
Accounts payable – related party	62,717	44,713
Convertible notes payable to related party	$ 218,513	$ 218,513

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BALANCE SHEETS (Parentheticals) - USD ($)	Dec. 31, 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)	597,174	597,174
Net of accumulated amortization (in Dollars)	$ 974,045	$ 974,045
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

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STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Income Statement [Abstract]
Engineering, Contract and Testing Revenue	$ 105,686	$ 151,156
Operating Costs and Expenses
Cost of revenue	33,525	36,258
Administrative and marketing	519,107	620,921
Research and development	223,505	223,227
Total Operating Costs and Expenses	776,137	880,406
Loss from operations	(670,451)	(729,250)
Other Income (Expense)
Interest expense	(116,288)	(76,782)
Other income	1,800	1,200
Net Other Income (Expense)	(114,488)	(75,582)
Net Loss	$ (784,939)	$ (804,832)
Basic and Diluted Loss Per Common Share (in Dollars per share)	$ (0.06)	$ (0.06)
Basic and Diluted Weighted-Average
Common Shares Outstanding (in Shares)	125,557,114	123,294,410

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STATEMENTS OF OPERATIONS (Parentheticals) - $ / shares	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Income Statement [Abstract]
Diluted Loss per Common Share	$ (0.06)	$ (0.06)
Diluted Weighted-Average Common Shares Outstanding	125,557,114	123,294,410

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STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($)	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total
Balance at Dec. 31, 2021	$ 114,396	$ 31,254,182	$ (30,082,373)	$ 1,286,205
Balance (in Shares) at Dec. 31, 2021	114,396,242
Common stock issued in full settlement of convertible note conversion	$ 11,161	546,887		558,048
Common stock issued in full settlement of convertible note conversion (in Shares)	11,160,932
Net loss			(804,832)	(804,832)
Balance at Dec. 31, 2022	$ 125,557	31,801,069	(30,887,205)	1,039,421
Balance (in Shares) at Dec. 31, 2022	125,557,174
Net loss			(784,939)	(784,939)
Balance at Dec. 31, 2023	$ 125,557	$ 31,801,069	$ (31,672,144)	$ 254,482
Balance (in Shares) at Dec. 31, 2023	125,557,174

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STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Cash Flows from Operating Activities:
Net loss	$ (784,939)	$ (804,832)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of Right-of-Use Asset	7,686	19,011
Changes in operating assets and liabilities:
Accounts receivable	(24,239)	(11,217)
Deposits and prepaid expense	2,283	(15,093)
Accounts payable	(11,848)	38,820
Accounts payable – related party	18,004	24,232
Lease liability	(7,650)	(11,130)
Accrued liabilities	361,370	440,910
Net Cash Used in Operating Activities	(439,333)	(319,295)
Cash Flows from Financing Activities:
Proceeds from (payments to) bank overdraft	3,809	7,506
Proceeds from (payments to) note payable	(17,500)	(10,000)
Proceeds from borrowings under convertible note payable	453,024	321,391
Net Cash Provided by Financing Activities	439,333	318,897
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
Supplemental Disclosure on Noncash Investing and Financing Activities
Initiation of operating lease		273,530
Conversion of note payable and accrued interest to common stock to be issued		$ 558,048

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NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2023

Nature of Business and Significant Accounting Policies [Abstract]

NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

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, entering into licensing agreements, production and seeking long-term manufacturing contracts. The Company’s operations are in designing, engineering, manufacturing, licensing and selling sensor technology and equipment using flexible potentiometer technology. Through December 31, 2023 the Company continued to manufacture products and sensors to fill customer orders and provide engineering and design work.

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 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 a highly liquid security 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 generally recorded at the time product is shipped or services are provided including any shipping and handling fees. Contracts associated with design and development engineering 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 is completed and accepted by the customer, at which time the entire contract price is billed to the customer and the deposit applied. The Company has established an allowance for bad debts based on historical experience and an analysis of risk associated with the account balances. The balance in the allowance account was $103,777 and $103,777 in the years ended December 31, 2023 and 2022, respectively.

Inventories – The Company does not currently have 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.

Going Concern– The Company suffered losses of $784,939 and $804,832 during the years ended December 31, 2023 and 2022, respectively.  At December 31, 2023, the Company had an accumulated deficit of $31,672,144. These matters raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

From 2008 through 2023 the Company raised approximately $7.0 million, which includes $453,024 raised in 2023, in additional capital, including accrued interest, through the issuance of long and short-term notes to related and other parties. All of the notes had an annual interest rate of 10% or 15% and were secured by the Company’s business equipment. The notes also had a conversion feature for restricted common shares ranging from $0.05 to $0.20 per share with maturity dates of December 31, 2018 through March 31, 2021. Management continues to work with investor groups to provide funds for the Company’s operations until its operations produce a positive cash flow.

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 year ended December 31, 2023. 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 year ended December 31, 2023.

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.

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 on December 31, 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.

As the Company consists of only one reporting unit, and is publicly traded, management estimates the fair value of its reporting unit utilizing the Company’s market capitalization, multiplying the number of actual shares outstanding by the market price on December 31, as reflected on NASDAQ National Market. As the Company is traded on a public exchange, the stock price is subject to fluctuations and the fair value test could be impacted by lower stock prices.

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. At the ship date the Company has no further obligations under the contract and the revenue from the sale is recognized.

Following are the five steps of revenue recognition to be considered in determining the recognition of revenue:

Identify the contract with the customer. A contract with a customer exists when: (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the good to be transferred or the services to be provided and identifies the payment terms related to these goods or services; (ii) the contract has commercial substance and (iii) we determine that collection of substantially all consideration for goods transferred or services rendered is probable based on the customer’s intent and ability to pay the promised consideration. We do not have significant costs to obtain contracts with customers.

Identify the performance obligations in the contract. Generally, our contracts with customers do not include multiple performance obligations to be completed or a period of time. Our performance obligations generally relate to delivering specialized sensors to a customer, subject to the shipping terms of the contract. Limited warranties are provided, under which we typically accept returns and provide either replacement sensors or refunds. We do not have significant returns. We do not offer extended warranty or service plans.

Determine the transaction price. Payment by the customer is due under customary fixed payment terms, and we evaluate if collectability is reasonably assured. Our contracts do not typically contain a financing component, except possibly in a licensing agreement. Revenue is recorded at the contract sales price. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues.

Allocate the transaction price to performance obligations in the contract. We typically do not have multiple performance obligations in our contracts with customers. As such, we generally recognize revenue upon transfer of the product to the customer’s control at contractually stated pricing.

Recognize revenue when or as we satisfy a performance obligation. We generally satisfy performance obligations at a point in time upon either shipment or delivery of goods or upon completion of all services detailed in the contract, in accordance with the terms of each contract with the customer. We do not have significant service revenue.

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:

			December 31,							December 31,
					2023						2022
			Consumer		Long-term					Consumer	Long-term
Segments			Products		Contract		Total			Products	Contract		Total
Domestic	$	54,439		-		54,439		$	11,655			-	11,655
International		51,247		-		51,247			139,501			-	139,501
	$	105,686		-		105,686		$	151,156			-	151,156
Components	$	61,383		-		61,383		$	115,086			-	115,086
Engineering Services		44,303		-		44,303			36,070			-	36,070
	$	105,686		-		105,686		$	151,156			-	151,156

Stock-Based Compensation –The Company, in accordance with ASC 718, Compensation – Stock Compensation, records all share-based payments to employees at the grant-date fair value of the equity instruments issued. In accordance with ASC 718-10-30-9, Measurement Objective – Fair Value at Grant Date, the Company uses the closing price of the stock, as quoted by NASDAQ, on the date of the grant. The Company believes this pricing method provides the best estimate of the fair value of the consideration given. Compensation cost is recognized over the requisite service period.

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 December 31, 2023 and

2022, there were outstanding common share equivalents (options and convertible notes payable) which amounted to 15,619,175 and 14,862,493, respectively, from convertible notes and 1,900,000 from options for common stock. These common share equivalents were not included in the computation of diluted loss per share 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 year ended December 31, 2023, three customers represented 86% of salesand two customers represented 95% of accounts receivable. A customer who is utilizing our technology for commercialization in shoes represented 80% of accounts receivable at December 31, 2022. The Company has a strong relationship with these customers and does not believe this concentration poses a significant risk, as their products are based entirely on the Company’s technologies. During 2022, five customers constituted 88% of the sales.

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 - In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses”. The ASU sets forth a “current expected credit loss” (“CECL”) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This ASU was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. In November 2019, the FASB issued ASU 2019-10 which deferred the effective date to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted this new guidance effective January 1, 2023 and has applied it using a modified retrospective method. The adoption of this standard had no material impact on our financial statements or disclosures.

The Company has reviewed all FASB-issued ASU accounting pronouncements and interpretations thereof that have effective dates during the period reported and in future periods. The Company has carefully considered the new pronouncements that alter previous GAAP and does not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management and certain standards are under consideration.

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PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2023

Property and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 2 – PROPERTY AND EQUIPMENT

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.  Depreciation expense was $-0- and $-0- for the years ended December 31, 2023 and 2022, respectively, and is included in the administrative and marketing expense on the statement of operations.

No impairment was recognized during the twelve months ended December 31, 2023. Property and equipment at December 31, 2023 and 2022 consisted of the following:

December 31,	2023	2022
Machinery and equipment	$        543,249	$       543,249
Office equipment	40,455	40,455
Furniture and fixtures	13,470	13,470
Total Property and Equipment	597,174	597,174
Less: Accumulated depreciation	(597,174)	(597,174)
Net Property and Equipment	$                -0-	$               -0-

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INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets [Abstract]

INTANGIBLE ASSETS

NOTE 3 – INTANGIBLE ASSETS

Intangible Assets – The components of intangible assets at December 31, 2023 and 2022 were as follows:

December 31, 2023	Gross Carrying Amount	Accumulated Amortization	Net Carrying Amount
Patents	$                174,963	$               174,963	$                      -
Proprietary Technology	799,082	799,082	-
Total Amortizing Asset	$               974,045	$               974,045	$                      -
December 31, 2022	Gross Carrying Amount	Accumulated Amortization	Net Carrying Amount
Patents	$               174,963	$               174,963	$                      -
Proprietary Technology	799,082	799,082	-
Total Amortizing Asset	$               974,045	$               974,045	$                      -

Patent amortization was $-0- and $-0- for the year ended December 31, 2023 and 2022, respectively. Amortization related to proprietary technology was $-0- and $-0- for the years ended December 31, 2023 and 2022.  Patent and proprietary technology amortization is charged to operations.

There will be no amortization expense for each of the next three years, as the patents became fully amortized in 2019.

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INCOME TAXES

12 Months Ended

Dec. 31, 2023

Income Taxes [Abstract]

INCOME TAXES

NOTE 4– INCOME TAXES

There was no provision for, or benefit from, income tax during the years ended December 31, 2023 and 2022,respectively.  The components of the net deferred tax asset as of December 31, 2023 and 2022, including temporary differences and operating loss carry forwards that arose prior to reorganization from bankruptcy, are as follows:

December 31,	2023	2022
Operating loss carry forwards	$           9,387,426	$           9,222,589
Origination and amortization of interest on convertible notes	932,622	932,622
Allowance for doubtful accounts	158,389	158,389
Change in derivative liabilities	107,270	107,270
Options issued for services	653,545	653,545
Total Deferred Tax Assets	$         11,239,252	$         11,074,415
Valuation allowance	(11,239,252)	(11,074,415)
Net Deferred Tax Asset	$                      --	$                      --

Federal and state net operating loss carry forwards at December 31, 2023 and 2022 were $25,746,697, and $24,961,758, respectively. A portion of the net operating loss carry forwards includes losses incurred prior to February 24, 2004, when a change of greater than 50% in ownership of the Company occurred. As a result of the change of ownership, only a portion of the net operating loss carry forwards incurred prior to the change becomes available each year. The net operating loss carry forwards began to expire in 2020.

The following is a reconciliation of the amount of benefit that would result from applying the federal statutory rate to pretax loss with the provision for income taxes for the years ended December 31, 2023 and 2022, respectively:

For the Years Ended December 31,	2023	2022
Tax at statutory rate (21%)	$      (164,837)	$      (209,256)
Options issued for services	-	-
Origination and amortization of interest on convertible notes	-	-
Allowance for doubtful accounts	-	-
Change in derivative liabilities	-	-
Change in valuation allowance	164,837	209,256
Provision for Income Taxes	$                    --	$                    --

Under FASB ASC 740-10-05-6, tax benefits are recognized only for the tax positions that are more likely than not be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in the company's tax return that do not meet these recognition and measurement standards.

The Company's policy is to recognize potential interest and penalties accrued related to unrecognized tax benefits with the income tax expense. For the years ended December 31, 2023, and 2022, the Company did not recognize any interest or penalties in its Statement of Operations, nor did it have any interest or penalties accrued in its balance sheet at December 31, 2023 and 2022 relating to unrecognized benefits.

The tax years 2023, 2022, 2021 and 2020 remain open to examination for federal income tax purposes and by other major taxing jurisdictions to which the Company is subject.

The Company does not reflect a deferred tax asset in its financial statements, but includes that calculation and valuation in its footnotes. We are still analyzing the impact of certain provisions of the Act and refining our calculations. The Company will disclose any change in the estimates as it refines the accounting for the impact of the Act.

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NOTES PAYABLE

12 Months Ended

Dec. 31, 2023

Notes Payable [Abstract]

NOTES PAYABLE

NOTE 5 – NOTES PAYABLE

On Demand Notes – Third Parties

On December 31, 2023 there are on demand notes the Company entered into which total $1,201,915. Of that total, $1,054,415 are with Capital Communications, $95,000 with First Equity, $45,000 with Empire Fund, all of which bear annual interest of 10%, and $7,500 with John Kelly, which is non-interest bearing. At December 31, 2022 there were on demand notes totaling $766,391. All of these notes are due on demand. At December 31, 2023, there is $83,970 in accrued interest relating to these notes.

Convertible Notes Payable – Third Parties

At December 31, 2023 there are convertible notes outstanding with principal balances which total $180,000, compared to convertible notes of $180,000 at December 31, 2022. Of the notes, $140,000 are convertible notes bearing a 10% annual rate of interest (with a 15% default rate) and are convertible into shares of common stock at the rate of $0.05 per share. The remaining $40,000 is a convertible note entered into on August 8, 2011 with a former Company Director. That note was due on December 31, 2015, and bears a default interest rate of 10% and is convertible at $0.20 per share.

In March 2022, the holder of $455,000 in convertible notes and $103,046 in accrued interest notified the Company of their intent to convert the debt into 8,419,547 shares of common stock. The note holder agreed to waive default interest in exchange for a reduced conversion price of $0.05 per share and the Company issued 11,160,932 shares of its restricted common stock in full settlement of its obligations.

Convertible Note Payable - Related Parties

Between July 1, 2016 and August 28, 2018, the Company issued promissory notes totaling $125,000 to officers of the Company. Additionally, on July 12, 2017 two officers assumed responsibility for $54,513 of debt owed by the Company. The officers made monthly payments against those debts until the obligation was paid in full.

At December 31, 2023 there are related party convertible notes outstanding with principal balances of $164,257 and $54,256 which are due to the CEO and the Chairman of the Board of the Company, respectively. Of the total balance, $114,514 are convertible notes bearing an 8% annual rate of interest (with a 12% default rate) and are convertible into shares of common stock at the rate of $0.07 per share and $104,000 are convertible notes bearing 8% annual interest (with a 12% default rate) and are convertible into shares of common stock at the rate of $0.06 per share. All the convertible notes payable related parties have a maturity date of March 31, 2024. The holders of the notes will extend the maturity dates of these notes.

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CAPITAL STOCK

12 Months Ended

Dec. 31, 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 December 31, 2023 and 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 December 31, 2023 and 2022 there were 125,557,174 shares of common stock issued. During the year ended December 31, 2022, the Company issued 11,160,932 shares of restricted common stock for the conversion of $455,000 of convertible notes payable and $103,046 of accrued interest.

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STOCK OPTION PLANS

12 Months Ended

Dec. 31, 2023

Stock Option Plans [Abstract]

STOCK OPTION PLANS

NOTE 7– 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 2023, the Company recognized a total of $2,451,971 of stock-based compensation expense, which includes charges of $8,203 in 2020 and $-0- in 2019, leaving $0 in unrecognized expense as of December 31, 2022. There were 1,900,000 and 1,900,000 employee stock options outstanding at December 31, 2023 and 2022, respectively.  

A summary of all employee options outstanding and exercisable under the plan as of December 31, 2023, and changes during the year then ended 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	1.65	$               --
Exercisable at the end of Period	1,900,000	$                 0.05	1.65	$               --

XML

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2023

Commitments And Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 8–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 lease is for $6,787 per month and is for a period of twelve months with a 90-day notice clause if our intent is to renew the lease for additional periods. Minimum payments under the lease for the current term and assuming the lease renewal for an additional three years is as follows:

2024	$    83,103
2025	85,596
2026	88,164
2027	59,948
Total payments	$  316,811
Imputed interest	(53,347)
Lease liability as of period end	263,464
Short-term lease liability	(59,404)
Lease liability – long term	$  204,060

We recognize lease expense on a straight-line basis over the term of the lease.

	For the Year 2023
Lease expense	$81,722

Our building lease does not specify an implicit rate of interest. Therefore, we estimate our incremental borrowing rate, which is defined as the interest rate we would pay to borrow on a collateralized basis, considering such factors as length of lease term and the risks of the economic environment in which the leased asset operates. As of December 31, 2023, the following disclosures for remaining lease term and incremental borrowing rates were applicable:

	December 31, 2023
Weighted average remaining lease term	3.67 years
Weighted average discount rate	5%

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RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2023

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 9 – RELATED PARTY TRANSACTIONS

At December 31, 2023 and 2022, the Company had accounts payable of $62,717 and $44,713, respectively, to its Chief Executive Officer for reimbursement of various operating expenses paid by him and a loan which he made the Company. It also owed $4,000 at December 31, 2023 to its Chairman of the Board for funds provided the Company for operating expenses.

At December 31, 2023 and 2022 there are related party convertible notes outstanding with principal balances of $164,257 and $54,257 which are due to the CEO and the Chairman of the Board of the Company, respectively. Of the total balance, $114,514 are convertible notes bearing a 8% annual rate of interest (with a 12% default rate) and are convertible into shares of common stock at the rate of $0.07 per share and $104,000 are convertible notes bearing 8% annual interest (with a 12% default rate) and are convertible into shares of common stock at the rate of $0.06 per share. All the convertible note payable related parties have a maturity date of March 31, 2024.  

The Company filed an amendment to their Articles of Incorporation whereby the shareholders approved an increase in the number of shares of common stock authorized. With the filing of the amendment the Company now has sufficient authorized shares to convert all convertible notes and stock options and therefore no longer needs to treat those financial instruments as derivatives. The notes are secured by the business equipment of the Company.

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2023

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 10 - SUBSEQUENT EVENTS

Subsequent to December 31, 2023, the Company has received an additional $90,524 in funding from an investor. The fundings have not yet been reduced to a formalized convertible note; therefore, there are no terms for interest rate or maturity date associated with these funds.

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

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Pay vs Performance Disclosure - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ (784,939)	$ (804,832)

XML

Insider Trading Arrangements	3 Months Ended
	Dec. 31, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

XML

Accounting Policies, by Policy (Policies)

12 Months Ended

Dec. 31, 2023

Nature of Business and Significant Accounting Policies [Abstract]

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, entering into licensing agreements, production and seeking long-term manufacturing contracts. The Company’s operations are in designing, engineering, manufacturing, licensing and selling sensor technology and equipment using flexible potentiometer technology. Through December 31, 2023 the Company continued to manufacture products and sensors to fill customer orders and provide engineering and design work.

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 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 a highly liquid security 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 generally recorded at the time product is shipped or services are provided including any shipping and handling fees. Contracts associated with design and development engineering 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 is completed and accepted by the customer, at which time the entire contract price is billed to the customer and the deposit applied. The Company has established an allowance for bad debts based on historical experience and an analysis of risk associated with the account balances. The balance in the allowance account was $103,777 and $103,777 in the years ended December 31, 2023 and 2022, respectively.

Inventories

Inventories – The Company does not currently have 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.

Going Concern

Going Concern– The Company suffered losses of $784,939 and $804,832 during the years ended December 31, 2023 and 2022, respectively.  At December 31, 2023, the Company had an accumulated deficit of $31,672,144. These matters raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

From 2008 through 2023 the Company raised approximately $7.0 million, which includes $453,024 raised in 2023, in additional capital, including accrued interest, through the issuance of long and short-term notes to related and other parties. All of the notes had an annual interest rate of 10% or 15% and were secured by the Company’s business equipment. The notes also had a conversion feature for restricted common shares ranging from $0.05 to $0.20 per share with maturity dates of December 31, 2018 through March 31, 2021. Management continues to work with investor groups to provide funds for the Company’s operations until its operations produce a positive cash flow.

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 year ended December 31, 2023. 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 year ended December 31, 2023.

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.

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 on December 31, 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.

As the Company consists of only one reporting unit, and is publicly traded, management estimates the fair value of its reporting unit utilizing the Company’s market capitalization, multiplying the number of actual shares outstanding by the market price on December 31, as reflected on NASDAQ National Market. As the Company is traded on a public exchange, the stock price is subject to fluctuations and the fair value test could be impacted by lower stock prices.

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. At the ship date the Company has no further obligations under the contract and the revenue from the sale is recognized.

Following are the five steps of revenue recognition to be considered in determining the recognition of revenue:

Identify the contract with the customer. A contract with a customer exists when: (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the good to be transferred or the services to be provided and identifies the payment terms related to these goods or services; (ii) the contract has commercial substance and (iii) we determine that collection of substantially all consideration for goods transferred or services rendered is probable based on the customer’s intent and ability to pay the promised consideration. We do not have significant costs to obtain contracts with customers.

Identify the performance obligations in the contract. Generally, our contracts with customers do not include multiple performance obligations to be completed or a period of time. Our performance obligations generally relate to delivering specialized sensors to a customer, subject to the shipping terms of the contract. Limited warranties are provided, under which we typically accept returns and provide either replacement sensors or refunds. We do not have significant returns. We do not offer extended warranty or service plans.

Determine the transaction price. Payment by the customer is due under customary fixed payment terms, and we evaluate if collectability is reasonably assured. Our contracts do not typically contain a financing component, except possibly in a licensing agreement. Revenue is recorded at the contract sales price. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues.

Allocate the transaction price to performance obligations in the contract. We typically do not have multiple performance obligations in our contracts with customers. As such, we generally recognize revenue upon transfer of the product to the customer’s control at contractually stated pricing.

Recognize revenue when or as we satisfy a performance obligation. We generally satisfy performance obligations at a point in time upon either shipment or delivery of goods or upon completion of all services detailed in the contract, in accordance with the terms of each contract with the customer. We do not have significant service revenue.

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:

			December 31,							December 31,
					2023						2022
			Consumer		Long-term					Consumer	Long-term
Segments			Products		Contract		Total			Products	Contract		Total
Domestic	$	54,439		-		54,439		$	11,655			-	11,655
International		51,247		-		51,247			139,501			-	139,501
	$	105,686		-		105,686		$	151,156			-	151,156
Components	$	61,383		-		61,383		$	115,086			-	115,086
Engineering Services		44,303		-		44,303			36,070			-	36,070
	$	105,686		-		105,686		$	151,156			-	151,156

Stock-Based Compensation

Stock-Based Compensation –The Company, in accordance with ASC 718, Compensation – Stock Compensation, records all share-based payments to employees at the grant-date fair value of the equity instruments issued. In accordance with ASC 718-10-30-9, Measurement Objective – Fair Value at Grant Date, the Company uses the closing price of the stock, as quoted by NASDAQ, on the date of the grant. The Company believes this pricing method provides the best estimate of the fair value of the consideration given. Compensation cost is recognized over the requisite service period.

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 December 31, 2023 and

2022, there were outstanding common share equivalents (options and convertible notes payable) which amounted to 15,619,175 and 14,862,493, respectively, from convertible notes and 1,900,000 from options for common stock. These common share equivalents were not included in the computation of diluted loss per share 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 year ended December 31, 2023, three customers represented 86% of salesand two customers represented 95% of accounts receivable. A customer who is utilizing our technology for commercialization in shoes represented 80% of accounts receivable at December 31, 2022. The Company has a strong relationship with these customers and does not believe this concentration poses a significant risk, as their products are based entirely on the Company’s technologies. During 2022, five customers constituted 88% of the sales.

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 - In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses”. The ASU sets forth a “current expected credit loss” (“CECL”) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This ASU was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. In November 2019, the FASB issued ASU 2019-10 which deferred the effective date to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted this new guidance effective January 1, 2023 and has applied it using a modified retrospective method. The adoption of this standard had no material impact on our financial statements or disclosures.

The Company has reviewed all FASB-issued ASU accounting pronouncements and interpretations thereof that have effective dates during the period reported and in future periods. The Company has carefully considered the new pronouncements that alter previous GAAP and does not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management and certain standards are under consideration.

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NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2023

Nature of Business and Significant Accounting Policies [Abstract]

Schedule of disaggregated revenues

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:

			December 31,							December 31,
					2023						2022
			Consumer		Long-term					Consumer	Long-term
Segments			Products		Contract		Total			Products	Contract		Total
Domestic	$	54,439		-		54,439		$	11,655			-	11,655
International		51,247		-		51,247			139,501			-	139,501
	$	105,686		-		105,686		$	151,156			-	151,156
Components	$	61,383		-		61,383		$	115,086			-	115,086
Engineering Services		44,303		-		44,303			36,070			-	36,070
	$	105,686		-		105,686		$	151,156			-	151,156

XML

PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2023

Property and Equipment [Abstract]

Schedule of Property and Equipment

No impairment was recognized during the twelve months ended December 31, 2023. Property and equipment at December 31, 2023 and 2022 consisted of the following:

December 31,	2023	2022
Machinery and equipment	$        543,249	$       543,249
Office equipment	40,455	40,455
Furniture and fixtures	13,470	13,470
Total Property and Equipment	597,174	597,174
Less: Accumulated depreciation	(597,174)	(597,174)
Net Property and Equipment	$                -0-	$               -0-

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INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets [Abstract]

Schedule of Intangible Assets

Intangible Assets – The components of intangible assets at December 31, 2023 and 2022 were as follows:

December 31, 2023	Gross Carrying Amount	Accumulated Amortization	Net Carrying Amount
Patents	$                174,963	$               174,963	$                      -
Proprietary Technology	799,082	799,082	-
Total Amortizing Asset	$               974,045	$               974,045	$                      -
December 31, 2022	Gross Carrying Amount	Accumulated Amortization	Net Carrying Amount
Patents	$               174,963	$               174,963	$                      -
Proprietary Technology	799,082	799,082	-
Total Amortizing Asset	$               974,045	$               974,045	$                      -

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2023

Income Taxes [Abstract]

Schedule of Net Deferred Tax Asset

There was no provision for, or benefit from, income tax during the years ended December 31, 2023 and 2022,respectively.  The components of the net deferred tax asset as of December 31, 2023 and 2022, including temporary differences and operating loss carry forwards that arose prior to reorganization from bankruptcy, are as follows:

December 31,	2023	2022
Operating loss carry forwards	$           9,387,426	$           9,222,589
Origination and amortization of interest on convertible notes	932,622	932,622
Allowance for doubtful accounts	158,389	158,389
Change in derivative liabilities	107,270	107,270
Options issued for services	653,545	653,545
Total Deferred Tax Assets	$         11,239,252	$         11,074,415
Valuation allowance	(11,239,252)	(11,074,415)
Net Deferred Tax Asset	$                      --	$                      --

Schedule of Reconciliation Provision for Income Taxes

The following is a reconciliation of the amount of benefit that would result from applying the federal statutory rate to pretax loss with the provision for income taxes for the years ended December 31, 2023 and 2022, respectively:

For the Years Ended December 31,	2023	2022
Tax at statutory rate (21%)	$      (164,837)	$      (209,256)
Options issued for services	-	-
Origination and amortization of interest on convertible notes	-	-
Allowance for doubtful accounts	-	-
Change in derivative liabilities	-	-
Change in valuation allowance	164,837	209,256
Provision for Income Taxes	$                    --	$                    --

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STOCK OPTION PLANS (Tables)

12 Months Ended

Dec. 31, 2023

Stock Option Plans [Abstract]

Schedule of Stock Option Activity

A summary of all employee options outstanding and exercisable under the plan as of December 31, 2023, and changes during the year then ended 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	1.65	$               --
Exercisable at the end of Period	1,900,000	$                 0.05	1.65	$               --

XML

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2023

Commitments And Contingencies [Abstract]

Schedule of Minimum Payments Under the Lease for the Current Term and Assuming the Lease Renewal

Minimum payments under the lease for the current term and assuming the lease renewal for an additional three years is as follows:

2024	$    83,103
2025	85,596
2026	88,164
2027	59,948
Total payments	$  316,811
Imputed interest	(53,347)
Lease liability as of period end	263,464
Short-term lease liability	(59,404)
Lease liability – long term	$  204,060

Schedule of Lease Expense on a Straight-Line Basis

We recognize lease expense on a straight-line basis over the term of the lease.

	For the Year 2023
Lease expense	$81,722

Schedule of Remaining Lease Term and Incremental Borrowing Rates

As of December 31, 2023, the following disclosures for remaining lease term and incremental borrowing rates were applicable:

	December 31, 2023
Weighted average remaining lease term	3.67 years
Weighted average discount rate	5%

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NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Nature of Business And Significant Accounting Policies [Line Items]
Percentage of deposit	50.00%
Allowance account	$ 103,777	$ 103,777
Net loss	(784,939)	(804,832)
Accumulated deficit	(31,672,144)	(30,887,205)
Raised approximately	7,000,000
Raised additional capital	$ 453,024
Sale of deposit	50.00%
Diluted outstanding common share equivalents, options		15,619,175
Diluted outstanding common share equivalents convertible notes payable		14,862,493
Diluted options for common stock		$ 1,900,000
Minimum [Member]
Nature of Business And Significant Accounting Policies [Line Items]
Annual interest rate	10.00%
Ranging per share (in Dollars per share)	$ 0.05
Intangible assets, useful lives	5 years
Maximum [Member]
Nature of Business And Significant Accounting Policies [Line Items]
Annual interest rate	15.00%
Ranging per share (in Dollars per share)	$ 0.2
Intangible assets, useful lives	15 years
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Three [Member]
Nature of Business And Significant Accounting Policies [Line Items]
Risk percentage	86.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Two [Member]
Nature of Business And Significant Accounting Policies [Line Items]
Risk percentage	95.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer [Member]
Nature of Business And Significant Accounting Policies [Line Items]
Risk percentage		80.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer [Member]
Nature of Business And Significant Accounting Policies [Line Items]
Risk percentage		88.00%

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NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of disaggregated revenues - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Consumer Products [Member]
Schedule of Disaggregated Revenues [Line Items]
Revenue	$ 105,686	$ 151,156
Consumer Products [Member] | Domestic [Member]
Schedule of Disaggregated Revenues [Line Items]
Revenue	54,439	11,655
Consumer Products [Member] | International [Member]
Schedule of Disaggregated Revenues [Line Items]
Revenue	51,247	139,501
Consumer Products [Member] | Components [Member]
Schedule of Disaggregated Revenues [Line Items]
Revenue	61,383	115,086
Consumer Products [Member] | Engineering Services [Member]
Schedule of Disaggregated Revenues [Line Items]
Revenue	44,303	36,070
Long-term Contract [Member]
Schedule of Disaggregated Revenues [Line Items]
Revenue
Long-term Contract [Member] | Domestic [Member]
Schedule of Disaggregated Revenues [Line Items]
Revenue
Long-term Contract [Member] | International [Member]
Schedule of Disaggregated Revenues [Line Items]
Revenue
Long-term Contract [Member] | Components [Member]
Schedule of Disaggregated Revenues [Line Items]
Revenue
Long-term Contract [Member] | Engineering Services [Member]
Schedule of Disaggregated Revenues [Line Items]
Revenue
Revenue [Member]
Schedule of Disaggregated Revenues [Line Items]
Revenue	105,686	151,156
Revenue [Member] | Domestic [Member]
Schedule of Disaggregated Revenues [Line Items]
Revenue	54,439	11,655
Revenue [Member] | International [Member]
Schedule of Disaggregated Revenues [Line Items]
Revenue	51,247	139,501
Revenue [Member] | Components [Member]
Schedule of Disaggregated Revenues [Line Items]
Revenue	61,383	115,086
Revenue [Member] | Engineering Services [Member]
Schedule of Disaggregated Revenues [Line Items]
Revenue	$ 44,303	$ 36,070

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PROPERTY AND EQUIPMENT (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Property and Equipment [Line Items]
Depreciation expense	$ 0	$ 0
Minimum [Member]
Property and Equipment [Line Items]
Property and equipment useful lives	3 years
Maximum [Member]
Property and Equipment [Line Items]
Property and equipment useful lives	10 years

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PROPERTY AND EQUIPMENT (Details) - Schedule of Property and Equipment - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Total Property and Equipment	$ 597,174	$ 597,174
Less: Accumulated depreciation	(597,174)	(597,174)
Net Property and Equipment
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Total Property and Equipment	543,249	543,249
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Total Property and Equipment	40,455	40,455
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Total Property and Equipment	$ 13,470	$ 13,470

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INTANGIBLE ASSETS (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Patents [Member]
Goodwill and Intangible Assets [Line Items]
Amortization	$ 0	$ 0
Proprietary Technology [Member]
Goodwill and Intangible Assets [Line Items]
Amortization	$ 0	$ 0

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INTANGIBLE ASSETS (Details) - Schedule of Intangible Assets - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Schedule of Intangible Assets [Line Items]
Gross Carrying Amount	$ 974,045	$ 974,045
Accumulated Amortization	974,045	974,045
Net Carrying Amount
Patents [Member]
Schedule of Intangible Assets [Line Items]
Gross Carrying Amount	174,963	174,963
Accumulated Amortization	174,963	174,963
Net Carrying Amount
Proprietary Technology [Member]
Schedule of Intangible Assets [Line Items]
Gross Carrying Amount	799,082	799,082
Accumulated Amortization	799,082	799,082
Net Carrying Amount

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INCOME TAXES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Income Taxes [Line Items]
Federal and state net operating loss carry forwards	$ 25,746,697	$ 24,961,758
Ownership percentage	50.00%
Other Ownership Interest [Member]
Income Taxes [Line Items]
Ownership percentage	50.00%

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INCOME TAXES (Details) - Schedule of Net Deferred Tax Asset - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Schedule of Net Deferred Tax Asset [Abstract]
Operating loss carry forwards	$ 9,387,426	$ 9,222,589
Origination and amortization of interest on convertible notes	932,622	932,622
Allowance for doubtful accounts	158,389	158,389
Change in derivative liabilities	107,270	107,270
Options issued for services	653,545	653,545
Total Deferred Tax Assets	11,239,252	11,074,415
Valuation allowance	(11,239,252)	(11,074,415)
Net Deferred Tax Asset

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INCOME TAXES (Details) - Schedule of Reconciliation Provision for Income Taxes - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Schedule of Reconciliation Provision for Income Taxes [Abstract]
Tax at statutory rate (21%)	$ (164,837)	$ (209,256)
Options issued for services
Origination and amortization of interest on convertible notes
Allowance for doubtful accounts
Change in derivative liabilities
Change in valuation allowance	164,837	209,256
Provision for Income Taxes

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INCOME TAXES (Details) - Schedule of Reconciliation Provision for Income Taxes (Parentheticals)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Schedule of Reconciliation Provision for Income Taxes [Abstract]
Tax at statutory rate	21.00%	21.00%

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NOTES PAYABLE (Details) - USD ($)		1 Months Ended	12 Months Ended
	Jul. 12, 2017	Mar. 31, 2022	Dec. 31, 2023	Dec. 31, 2022	Aug. 28, 2018	Dec. 31, 2015	Aug. 08, 2011
Notes Payable [Line Items]
Debt owed	$ 54,513
Convertible Notes Payable – Third Parties [Member]
Notes Payable [Line Items]
Bears annual interest			10.00%			10.00%
Accrued interest		$ 103,046
Convertible notes outstanding principal			$ 180,000
Convertible notes payable		$ 455,000	$ 140,000	$ 180,000
Annual interest rate			15.00%
Convertible price per share (in Dollars per share)		$ 0.05	$ 0.05			$ 0.2
Issued shares (in Shares)		8,419,547
Convertible Notes Payable – Third Parties [Member] | Director [Member]
Notes Payable [Line Items]
Convertible notes payable							$ 40,000
Convertible Note Payable Related Parties [Member]
Notes Payable [Line Items]
Bears annual interest			8.00%
Convertible notes payable			$ 114,514
Default interest rate			12.00%
Convertible notes			$ 104,000
Maturity date			Mar. 31, 2024
Convertible Note Payable Related Parties [Member] | Minimum [Member]
Notes Payable [Line Items]
Convertible price per share (in Dollars per share)			$ 0.07
Convertible Note Payable Related Parties [Member] | Maximum [Member]
Notes Payable [Line Items]
Convertible price per share (in Dollars per share)			$ 0.06
Convertible Note Payable Related Parties [Member] | Officer [Member]
Notes Payable [Line Items]
Promissory notes total amount					$ 125,000
Convertible Note Payable Related Parties [Member] | CEO [Member]
Notes Payable [Line Items]
Convertible notes outstanding principal			$ 164,257
Default interest rate			12.00%
Convertible Note Payable Related Parties [Member] | Chairman [Member]
Notes Payable [Line Items]
Convertible notes outstanding principal			$ 54,256
Convertible Notes [Member]
Notes Payable [Line Items]
Bears annual interest			8.00%
Demand Notes Third Parties [Member]
Notes Payable [Line Items]
Notes payable amount			$ 1,201,915	$ 766,391
Total capital amount			1,054,415
Equity amount			95,000
Empire fund			$ 45,000
Bears annual interest			10.00%
Non-interest bearing amount			$ 7,500
Accrued interest			$ 83,970
Restricted Common Stock [Member] | Convertible Notes Payable – Third Parties [Member]
Notes Payable [Line Items]
Issued shares (in Shares)		11,160,932

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CAPITAL STOCK (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 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 issued
Preferred stock outstanding
Common stock, shares authorized	200,000,000	200,000,000
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock issued	125,557,174	125,557,174
Restricted common stock, shares issued	11,160,932
Convertible notes payable (in Dollars)	$ 455,000
Accrued interest (in Dollars)	$ 103,046

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STOCK OPTION PLANS (Details) - USD ($)						1 Months Ended			12 Months Ended
	Dec. 31, 2020	Dec. 30, 2020	Dec. 31, 2017	Aug. 24, 2015	Dec. 31, 2005	Aug. 25, 2019	Aug. 25, 2015	Aug. 25, 2005	Dec. 31, 2023	Dec. 31, 2019	Dec. 31, 2022
Stock Option Plans [Line Items]
Premium percent									10.00%
Issuance of options for purchase of common shares				225,000
Exercise price of stock options granted (in Dollars per share)
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		1,900,000
2005 Stock Incentive Plan [Member]
Stock Option Plans [Line Items]
Effective term							10 years
Shares authorized									2,500,000
Employee Stock Options [Member]
Stock Option Plans [Line Items]
Options outstanding									1,900,000		1,900,000
Stock Options [Member]
Stock Option Plans [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 [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		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
Stock Options [Member] | Exercise Price Range One [Member] | 2005 Stock Incentive Plan [Member]
Stock Option Plans [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 [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 [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 [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 [Line Items]
Issuance of options for purchase of common shares				1,960,000
Stock Options [Member] | Employee Stock Options [Member]
Stock Option Plans [Line Items]
Stock-based compensation expense (in Dollars)										$ 0

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STOCK OPTION PLANS (Details) - Schedule of Stock Option Activity - USD ($)		12 Months Ended
	Dec. 31, 2022	Dec. 31, 2023
Schedule of Stock Option Activity [Abstract]
Shares, Outstanding at the ending of period	1,900,000	1,900,000
Weighted Average Exercise Price, Outstanding at the ending of period	$ 0.05	$ 0.05
Weighted Average Remaining Contractual Life (Years), Outstanding at the ending of period	2 years 7 months 24 days	1 year 7 months 24 days
Aggregate Intrinsic Value, Outstanding at the ending of period
Shares, Exercisable at the end of Period		1,900,000
Weighted Average Exercise Price, Exercisable at the end of Period		$ 0.05
Weighted Average Remaining Contractual Life (Years), Exercisable at the end of Period		1 year 7 months 24 days
Aggregate Intrinsic Value, Exercisable at the end of Period
Shares, Granted
Weighted Average Exercise Price, Granted
Weighted Average Remaining Contractual Life (Years), Granted
Aggregate Intrinsic Value, Granted
Shares, Expired
Weighted Average Exercise Price, Expired
Weighted Average Remaining Contractual Life (Years), Expired
Aggregate Intrinsic Value, Expired
Shares, Forfeited
Weighted Average Exercise Price, Forfeited
Weighted Average Remaining Contractual Life (Years), Forfeited
Aggregate Intrinsic Value, Forfeited

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COMMITMENTS AND CONTINGENCIES (Details)	Dec. 31, 2023 USD ($) m²
Commitments And Contingencies [Abstract]
Area of office and manufacturing space | ft² | m²	8,029
Lease, monthly payment | $	$ 6,787

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COMMITMENTS AND CONTINGENCIES (Details) - Schedule of Minimum Payments Under the Lease for the Current Term and Assuming the Lease Renewal - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Schedule of Minimum Payments Under the Lease for the Current Term and Assuming the Lease Renewal [Abstract]
2024	$ 83,103
2025	85,596
2026	88,164
2027	59,948
Total payments	316,811
Imputed interest	(53,347)
Lease liability as of period end	263,464
Short-term lease liability	(59,404)	$ (57,679)
Lease liability – long term	$ 204,060	$ 198,064

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COMMITMENTS AND CONTINGENCIES (Details) - Schedule of Lease Expense on a Straight-Line Basis	12 Months Ended
	Dec. 31, 2023 USD ($)
Schedule of Lease Expense on a Straight-Line Basis [Line Items]
Lease expense	$ 81,722

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COMMITMENTS AND CONTINGENCIES (Details) - Schedule of Remaining Lease Term and Incremental Borrowing Rates	Dec. 31, 2023
Schedule of Remaining Lease Term and Incremental Borrowing Rates [Line Items]
Weighted average remaining lease term	3 years 8 months 1 day
Weighted average discount rate	5.00%

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RELATED PARTY TRANSACTIONS (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Related Party Transactions [Line Items]
Total balance amount	$ 104,000
Convertible notes bearing annual rate	8.00%
Default rate	12.00%
Common stock at the rate per share (in Dollars per share)	$ 0.06
Chief Executive Officer [Member]
Related Party Transactions [Line Items]
Related party convertible notes outstanding	$ 164,257	$ 54,257
Convertible notes bearing annual rate	8.00%
Default rate	12.00%
Common stock at the rate per share (in Dollars per share)	$ 0.07
Convertible Note Payable Related Parties [Member]
Related Party Transactions [Line Items]
Maturity date	Mar. 31, 2024
Related Party [Member]
Related Party Transactions [Line Items]
Accounts payable	$ 62,717	$ 44,713
Operating expenses	4,000
Total balance amount	$ 114,514

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SUBSEQUENT EVENTS (Details)	Dec. 31, 2023 USD ($)
Investor [Member]
Subsequent Events [Line Items]
Convertible notes	$ 90,524