UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-Q  [X] QUARTERLY REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For quarterly period ended March 31,
2008  [
  ] 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)  The registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act 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 is a large
accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company:  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]  Indicate by check mark whether the registrant has filed
all documents and reports required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. Yes  [X]   No  [
 ]  The number of shares outstanding of the registrants
common stock was 24,792,887 as of May 14 , 2008.   1    TABLE
OF CONTENTS  PART I: FINANCIAL INFORMATION  Item 1.  Financial Statements  Condensed Consolidated Balance Sheets (Unaudited) at March 31, 2008 and December
31, 2007 3  Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2008 and 2007 and for the Cumulative Period
from February 24, 2004 (Date of Emergence from Bankruptcy) through March 31, 2008 4  Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2008 and 2007 and for the Cumulative Period from February 24, 2004 (Date of Emergence from Bankruptcy) through March 31, 2008 5  Notes
to Condensed Consolidated Financial Statements (Unaudited) 6  Item 2.
Managements Discussion and Analysis of Financial Condition and Results of
Operations 9  Item 3.
Quantitative and Qualitative Disclosures About Market Risk 15  Item 4.
Controls and Procedures 15   PART II: OTHER INFORMATION  Item 6.
 Exhibits 16  Signatures 17   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, 2008, the condensed consolidated statements of operations and cash
flows for the three month periods ended March 31, 2008 and 2007is 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, 2008, 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 31,2008

2007ASSETSCurrent AssetsCash and cash equivalents
$   
          824,657

$    
      1,058,135Accounts receivable
15,875

6,933Prepaid expenses
55,785

27,224Total Current Assets
896,317

1,092,292Long-Term Deposits
6,500

6,500Property and Equipment,net of accumulated
depreciationof  $38,057 and $0
754,478

792,535Patents and Proprietary Technology,net of
accumulatedamortization of $35,091 and $0
1,181,141

1,216,233Goodwill
5,356,414

5,356,414Total Assets
$   
         8,194,850

$      
   8,463,974LIABILITIES AND STOCKHOLDERS' EQUITYCurrent LiabilitiesAccounts payable
$
           
     22,256

$      
        15,588Accrued liabilities
111,662

34,237Deferred revenue
100,000

50,000Total Current Liabilities
233,918

99,825Stockholders' 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 for each
period
24,792

24,792Additional paid-in capital
17,791,493

17,791,493Warrants and options outstanding
1,915,108

1,799,915Deficit accumulated during the development
stage
(11,770,461)

(11,252,051)Total Stockholders' Equity
7,960,932

8,364,149Total Liabilities and Stockholders'
Equity
$      
      8,194,850

$     
    8,463,974  The
accompanying notes are an integral part of these condensed consolidated
financial statements.  3   FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES (A Development
Stage Company) CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)  For the CumulativePeriod fromFebruary 24, 2004(Date of Emergence)For the Three Months

from Bankruptcy)Ended March 31,

through2008
2007

March 31, 2008Design, Contract and Testing Revenue
$
          
   12,733

$      
      10,734


$
              
    504,037Operating Costs and ExpensesAmortization of patents and proprietary
technology
(35,091)

(38,242)


(605,694)Cost of revenue
(3,099)

(3,412)


(116,442)Administrative and marketing expense
(388,394)

(471,402)


(8,320,790)Research and development expense
(109,954)

(112,766)


(1,565,910)Impairment of long-lived assets
-

-


(299,798)Total Operating Costs and Expenses
(536,538)

(625,822)


(10,908,634)Other Income and ExpensesInterest expense
-

-


(1,576,054)InteresIInterest income
5,395

3,556


127,104Sublease rent income
-

972


11,340Other income
-

-


478Gain on forgiveness of debt
-

-


71,268Net Other Income (Expense)
5,395

4,528


(1,365,864)Net Loss
$      
   (518,410)

$      
 (610,920)


$         
    (11,770,461)Basic and Diluted Loss Per Common
Share
$
        
      (0.02)

$
        
    (0.03)Basic and Diluted Weighted-AverageCommon Shares Outstanding
24,792,887

23,292,887     The
accompanying notes are an integral part of these condensed consolidated
financial statements.  4   FLEXPOINT
SENSOR SYSTEMS, INC. AND SUBSIDIARIES (A Development
Stage Company) CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the CumulativePeriod fromFebruary 24, 2004(Date of Emergence)For the Three Months
from Bankruptcy)Ended March 31,
through2008

2007
March 31, 2008Cash Flows
from Operating Activities:Net loss

$       
   (518,410)

$        (610,920)

$      (11,790,461)Adjustments to
reconcile net loss to net cash used in
operating
activities:Depreciation

38,057

41,097

573,546Amortization
of patents and proprietary technology

35,091

38,242

605,693Impairment
of long-lived assets

-

-

299,798Issuance
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

115,193

176,181

1,521,560Changes in
operating assets and liabilities:Accounts
receivable

(8,943)

(2,524)

(15,876)Prepaid
expenses

(28,560)

7,145

(55,784)Accounts
payable

6,669

(380)

(185,850)Accrued
liabilities

77,425

60,384

109,170Deferred
revenue

50,000

-

(243,750)Deposits

-

-

(6,500)Net Cash Used
in Operating Activities

(233,478)

(290,775)

(4,856,735)Cash Flows
from Investing Activities:Payments for the
purchase of equipment

-

-

(197,574)Payments for
patents

-

-

(43,626)Payment for
acquisition of equipment and proprietarytechnology
from Flexpoint Holdings, LLC

-

-

(265,000)Net Cash Used
in Investing Activities

-

-

(506,200)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

-

-

583,334Net Cash
Provided by Financing Activities

-

-

6,185,541Net Change in
Cash and Cash Equivalents

(233,478)

(290,775)

822,606Cash and Cash
Equivalents at Beginning of Period

1,058,135

768,220

2,051Cash and Cash
Equivalents at End of Period

$      
    824,657

$     
   477,445

$    
    824,657Supplemental
Cash Flow Information:
Cash
paid for interest

$
          
           -

$
       
            -

$  
        16,888  The
accompanying notes are an integral part of these condensed 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, 2007, included in the Companys
Form 10-KSB filed with the Securities and Exchange Commission on April 15, 2008.
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, 2008.  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 flexible
potentiometer technology. The Company is in the development stage as planned
operations have not commenced. Development stage activities primarily include
acquiring equipment and technology, organizing activities, obtaining financing
and seeking manufacturing contracts. During the three months ended March 31,
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 four to 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 long-term 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.  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 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.  Research
and Development Research and development costs are recognized as
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


6


FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES (A Development Stage Company) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)   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, 2008, there were outstanding
options and warrants to purchase 1,957,000 shares of common stock.  At
March 31, 2007, there were outstanding options and warrants to purchase
4,878,335 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 utilizes 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  On February 8,
2007, the Company granted employee options to purchase an aggregate 382,000
shares of common stock at an exercise price of $1.18 per share.  The
options vest on the anniversary of the grant date and expire on August 25, 2015,
which is 10 years from date of Board approval of the Plan.  The Company
used the following assumptions in estimating the fair value of the options
granted on February 8, 2007; market value at time of issuance - $1.45; expected
holding period  6 years; risk-free interest rate  4.86%; dividend yield  0%;
and expected volatility  200%.  Using these assumptions, the options
granted have a weighted-average fair value of $1.43 per share.


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, 2008 and 2007, the Company recognized $115,193 and
$176,181  of stock-based compensation expense, respectively. There were
1,607,000 employee stock options outstanding at March 31, 2008.  A summary
of all employee options outstanding and exercisable under the plan as of March
31, 2008, and changes during the three months then ended is set forth below:   Weighted-AverageWeighted-

Remaining

AggregateAverage

Contractual

IntrinsicOptions
Shares

Exercise Price

Life (Years)

ValueOutstanding
at beginning of period
1,607,000

$
          1.66

7.68

$ 
         -Granted
-

-Expired
-Forfeited
-Outstanding
at end of period
1,607,000

$
          1.66

7.43

$    
       -Exercisable
at end of period
1,120,000

$
          1.74

7.43

$     
      -   As of March 31,
2008, there was approximately $209,238 of unrecognized compensation cost related
to employee stock options that will be recognized over a weighted average period
of approximately 1 year.  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 interest 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 the mattresses.  The initial
order is for 30,000 Bend Sensors® to be used to begin manufacture of 1,000
mattresses.  R&D Products has deposited with Flexpoint the sum of
$100,000 to begin work on the initial production order of 20 medical beds.
 However, the realization of the manufacture and sales of the Bend Sensors®
is dependent upon R&D Products selling either their bed technology directly
or licensing their technology to a third party.  There are no guarantees
that R&D will make such sales in such quantities to meet the demands of this
contract.


8


In this quarterly report references to 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, will,
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 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 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.  In September 2007 the Company entered into a Purchase and
Sale Agreement (the Agreement) with Precision Pumping Systems, Inc.
(Precision), a Washington corporation, with its principal office in Kelso,
Washington.  Under the terms of the agreement, Precision will market and
distribute the patented Wave Sensor®, a flow meter utilizing Bend
Sensor® technology to determine the presence and volume of liquid
flow through a pipeline.  The amount and direction of the flow can be
continuously measured, monitored and recorded.  The Wave
Sensors® will be marketed and distributed by Precision to all types
of industries, including original equipment manufacturers, municipalities,
irrigation companies, governmental agencies and individual property owners.
 The Agreement is for a period of three years.  Within one month prior
to the conclusion of the three year period, the Agreement may be extended for
one or more successive one year terms upon the mutual written agreement of both
parties.  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 are estimated to exceed $100,000
and will impact both the third and fourth quarters of 2007.  In March 2008 the Company reached a
development agreement with Auto Electronic Corporation (AEC) to mutually
develop, manufacture, market, and sell automotive products utilizing 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 existing
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.


9


Finalizing a major contract with a customer remains our
greatest challenge because our on-going business is dependent upon finalizing
this type of contract. Cash flow and cash requirement risks are closely tied to
and are dependent upon our ability to attract significant contracts.  We
must continue to obtain funding to operate and expand our operations so that we
can deliver our 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 2008.  LIQUIDITY AND CAPITAL RESOURCES  Our revenue is primarily from design, contract and
testing services and is not to a level to support our operations.
 Management anticipates that we may not realize significant revenue within
the next twelve months.  For the past twelve months we have relied on
proceeds from the private placement we completed in June and September of 2007
to satisfy our cash requirements.  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 this private placement that we
have used to fund continuing operations and business development.  Management believes that our current cash burn rate is
approximately $140,000 per month and that the remaining proceeds from the
private placement will fund our operations for at least the next five months.
 We will require additional financing to fund our long-term cash needs.
 We may rely on 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.  We also may receive additional funds in the future from
the exercise of warrants.  As of March 31, 2008 we have outstanding
warrants to purchase an aggregate of 350,000 shares and we may receive an
additional $280,000 if those warrants are exercised.  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.  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 royalties related to these agreements. However, we have
formalized only a few additional 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.  COMMITMENTS AND CONTINGENCIES  Our principal commitments at March 31, 2008 consist of
our operating lease and total current liabilities of $233,918. The operating
lease has average monthly payments of $8,796, including common area maintenance
and a 2% annual increase.  The total future minimum payments under this
lease as of March 31, 2008 were $159,842.  Our total current liabilities include accounts payable of
$22,256 related to normal operating expenses, including health insurance,
utilities, production supplies and travel expense, expenses for professional
fees regarding audit fees and legal fees related to the defense of patent
rights.  Accrued liabilities at March 31, 2008, were $211,662 and were
related to deferred revenue, payroll, payroll tax liabilities, accrued audit and
tax expenses, accrued lease expense and accrued paid time off, our combination
vacation-sick leave policy.  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 $200,000.  Management believes it is
critical to protect our patents and will divert a portion of our financial
resources to continue this legal matter.


10


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 valuing stock
option compensation.  We annually test goodwill 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 a discounted-cash-flows model considering future
revenues, operating costs and risk-adjusted discount rate and other factors.
 The goodwill impairment test conducted at December 31, 2007 identified a
loss of $299,798 which was recognized at that date.  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, 2008 and
2007 we recognized $115,193 and $176,181, respectively, of stock-based
compensation expense for our stock options and there was approximately $209,238
of unrecognized compensation cost related to employee stock options that will be
recognized over approximately 1 year.  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, 2008 and 2007.  These financial
statements are included in this report at Part I, Item 1, above.  Three month
period ended
March 31, 2008     March 31, 2007Design, contract and
testing revenue
$   
        12,733
$
         
     10,734Total operating costs and
expenses
(536,538)
(625,822)Net other income
(expense)
5,395
4,528Net loss
(518,410)
(610,920)Basic and diluted loss per
common share
$   
          (0.02)
$
       
        (0.03)


11


Our revenue for the 2008 and 2007 interim periods was
from design, contract 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.  The increase in revenue for the three month period ended
March 31, 2008 compared to the  three month period ended March 31, 2007 was
the result of increases in revenue from design engineering work.
 Management does not anticipate that revenues will significantly increase
until we finalize a major contract.  Total operating costs and expenses decreased for the 2008
three month period when compared to the 2007 three month period.  The
majority of the decrease is the result of lower non-cash stock-based
compensation charges which were partially offset by increased administrative and
marketing expense resulting from the hiring of additional personnel.
 Administrative and marketing expenses for the 2008 first quarter were
$388,394, a decrease of $83,008 over the $471,402 for the 2007 first quarter.
 It is expected that administrative and marketing expenses will continue to
increase due to additional travel and legal expenses related to the pursuit of
technology and license agreements.  Research and development expenses
remained relatively flat, decreasing by $2,812.  Total other income for the 2008 and 2007 periods was
primarily the result of interest income from the proceeds of the private
placement offering, which were deposited in a savings account.  Due to minimal revenues and increased operating costs and
expenses, we recorded a net loss and loss per share for both the 2008 and 2007
periods.  Management expects losses to continue in the short term.  The chart below presents a summary of our consolidated
balance sheets at March 31, 2008, and December 31, 2007.  SUMMARY OF
BALANCE SHEET INFORMATIONMarch 31,
2008
December 31,
2007Cash and cash
equivalents
$   
      824,657
$
             1,058,135Total current assets
896,317
1,092,292Total assets
8,194,850
8,463,974Total current
liabilities
233,918
99,825Deficit accumulated during
the development stage
(11,770,461)
(11,252,051)Total stockholders
equity
$
      7,960,932
$
            8,364,149  Cash and cash equivalents decreased $233,478 at March 31,
2008 compared to December 31, 2007 because we had minimal revenue in the 2008
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, 2008 due to
adjustments for depreciation and amortization.  These assets include
property and equipment valued at $754,478 net of depreciation, patents and
proprietary technology of $1,181,141 net of amortization, goodwill of
$5,356,414, and long-term deposits of $6,500.  Total current liabilities increased at March 31, 2008,
the result of increases in accrued liabilities and deferred revenue.


12


LEGAL PROCEEDINGS  On January 20, 2006, Sensitron, Inc., the Companys
wholly owned subsidiary, 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 States 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.
 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
is seeking a copy of the source code and ownership of the patent or correction
of the patent and patent application to add the appropriate co-inventors.
 Sensitron is also seeking unspecified damages along with its costs and
attorneys fees.  As of March 31, 2008, this action is pending in the
United States District Court.  On July 3, 2001, Flexpoint Sensor Systems, Inc. filed a
voluntary petition for reorganization pursuant to Chapter 11 of the United
States Bankruptcy Code.  The petition was filed in the United States
Bankruptcy Court for the District of Utah, File No. 01-29577JAB.  On
February 24, 2004 the bankruptcy court confirmed the Plan of Reorganization. In
the bankruptcy proceeding we objected to the $1,700,000 claim made by Delco
Electronics, Inc. (Delphi).  The Company believes that Delphi is
precluded by the terms of the agreement from any financial recovery due to its
breach of the sponsorship agreement.  Other potential claims are breach of
contract, breach of fiduciary duties owed to Flexpoint, Inc. pursuant to the
contract, and intentional and negligent interference with Flexpoint, Inc.s
contractual and business relationship with General Motors.  The Company is
currently attempting to negotiate a settlement to this controversy.  FACTORS AFFECTING FUTURE PERFORMANCE  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 2008 three month period we had negative cash
flows from operating activities of $233,478.  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.  We may not have adequate experience 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 in 2008.
 The second manufacturing line is expected to result in increased
manufacturing capacity and manufacturing efficiencies.  We have completed
installation of our first production line and are in the process of qualifying
our own manufacturing facility for ISO/TS-16949 certification.  However, we
cannot assure you that we


13


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 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 our 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 from 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.  Our products must satisfy governmental regulations in
order to be marketable  During the past several years, the automotive industry
has been subject to increased government safety regulation. Among other things,
proposed regulations from the National Highway Transportation and Safety
Administration required automakers to incorporate advanced air bag technology
into vehicles beginning in 2005 with the phase-in to be completed by 2008.
 The requirements allow automakers to meet the requirements over a period
of time, up through 2010, through gradually applying a technology through an
increasing percentage of their car models.  Most automakers are meeting the
current requirements through safety advances in their higher-end automobiles.
 Our products may not meet the proposed National Highway Transportation and
Safety Administration standards or the standards may be modified.  These
proposals call for upgraded air bag system performance tests for passenger cars
and light trucks.  The new testing requirements are intended to improve the
safety of infants, children and out-of-position adults, and maximize the
protection of properly seated adults.  The National Highway Transportation
and Safety Administration tests are similar to conditions that we have already
been using to test our Seat Mat System and we believe that our Seat Mat System
will meet the standards as proposed.  In addition, automakers may react to
these proposals and the uncertainty surrounding these proposals by curtailing or
deferring investments in new technology, including our Bend Sensor® technology,
until final regulatory action is taken.  We cannot predict what impact, if
any, these proposals or reforms might have on our financial condition and
results of operations.  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.


14


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, some Tier 1 suppliers are in bankruptcy or in
financial difficulty, and  automobile manufacturers have reported increased
financial difficulties.  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.  In our next
annual report, our independent registered accounting firm must attest to the
effectiveness of our internal control over financial reporting.  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.  INFLATION  We do not expect the impact of inflation on our
operations to be significant for the next twelve months.  ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK  Not applicable.  ITEM 4.  CONTROLS AND PROCEDURES  (a) Managements
Annual Report on Internal Control Over Financial Reporting.  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) Changes in Internal Control Over
Financial Reporting.  In addition, we reviewed our internal controls over
financial reporting, and there have been no changes in our internal controls
over financial reporting in the first fiscal quarter of 2008 that have
materially affected our internal controls over financial reporting.


15


PART II - OTHER INFORMATION  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 John A. Sindt
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 Act of
2002  Part II Exhibits  No. Description.  2.1 Order Confirming Plan, dated February
24, 2004 (Incorporated by reference to exhibit 2.1 for Form 8-K filed March 5, 2004)  2.2 Debtors Plan of Reorganization, dated
January 14, 2004 (Incorporated by reference to exhibit 2.2 for Form 8-K filed March 5, 2004)  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)  20.2 Audit Committee Charter (Incorporated
by reference to Schedule 14A, filed October 27, 2005)


16


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,
2008  /s/ Clark M. Mower Clark M. Mower President, Chief Executive Officer and
Director  Date: November 8, 2006 /s/ John A. Sindt John A. Sindt Chairman of the Board Principal Financial and Accounting
Officer


17