UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM
10-Q  [X] QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For quarterly period ended March 31,
2009  [
  ] TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period from _____
to _____  Commission file number: No. 0-24368  FLEXPOINT SENSOR SYSTEMS, INC. (Exact name of registrant as specified in
its charter)  Delaware
87-0620425(State
of incorporation)
(I.R.S.
 Employer Identification No.)  106 West Business Park Drive, Draper,
Utah  84020 (Address of principal executive offices)  801-568-5111 (Registrants telephone number)  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 and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or
for such shorter period that the registrant was required to submit and post such
files).  Yes [  ]   No [  ]  Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.:  Large accelerated filer  [   ]
Accelerated filer
                  [
  ]Non-accelerated filer    [
  ]
Smaller reporting company
 [X]  Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act. Yes [   ]     No [X]  The number of shares outstanding of the registrants
common stock was 24,792,887 as of May 14, 2009.    1    TABLE OF CONTENTS  PART I: FINANCIAL INFORMATION  Item 1.  Financial Statements  Condensed
Consolidated Balance Sheets (Unaudited) at March 31, 2009 and December
31, 2008 3  Condensed
Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2009 and 2008 and for the
Cumulative Period from February 24, 2004 (Date
of Emergence from Bankruptcy) through March 31, 2009 4  Condensed
Consolidated Statements of Cash Flows (Unaudited) for the Three Months
Ended March 31, 2009 and 2008 and for the Cumulative Period from February
24, 2004 (Date of Emergence from Bankruptcy) through March 31, 2009 5  Notes
to Condensed Consolidated Financial Statements (Unaudited) 6  Item 2.
Managements Discussion and Analysis of Financial Condition and Results of
Operations 10  Item 3.
Quantitative and Qualitative Disclosures About Market Risk 15  Item 4T.
Controls and Procedures 15   PART II: OTHER INFORMATION  Item 1.
 Legal Proceedings 15  Item 1A.
 Risk Factors 15  Item 6.
 Exhibits 17  Signatures 18   PART I - FINANCIAL INFORMATION  ITEM 1.  FINANCIAL STATEMENTS The financial information set
forth below with respect to our condensed consolidated financial position as of
March 31, 2009, the condensed consolidated statements of operations for the
three  month periods ended March 31, 2009 and 2008, and condensed
consolidated statements of cash flows for the three month periods ended March
31, 2009 and 2008 is unaudited.  This financial information, in the opinion
of management, includes all adjustments consisting of normal recurring entries
necessary for the fair presentation of such data.  The results of
operations for the three month period ended March 31, 2009, are not necessarily
indicative of results to be expected for any subsequent period.  2     FLEXPOINT SENSOR SYSTEMS, INC. AND
SUBSIDIARIES(A Development Stage
Company)CONDENSED CONSOLIDATED BALANCE
SHEETS(UNAUDITED)March 31,

December 31,2009

2008ASSETSCurrent
AssetsCash and cash
equivalents
$
31,128
$
178,158Accounts
receivable

34,464

32,551Inventory

8,822

10,016Deposits and
prepaid expenses

30,572

30,717Total
Current Assets

104,986

251,442Long-Term
Deposits

6,500

6,500Property and
Equipment,net of accumulated depreciationof
$60,266 and $29,984

532,425

560,161Patents and
Proprietary Technology,net of accumulatedamortization
of $63,496 and $31,748

897,488

929,237Goodwill

5,356,414

5,356,414Total
Assets
$
6,897,813
$
7,103,754LIABILITIES
AND STOCKHOLDERS' EQUITYCurrent
LiabilitiesAccounts
payable
$
51,172
$
34,072Accrued
liabilities

237,105

159,196Convertible
note payable, net of discount of $11,544 and $0

10,656

-Convertible
notes payable to related party, net of discount of

312,000

250,000$38,000
and $50,000Total
Current Liabilities

610,933

443,268Stockholders'
EquityPreferred stock
 $0.001 par value; 1,000,000 shares authorized;no
shares issued or outstanding

-

-Common stock 
$0.001 par value; 100,000,000 shares authorized;24,792,887
shares issued and outstanding each period

24,792

24,792Additional
paid-in capital

17,881,037

17,851,493Warrants and
options outstanding

2,070,624

2,037,214Deficit
accumulated during the development stage

(13,689,573)

(13,253,013)Total
Stockholders' Equity

6,286,880

6,660,486Total
Liabilities and Stockholders' Equity
$
6,897,813
$
7,103,754   The
accompanying notes are an integral part of these consolidated financial
statements.    3     FLEXPOINT SENSOR SYSTEMS, INC. AND
SUBSIDIARIES(A Development Stage
Company)CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(UNAUDITED)For theCumulativePeriod fromFebruary 242004 (Date ofEmergenceFromBankruptcy)For the Three Months

ThroughEnded March 31,

March 31,2009

2008

2009Design,
Contract and Testing Revenue
$
26,603
$
12,733
$
693,765Operating
Costs and ExpensesAmortization of
patents and proprietary technology

31,748

35,091

739,372Cost of
revenue

7,962

3,099

134,839Administrative
and marketing expense

277,247

388,394

9,485,463Research and
development expense

108,618

109,954

2,064,660Impairment of
long-term assets

-

-

546,562Total
Operating Costs and Expenses

425,575

536,538

12,970,896Other Income
and (Expenses)Interest
expense

(37,766)

-

(1,627,106)Interest
income

178

5,395

131,578Sublease rent
income

-

-

11,340Other income

-

-

478Gain on
forgiveness of debt

-

-

71,268Net Other
Income (Expense)

(37,588)

5,395

(1,412,442)Net
Loss
$
(436,560)
$
(518,410)
$
(13,689,573)Basic and
Diluted Loss Per Common Share
$
(0.02)
$
(0.02)Basic and
Diluted Weighted-AverageCommon
Shares Outstanding

24,792,887

24,792,887  The
accompanying notes are an integral part of these consolidated financial
statements.    4     FLEXPOINT SENSOR SYSTEMS, INC. AND
SUBSIDIARIES(A Development Stage
Company)CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS(UNADUDITED)For theCumulativePeriod fromFebruary 24,2004 (Date ofEmergenceFromBankruptcy)For the Three Months

ThroughEnded March 31,

March 31,2009

2008

2009Cash Flows from Operating Activities:Net loss



$
(436,560)
$
(518,410)
$
(13,689,573)Adjustments to reconcile net loss to net cash used
inoperating activities:Depreciation



30,282

38,057

703,596Amortization of patents and proprietary
technology
31,748

35,091

739,372Impairment of long-lived assets


-

-

546,562Issuance of common stock and warrants for
services
-

-

2,695,053Expenses paid by increase in convertible note
payable
-

-

60,000Amortization of discount on note payable

-

-

1,556,666Stock-based compensation expense for
employees
33,410

115,193

1,677,076Non-cash interest expense on convertible notes
payable
30,000

-

40,000Changes in operating assets and liabilities:Accounts receivable



(1,913)

(8,943)

(34,464)Inventory




1,194

-

(8,822)Deposits and prepaid expenses


145

(28,560)

(37,072)Accounts payable



39,301

6,669

(134,733)Accrued liabilities



77,909

77,425

234,613Deferred revenue



-

50,000

(343,750)Net Cash Used in Operating Activities

(194,484)

(233,478)

(5,995,476)Cash Flows from Investing Activities:Payments for the purchase of equipment

(2,546)

-

(200,120)Payments for patents



-

-

(45,868)Payment for acquisition of equipment and
proprietarytechnology from Flexpoint Holdings, LLC

-

-

(265,000)Net Cash Used in Investing Activities


(2,546)

-

(510,988)Cash Flows from Financing Activities:Net proceeds from issuance of common stock and
warrants
-

-

5,617,207Principal payments on notes payable - related
parties
-

-

(460,300)Proceeds from notes payable - related
parties

-

-

445,300Proceeds from borrowings under convertible note
payable
50,000

-

933,334Net Cash Provided by Financing
Activities

50,000

-

6,535,541Net Change in Cash and Cash
Equivalents

(147,030)

(233,478)

29,077Cash and Cash Equivalents at Beginning of
Period
178,158

1,058,135

2,051Cash and Cash Equivalents at End of
Period
$
31,128
$
824,657
$
31,128Supplemental Cash Flow Information:Cash paid for interest


$
-
$
-
$
16,995Noncash investing and financing activities:Accounts payable
converted to note payable
$
22,200
$
-
$
-    The
accompanying notes are an integral part of these consolidated financial
statements.   5


FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES (A Development Stage Company) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)   NOTE
1SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Condensed
Interim Financial Statements The accompanying unaudited condensed
consolidated financial statements include the accounts of Flexpoint Sensor
Systems, Inc. and its subsidiaries (the Company).  These financial
statements are condensed and, therefore, do not include all disclosures normally
required by accounting principles generally accepted in the United States of
America. These statements should be read in conjunction with the most recent
annual consolidated financial statements of Flexpoint Sensor Systems, Inc. and
subsidiaries for the year ended December 31, 2008, included in the Companys
Form 10-K filed with the Securities and Exchange Commission on March 30, 2009.
In particular, the Companys significant accounting principles were presented as
Note 1 to the Consolidated Financial Statements in that report.  In the
opinion of management, all adjustments necessary for a fair presentation have
been included in the accompanying condensed consolidated financial statements
and consist of only normal recurring adjustments. The results of operations
presented in the accompanying condensed consolidated financial statements are
not necessarily indicative of the results that may be expected for the full year
ending December 31, 2009.  Nature of
Operations The Company is located near Salt Lake City, in Draper, Utah
and is a development stage company engaged principally in designing,
engineering, and manufacturing sensor technology and equipment using Bend
Sensors® flexible potentiometer technology. The Company is in the
development stage as planned production and revenue generation have not
commenced.  Development stage activities primarily include acquiring
equipment and technology, organizing activities, obtaining financing, and
seeking manufacturing contracts. During the third quarter 2008, the Company
entered into new manufacturing agreements which are described in Note 3.
 Even though the Company is making strides forward with its business plan,
it is likely that significant progress may not occur within the next six months.
 Accordingly, the Company may not realize significant revenues or become
profitable within the next twelve months, which would require additional
financing to fund its current cash needs. 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. The Company may be required to rely on debt financing, loans
from related parties, and private placements of common stock for additional
funding.  These sources of financing may only be available on terms not
acceptable to the Company.  Accounts
Receivable Trade accounts receivable are recorded at the time product
is shipped or services are provided including any shipping and handling fees.
Due to the limited amount of transactions collectability of the trade
receivables are reasonably assured, therefore the Company has not created an
allowance for doubtful accounts. Contracts associated with design and
development engineering requires 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. As the
Companys revenues and customer base increase, an allowance policy will be
established.  Inventories
Inventories are stated at the lower of cost or market. Cost is
determined by using the first in, first out (FIFO) method.  Inventories
consist of raw materials at March 31, 2009  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.  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


6


FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES (A Development Stage Company) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)   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.
 The Companys analysis did not indicate any impairment of assets as of
March 31, 2009.  Research
and Development Research and development costs are recognized as an
expense during the period incurred 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 or when a
triggering event occurs using a fair value approach. A fair-value-based test is
applied at the overall Company level. The test compares the fair value of the
Company to the carrying value of its net assets. This test requires various
judgments and estimates. The fair value of the Company is determined using the
market value of the Companys common stock. 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.  Stock-Based
Compensation  The Company records stock-based compensation according to
the provisions of FASB Statement No. 123 (Revised 2004), Share-Based Payment.
 As such, the Company recognizes expense for employee compensation from
stock options and awards equal to the grant-date fair value over the vesting
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 of common shares
outstanding during the period.  At March 31, 2009, there were outstanding
options and warrants to purchase 1,432,000 shares of common stock.  At
March 31, 2008, there were outstanding options and warrants to purchase
1,957,000 shares of common stock.  These options and warrants 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. NOTE
2 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 will continue in effect for ten years, unless terminated.
 This plan was approved by the stockholders of the Company 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
utilized the Black-Scholes option-pricing model for calculating the fair value
for financial reporting purposes under SFAS No. 123R.  This model requires
the input of subjective assumptions, including the expected price volatility of
the underlying stock.  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.  .


7


FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES (A Development Stage Company) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)    During the three
month periods ended March 31, 2009 and 2008, the Company recognized $33,410 and
$115,193 of stock-based compensation expense, respectively. There were 1,432,000
employee stock options outstanding at March 31, 2009.  A summary of all
employee options outstanding and exercisable under the plan as of March 31,
2009, and changes during the three months then ended is set forth below:  Options
Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
ValueOutstanding
at the beginning of period
1,432,000
$
            1.61
6.68
$
               -Grant
-
-
-Expired
-
-
-Forfeited
-
-
-Outstanding
at end of Year
1,432,000
$
           1.61
6.43Excercisable
at the end of Year
1,217,000
$
           1.75
6.30
$    
           -   As of March 31,
2009, there was approximately $62,370 of unrecognized compensation cost related
to employee stock options that will be recognized over a weighted average period
of approximately 1.49 years.  NOTE 3 
RELATED PARTY MANUFACTURING CONTRACT  In September 2005
the Company entered into a manufacturing agreement with R&D Products, LLC, a
Utah limited liability company, doing business in Midvale, Utah.  For the
purpose of this contract, management considers R&D Products to be a related
party because a controlling member of R&D Products, LLC is also a
non-controlling shareholder of Flexpoint Sensor Systems, Inc.  R&D
Products has developed a mattress with multiple air chambers that uses the
Companys Bend Sensors® and the Company has agreed to manufacture the
Bend Sensors® for R&Ds specific mattress use.  The initial
order is for 30,000 Bend Sensors® to be used to begin manufacture of
1,000 mattresses.  During 2007 and 2008 R&D Products deposited with
Flexpoint the sum of $100,000 to begin work on the initial production order of
20 commercial beds.  However, the realization of the manufacture and sales
of the Bend Sensors® under the Manufacturing Contract is dependent upon R&D
Products selling either their bed technology directly or licensing their
technology to a third party.  On September 11,
2008 R&D Products, LLC entered into a long-term Licensing Agreement for
their bed technology with a major medical solutions provider (Licensee). The
Agreement provides the Licensee the exclusive worldwide rights to R&Ds
patented bed technology. On that same day the Company, R&D Products and the
Licensee entered into a long-term joint manufacturing agreement for R&Ds
bed technology and related products. The manufacturing agreement allows for the
Company to manufacture sensors for the bed technology and related products
through 2018 with an option to renew each year thereafter. Ramp up and
production schedules with specific quantities and deadlines are still being
negotiated.


8


FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES (A Development Stage Company) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)   NOTE 4 
CONVERTIBLE NOTES PAYABLE  During the three
months ended March 31, 2009 the Company secured $72,200 of short-term financing
from related parties. The notes are for $50,000 and $22,200, respectively. The
proceeds were used for operations and to finance our annual directors and
officers insurance. The $50,000 note is due and payable on September 30, 2009
and the $22,200 note is due and payable on March 31, 2010; both have an annual
interest rate of 10%. The notes are secured by the Companys business equipment.
The notes also have a conversion feature for restricted common shares at $.25
per share. Due to the difference of the market price of the common stock
associated with the conversion features of the notes and the conversion price,
resulting in a beneficial conversion feature of $29,544, which was recognized as
a debt discount and an increase to additional paid-in capital. The calculation
for the intrinsic value of the beneficial conversion feature was the
difference between the conversion price of the common stock and the market value
on the date the notes were executed multiplied by the number of shares into
which the notes may be converted. The debt discount will be amortized from the
date the notes were executed through September 30, 2009 and March 31, 2010,
respectively.  As of March 31, 2009, there was no amortization of the
discount on these notes.  NOTE 5  SUBSEQUENT EVENTS  On April 1, 2009
the Company renegotiated its facilities lease reducing monthly rent and common
area maintenance from approximately $8,900 to $7,950 and increasing the length
of the lease term from September 2009 to December 31, 2011. This amount
increases to $8,450 during the final year of the lease ending December 31, 2011.  On April 6, 2009
the Company secured $150,000 in additional operating capital through the
issuance of notes with identical conversion features, terms and conditions as
those secured during the three months ended March 31, 2009.  On May 1, 2009
the Company settled its patent infringement suit against Michael W. Wallace,
d/b/a Pure Imagination, and is currently seeking court approval of the
settlement and dismissal of the legal action.


9


In this quarterly report references to the
Company, we, us, and our refer to Flexpoint Sensor Systems, Inc. and itssubsidiaries.  FORWARD LOOKING STATEMENTS  The 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.  ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS  EXECUTIVE OVERVIEW  Flexpoint Sensor Systems, Inc. is a development stage
company engaged principally in acquiring equipment and technology, obtaining
financing and seeking manufacturing contracts.  Our planned operations have
not commenced to a commercial level and include designing, engineering and
manufacturing and selling sensor technology and equipment featuring our Bend
Sensor® technology and equipment.  We emerged from Chapter 11 bankruptcy on February 24,
2004 and since that time we have leased a manufacturing facility, purchased
necessary equipment to establish a production line, negotiated contracts,
manufactured and enhance Bend Sensor® technology devices and conducted testing
on those devices.  Our goal is to qualify our production line and facility
as an ISO/TS 16949 production line and facility at a time that production
contracts will require it.  This qualification will increase the
marketability of our products to automotive parts suppliers.  The Company has negotiated the following contracts, which
management believes may produce revenues within the next twelve to eighteen
months:  In September 2007 the Company entered into an agreement
with Intertek Industrial Corp. on an automotive seat monitoring device
application for emergency response vehicles.  This monitoring device places
the Companys Bend Sensors® in each rear passenger seat with a
monitor viewable to the vehicles driver.  The foolproof system informs the
driver if the emergency medical technicians are seated and properly secured
prior to departure and while the vehicle is in motion.  Revenue from the
development fees and the initial purchase order were approximately $30,000 in
2008. During the first quarter of 2009 Intertek issued a second purchase order
for over $10,000, and has initiated discussions with other seat manufactures for
additional applications of their technology. The Company believes that through
its relationship with Intertek we will further validate our technology in the
automotive and safety industries. Through this validation the Company
anticipates additional projects with Intertek using the Bend
Sensors®.  In March 2008 the Company entered into a basic Agreement
with Auto Electronic Corporation (AEC) to mutually develop, manufacture,
market, and sell automotive products utilizing Bend Sensor® technology. Since
March 2008 we have completed advanced testing on four various designs of a
Seat-Belt-Reminder (SBR) with AEC and signed a joint development agreement with
them prior to December 31, 2008. We are awaiting AECs final test result to
determine final design specifications and manufacturing requirements for the
SBR. We anticipate that the SBR will be one of many automobile applications that
AEC will integrate using the Bend Sensor® technology. AEC, a South Korean auto
parts supplier, has a strong relationship with Hyundai-Kia Motors, as well as
other Tier 1 automotive suppliers and manufacturers.  AEC intends to
promote new and innovative applications to automotive manufacturers and parts
suppliers including Hyundai-Kia, the sixth largest auto manufacturer in the
world.  In addition, under the agreement AEC and Flexpoint will
cooperatively work toward development of other applications utilizing the Bend
Sensor® technology for which the company sees a market. Management believes that
the automotive sector offers the greatest potential for acquiring large,
long-term contracts, but because of the length of time required to


10


successfully market and develop products for automotive
use, the realization of income takes longer in this sector, with substantial
income coming as much as three to five years after agreements have been
successfully negotiated.  On September 11, 2008 the Company entered into a Joint
Manufacturing Agreement with R&D Products, LLC, a Midvale, Utah company and
R&Ds Licensee of its patented bed technology.  The Licensee is one of
the worlds leading medical mattress providers. The Company agreed to sell Bend
Sensors® to be used in the manufacture and development of R&Ds mattress and
related products on a commercial scale. The mattress and related products will
be distributed, sold and marketed through the Licensees current world-wide
distribution channels. Ramp up and production schedules with specific quantities
and deadlines are currently being negotiated. It is anticipated that sensors
sold for the mattress and related products will begin to generate revenue by the
fourth quarter 2009 and has the potential for significant revenues over the 10
year manufacturing agreement.  Finalizing additional long-term revenue generating
production contracts with 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, it is likely that significant progress may not
occur for the next six to eight months.  Accordingly, we cannot guarantee
that we will realize significant revenues or that we will become profitable
during 2009.  The widespread credit crisis has reduced consumer
purchasing power and resulted in an overall down turn in consumer confidence.
These factors have contributed to lower consumer spending and investments by
companies and have resulted in a world wide slowing of the global economy. While
all sectors of the economy are experiencing difficult times, the automotive
industry is particularly challenged. Worldwide automakers are seeing double
digit declines in profits. This trend is expected to continue through 2009 and
not only affect the automobile manufacturer but also the Tier 1 and after market
suppliers.  Because the Company has concentrated most of its
marketing efforts on the automotive industry and with the downturn in this
industry and the economy as a whole we might experience further delays in
securing additional long-term production contracts. However, the economic down
turn might also be to our advantage. Our Bend Sensor® is lighter in
weight, has fewer moving parts than conventional sensing devises, is more
versatile and due to its unique design is more cost effective. Product and
design changes in the automotive industry are slow, averaging two to three years
before actually being incorporated into a commercially viable automotive
platform. Because we are not currently under production in an auto application,
we believe we are poised to provide the next generation of sensing devises to
the industry. With the likelihood of higher fuel and manufacturing costs, the
auto industry will be looking to develop more fuel-efficient and
alternative-fuel type (green) vehicles that will need to be lighter in weight,
less complicated in design, and more cost effective to run and build. Due to the
advanced technology of the Bend Sensor® and its versatility of
applications we believe we can be a part of the changes needed in the
automotive, energy and technological industries.  LIQUIDITY AND CAPITAL RESOURCES  Our revenue is primarily from design, contract, testing
and limited production services and is not to a level to support our operations.
 Management anticipates that we may not realize significant revenue within
the next eight to twelve months.  For the past twelve months we have relied
on proceeds from private placements and loans from related parties. We completed
a private placement in June and September of 2007 to satisfy most of our cash
requirements through December 31, 2008.  In these private placements we
issued an aggregate of 1,500,000 shares of common stock at a price of $1.00 per
share.  We realized net proceeds of $1,500,000 from the private placements
that we have used to fund continuing operations and business development.
 In November 2008 we secured $300,000 of short-term financing from related
parties. The notes are due and payable on May 31, 2009 with an annual interest
rate of 10%.  They also have a conversion option for restricted common
shares at $.25 per share.  The same related parties have agreed to fund up
to an additional $800,000 if needed under similar terms. To date we have used
the funds generated from these private placements and notes to fund continuing
operations and business development.


11


Due to additional cost cutting measures management
believes that our current cash burn rate is approximately $75,000 per month and
that the remaining proceeds from the private placement, notes and our
engineering and design fees will fund our operations for at least the next two
months. We are currently in negotiations with existing shareholders for
additional convertible debt financing that will provide sufficient funds for the
next six to eight months. We believe that this additional financing will provide
the needed capital to extend operations to the development of production with
R&D Products, LLC and their Licensee on the medical mattress project. At
that time the Licensee will be providing some needed cash flow through the
development stage of the agreement.  If necessary we may rely on additional
debt financing, loans from related parties and private placements of common
stock for additional funding.  However, we cannot assure you that we will
be able to obtain financing, or that sources of financing, if any, will continue
to be available, and if available, that they will be on terms favorable to us.  As we enter into new technology agreements in the future,
we must ensure that those agreements provide adequate funding for any
pre-production research and development and manufacturing costs.  As 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 royalties related to these agreements. However, we have
formalized only a few agreements during the past year and there can be no
assurance that agreements will come to fruition in the future or that a desired
technological application can be brought to market on a commercially viable
basis.  FINANCIAL OBLIGATIONS AND CONTINGENT LIABILITIES  Our principal commitments at March 31, 2009 consist of
our operating lease and total current liabilities of $610,933 which includes
$322,656 short-term notes payable to related parties, net of $49,544 discount.
Our operating lease for the facilities we occupy was scheduled to end on
September 30, 2009. On April 1, 2009 we renegotiated the lease reducing our
monthly obligation by about $1,000 and extending the term through December 31,
2011. Under the new terms of the operating lease the average monthly payments
are $7,950, including common area maintenance through December 31, 2010. This
amount increases to $8,450 during the final year of the lease ending December
31, 2011.   The total future minimum payments under this lease as of
April 1, 2009 were $268,350.  Our total current liabilities include accounts payable of
$51,172 related to normal operating expenses, including health insurance,
utilities, production supplies, travel expense, and expenses for professional
fees.  Accrued liabilities at March 31, 2009, were $237,105 and were
related to payroll, payroll tax liabilities, accrued professional expenses,
accrued lease expense and accrued paid time off.  In January 2006 we initiated a legal action for patent
encroachment and we anticipated that this legal action would result in legal
costs of approximately $100,000; however, the cost of this action has been
higher than anticipated and we now estimate that this legal action will result
in legal costs of approximately $260,000.  Management believes it is
critical to protect our patents and will divert a portion of our financial
resources to continue this legal matter.  Based upon the cost to-date, and the open-ended nature of
the legal and court cost of the litigation management felt it was in the best
interest of the Company to settle the above referenced litigation. Subsequent to
the date of the financial statements we have negotiated a settlement agreement
on the legal action and patent encroachment, and is currently seeking court
approval of the settlement and dismissal of the legal action  OFF-BALANCE SHEET ARRANGEMENTS  None.  CRITICAL ACCOUNTING 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 consolidated financial statements and accompanying notes.
 Estimates of particular significance in our financial statements include
goodwill and the annual tests for impairment of goodwill and long-lived assets
and valuing stock option compensation.  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 amount of
impairment is measured using


12


a discounted-cash-flows model considering future
revenues, operating costs and risk-adjusted discount rate and other factors.
 The long-lived asset impairment test conducted at December 31, 2007 and
2008 identified a loss of $299,798 and $246,764 respectively, and these
additional expenses were recognized accordingly. 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.  The
result of the valuation analysis showed an impairment of long-lived assets, as
their carrying values exceeded the present value of the discounted projected
revenues.  Under similar analysis no impairment charge was taken during the
three months ending March 31, 2009.  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 No. 123(R), effective January 1, 2006.  Statement
123(R) 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 three month periods ended March 31, 2009 and 2008
we recognized $33,410 and $115,193, respectively, of stock-based compensation
expense for our stock options and there was approximately $62,370 of
unrecognized compensation cost related to employee stock options that will be
recognized over approximately 1.49 years.  RESULTS OF OPERATIONS  The following discussions are based on the consolidated
operations of Flexpoint Sensor Systems, Inc. and its subsidiaries and
should be read in conjunction with our unaudited financial statements for the
three month periods ended March 31, 2009 and 2008, included in Part I, Item 1,
above and the audited financial statements included in the Companies annual
filing 10-K for the years ended December 31, 2008 and 2007 respectively.  Three month period ended

Twelve month period endedMar 31, 2009

Mar 31, 2008

Dec 31, 2008

Dec 31, 2007Design, contract and testing revenue
$  
       26,603

$   
      12,733

$   
    175,858

$      
   31,495Total operating costs and expenses
(425,575)

(536,538)

(2,173,225)

(2,515,837)Net other income


(37,588)

5,395

(3,595)

25,873Net loss



(436,560)

(518,410)

(2,000,962)

(2,458,469)Basic and diluted loss per common share
$     
     (0.02)

$  
        (0.02)

$   
       (0.08)

$  
         (0.10)  Revenue for the 2009 and 2008 interim periods was from
design, contract and limited production.  Revenue for the 2008 and 2007
years was primarily from design & development engineering, prototype
products, sample products and testing services. Revenue from research and
development engineering contracts is recognized as the services are provided and
accepted by the customer.  Revenue from contracts to license technology to
others is deferred until all conditions under the contract are met and then the
sale is recognized as licensing royalty revenue over the remaining term of the
contract. Revenue from the sale of a product is recorded at the time of shipment
to the customer.  Of the $425,575 and $536,538 total operating costs and
expenses for the three month interim periods respectively, $108,618 and $109,954
were for direct research and development cost.  Of the $2,173,225 and
$2,515,837, $246,764 and 299,798, respectively, were related to the December 31,
2008 and 2007 impairment of long-lived assets. The adjustments were made based
upon the revised estimated discounted cash flow projection over a 36 month
period.  Based upon the analysis the carrying values of property and
equipment were written down by $94,551 and $118,283, respectively and our
intangible asset carrying values were written down by $152,213 and $181,515,
respectively.


13


The increase in revenue for the three month interim
period ended March 31, 2009 compared to the three month period ended March 31,
2008 resulted from increased revenue for production and sample sensors related
to existing customers and contracts. The revenue increase from December 31, 2007
compared to December 31, 2008 was primarily due to the increase of shipping
sample and prototype products to existing customers. Although revenues continue
to increase, they are not sufficient to sustain our operations and management
does not anticipate that revenues will significantly increase until we are in a
full production phase of a long-term licensing or manufacturing contract.  Total operating expenses decreased by $110,963 for the
2009 three month period when compared to the same period in 2008. Most of the
decrease is due to lower stock based compensation expense to employees.
 Total operating expense decreased by $342,612 for the twelve month period
ending December 31, 2008 compared to the same period in 2007. The decrease was
due to lower impairment charges, lower depreciation expense, lower stock based
compensation expense and lower trade show and related expenses.  The decrease in net other income for the three months
ending March 31, 2009 compared to the same period in 2008 is primarily due to
the accrued interest and amortization of the discount associated with the
related party notes. The decrease in net other income for the twelve months
ending December 31, 2008 and 2007, respectively, was primarily the result of
lower interest income from the proceeds of the private placement offering, which
were deposited in a savings account.  The lower interest income results
from lower amounts on deposit.  Due to minimal revenues and overall operating costs and
expenses, we recorded a net loss and loss per share for both the 2009 and 2008
periods.  Management expects losses to continue in the short term.  The chart below presents a summary of our consolidated
balance sheets at March 31, 2009 and December 31, 2008.  SUMMARY OF BALANCE SHEET
INFORMATIONMarch 31, 2009

December 31, 2008Cash and cash equivalents


$
      
             31,128

$      
            178,158Total current assets



104,986

251,442Total assets



6,897,813

7,103,754Total current liabilities



610,933

443,268Deficit accumulated during the development
stage
(13,689,573)

(13,253,013)Total stockholders' equity


$      
         6,286,880

$     
          6,660,486  Cash and cash equivalents decreased by $147,030 at March
31, 2009 compared to December 31, 2008 because we had minimal revenue in the
three month period to provide cash.  The entire decrease in cash resulted
from funds used for operating activities.  Until our revenue increases, our
cash will continue to decrease.  Our non-current assets decreased at March 31, 2009 due to
the depreciation and amortization of long-lived assets. These assets include
property and equipment valued at $532,425 net of depreciation, patents and
proprietary technology of $897,488 net of amortization, goodwill of $5,356,414,
and long-term deposits of $6,500 associated with the facility operating lease.  Total current liabilities increased by $167,665 at March
31, 2009, which was the result of increases in accrued liabilities and a net
increase in short-term convertible notes payable of $72,656.  INFLATION  We do not expect the impact of inflation on our
operations to be significant for the next twelve months.


14


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK  Not applicable.  ITEM 4T.  CONTROLS AND PROCEDURES  (a) Disclosure
Controls and Procedures  As of the end of the period covered by this Quarterly
Report, we carried out an evaluation, under the supervision and with the
participation of our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures.  Based upon this evaluation, our Chief Executive Officer and
Chief Financial  Officer concluded that information required to be
disclosed is recorded, processed, summarized and reported within the specified
periods, and is accumulated and communicated to management, including our Chief
Executive Officer and Chief Financial Officer, to allow for timely decisions
regarding required disclosure of material information required to be included in
our periodic Securities and Exchange Commission reports.  Our disclosure
controls and procedures are designed to provide reasonable assurance of
achieving their objectives and our Chief Executive Officer and Chief Financial
Officer have concluded that our disclosure controls and procedures are effective
to a reasonable assurance level of achieving such objectives.  However, it
should be noted that the design of any system of controls is based in part upon
certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote.  (b) Managements 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). Management reviewed our internal
controls over financial reporting, and there have been no changes in our
internal controls over financial reporting for the first quarter ended March 31,
2009 that have materially affected, or are likely to affect, our internal
controls over financial reporting.  PART II - OTHER INFORMATION  ITEM 1.  LEGAL PROCEEDINGS  On January 20, 2006, Sensitron, Inc. filed a complaint in
the United States District Court for the District of Utah, Central Division,
against Michael W. Wallace, d/b/a Pure Imagination, seeking patent rights for a
patent and patent application that Mr. Wallace filed with the United State
Trademark and Patent Office.  Mr. Wallace assisted Sensitron with the
development of certain software to be used in combination with our Bend
Sensor® technology related to the SEAT MAT system. The complaint
alleged that Mr. Wallace failed to deliver the source code to Sensitron and
failed to list our employees and previous employees as co-inventors on the
patent he obtained and for his pending application for a patent.  Sensitron
sought a copy of the source code and ownership of the patent and/or correction
of the patent and patent application to add the appropriate co-inventors.
 In April 2009 we negotiated a settlement agreement on the legal action and
patent encroachment, and are currently seeking court approval of the settlement
and dismissal of the legal action.  ITEM 1A.  RISK FACTORS  We have a history of losses and may never become
profitable.  We are unable to fund our day-to-day operations from
revenues and the lack of revenues for continued growth may cause us to delay our
business development.  For the 2009 three month period we had negative cash
flows from operating activities of $194,484.  We will require additional
financing to fund our long-term cash needs and we may be required to rely on
debt financing, loans from related parties, and private placements of our common
stock for that additional funding. Such funding sources may not be available or
the terms of such funding sources may not be acceptable to the company. If the
Company is unable to find such funding it could have a material adverse effect
on our ability to continue as a going concern.


15


We may not have adequate resources to successfully
manage anticipated growth.  We may not be equipped to successfully manage any
possible future periods of rapid growth or expansion, which could be expected to
place a significant strain on our managerial, operating, financial and other
resources.  Our future performance will depend, in part, on our ability to
manage growth effectively, which will require us to:  · improve existing, and implement new,
financial controls and systems, management information systems, operating,
administrative, financial and accounting systems and controls, · maintain close coordination between
engineering, programming, accounting, finance, marketing, sales and operations,
and · attract and retain additional
qualified technical and marketing personnel.  There is intense competition for management, technical
and marketing personnel in our business.  The loss of the services of any
of our key employees or our failure to attract and retain additional key
employees could have a material adverse effect on our ability to continue as a
going concern.  We may not have adequate manufacturing capacity to
meet anticipated manufacturing contracts.  Based on projected business development, we will need to
complete a second production line and have it installed and approved during
2011.  The second manufacturing line is expected as a result of anticipated
increased manufacturing demand and improved manufacturing efficiencies.  We
have completed installation of our first production line and anticipate
qualifying our manufacturing facility for ISO/TS-16949 certification as the
Company successfully obtains additional manufacturing contracts during 2009 and
2010.  However, we cannot assure you that we will satisfy ISO/TS-16949
qualification or that the production lines will produce product in the volumes
required or that the production lines will satisfy the requirements of our
automotive customers.  Our success is dependent on our intellectual property
rights which are difficult to protect.  Our future success depends on our ability to protect our
intellectual property.  We use a combination of patents and other
intellectual property arrangements to protect our intellectual property.
 There can be no assurance that the protection provided by our patents will
be broad enough to prevent competitors from introducing similar products or that
our patents, if challenged, will be upheld by courts of any jurisdiction.
 Patent infringement litigation, either to enforce patents or defend
ourselves from infringement suits, will be expensive and could divert our
resources from other planned uses.  Patent applications filed in foreign
countries and patents in these countries are subject to laws and procedures that
differ from those in the U.S. and may not be as favorable to us.  We also
attempt to protect our confidential 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
confidential information and intellectual properties from our competitors.  Research and development may result in problems which
may become insurmountable to full implementation of production.  Customers request that we create prototypes and perform
pre-production research and development. As a result, we are exposed to the risk
that we may find problems in our designs that are insurmountable to fulfill
production.  In that event, we will be unable to recover the costs of the
pre-production research and development.  However, we are currently unaware
of any insurmountable problems with ongoing research and development that may
prevent further development of an application.  Economic uncertainties will delay or eliminate new
technological investments.  Due to the current downturn in the global economy and
financial uncertainties, automakers and other potential customers could delay,
significantly curtail or altogether eliminate any further investment in new
technology including, the Bend Sensor® technology, until the global
financial markets and economies stabilize. Due to our limited cash resources any
delays in bringing our products and technology to market could have a material
adverse effect on our ability to continue as a going concern


16


Because we are significantly smaller than the majority
of our competitors, we may lack the financial resources needed to capture
increased market share.  The market for sensor devices is extremely competitive,
and we expect that competition will intensify in the future. There can be no
assurance that we will be able to compete successfully against current or future
competitors or that competitive pressures we face will not materially adversely
affect our business, operating results or financial condition.  Our primary
competitors in the air bag market are International Electronics and Engineering,
Siemens, Robert Bosch GmbH, Denso, Inc., Breed Technologies, TRW Automotive,
Delphi Corporation, Autoliv Inc., Takata and Temic.  We believe that none
of our competitors have a product that is superior to our Bend Sensor®
technology at this time.  However, many of our competitors and potential
competitors have substantially greater financial, technical and marketing
resources, larger customer bases, longer operating histories, greater name
recognition and more established relationships than we do.  These
competitors may be able to undertake more extensive marketing campaigns, adopt
more aggressive pricing policies and devote substantially more resources to
developing new products and markets than we can.  Ongoing industry consolidation among worldwide
automotive parts suppliers and financial difficulties of U.S. auto makers may
limit the market potential for our products.  In the automotive parts industry, there is a trend of
consolidation through business combinations and acquisitions of complementary
technologies among worldwide suppliers as these suppliers seek to build stronger
customer relationships with automobile manufacturers.  Automobile
manufacturers look to Tier 1 suppliers (major suppliers) to provide fully
engineered systems and pre-assembled combinations of components rather than
individual components.  This trend of consolidation of suppliers may result
in fewer Tier 1 suppliers and thus limit the marketing opportunities for our
Bend Sensor® technology.  In addition, U.S. auto makers have closed plants
and reduced their work force and some are considering bankruptcy. In addition,
some Tier 1 suppliers are in bankruptcy or in financial difficulty. These
industry trends may limit the market for our products.  Failure to achieve and maintain effective internal
controls in accordance with Section 404 of the Sarbanes-Oxley Act could lead to
loss of investor confidence in our reported financial information.  Pursuant to Section 404 of the Sarbanes-Oxley Act of
2002, we are required to furnish a report by our management on our internal
control over financial reporting.  If we cannot provide reliable financial
reports or prevent fraud, then our business and operating results could be
harmed, investors could lose confidence in our reported financial information,
and the trading price of our stock could drop significantly.  Our
independent registered accounting firm must attest to the effectiveness of our
internal control over financial reporting for the fiscal year ended December 31,
2009.  We cannot assure you as to our independent auditors conclusions at
December 31, 2009 with respect to the effectiveness of our internal control over
financial reporting.  There is a risk that our independent auditors will
not be able to conclude at December 31, 2009 that our internal controls over
financial reporting are effective as required by Section 404 of the Act.  ITEM 6. EXHIBITS  Part I Exhibits  No. Description.  31.1 Certification of Clark M. Mower
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  31.2 Certification of Thomas N. Strong
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  32 Certification pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


17


Part II  Exhibits  No. Description.  3.1 Certificate of Incorporation of
Flexpoint Sensor, as amended (Incorporated by reference to exhibit 3.1 for Form 10-QSB, filed August 4,
2006)  3.2 Bylaws of Flexpoint Sensor, as amended
(Incorporated by reference to exhibit 3.4 of Form 10-QSB, filed May 3, 2004)  10.1 Lease Agreement between Flexpoint
Sensor and F.G.B.P., L.L.C., dated July 12, 2004 (Incorporated by reference to exhibit 10.2 of
Form 10-QSB, filed November 15, 2004, as amended)  10.2 Addendum to Lease Agreement between
Flexpoint Sensor and F.G.B.P., L.L.C., dated April 1, 2009   SIGNATURES  In accordance with the requirements of the Exchange Act,
the registrant caused this report to be signed on its behalf by the undersigned,
who are duly authorized.   FLEXPOINT SENSOR SYSTEMS, INC.    Date: May 14, 2009  /s/ Clark M. Mower Clark M. Mower President, Chief Executive Officer and
Director  Date: November 8, 2006 /s/ Thomas N. Strong Thomas N. Strong Controller, Chief Financial
Officer


18