UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
February 24, 2004
(Date of Earliest Event Reported)
FLEXPOINT SENSOR SYSTEMS, INC.
(Name of small business issuer in its charter)
Delaware 0-24368 87-0620425
(State of incorporation) (Commission file number) (I.R.S. Employer
Identification No.)
47 East 7200 South, Suite 204
Midvale, Utah 84047
(Address of principal executive offices )
801-568-5111
(Issuer's telephone number)
In this current report references to "Flexpoint Sensor," "we," "us," and "our"
refer to Flexpoint Sensor Systems, Inc.
This current report contains certain forward-looking statements and any
statements contained in this current report that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate" or "continue" or comparable terminology are intended
to identify forward-looking statements. These statements by their nature
involve substantial risks and uncertainties, and actual results may differ
materially depending on a variety of factors, many of which are not within
Flexpoint Sensor's control.
ITEM 1. CHANGES IN CONTROL
As a result of the confirmation of our Debtor's Plan of Reorganization (the
"Plan"), discussed in Item 3, below, we have agreed to issue 6,879,474 shares
of common stock to satisfy creditor's claims and have effected a 7-to-1
reverse of our common stock, discussed in Item 5, below. Under the Plan,
First Equity Holdings Corp. was issued 7,142,857 shares in consideration for
its assigned interest in the Aspen Capital Ventures creditor claim of
$3,681,280. First Equity Holdings Corp. agreed to reduce its assigned claim
to zero in exchange for our agreement not to contest the 50,000,000 shares
issued to Aspen Capital Ventures prior to our petition for bankruptcy
protection. The 7,142,857 shares will represent 40.1% of our issued and
outstanding shares after completion of the Plan.
Broad Investment Partners, LLC may acquire 3,000,000 shares held in escrow if
it opts to convert its credit line of $1.5 million, which is discussed in Item
5, below. If Broad Investment Partners converts the credit line, then it will
own 16.8% of our issued and outstanding common stock upon completion of the
Plan.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
On February 24, 2004, the United States Bankruptcy Court for the District of
Utah confirmed Flexpoint Sensor Systems, Inc.'s Plan. The confirmation of the
Plan was subject to a 10 day appeal period and is effective March 5, 2004. As
of December 31, 2003, Flexpoint Sensor had total assets of approximately
$3,612 and total liabilities of approximately $9 million with approximately
$7.8 million subject to compromise under the Plan.
Summary of the Plan
The essence of the Plan is to satisfy allowed creditor's claims with common
shares and restructure Flexpoint Sensor's current equity stockholders by
effecting a 7-to-1 reverse split. The reverse split will result in 10,933,529
shares of common stock issued and outstanding. As part of the Plan we will
issue 6,879,474 new shares of free trading stock to satisfy creditor claims.
Of those shares, 3,879,474 will be used to satisfy debt totaling $5.6 million
and 3,000,000 shares will be held in escrow for Broad Investment Partners,
LLC. The reverse of our outstanding common stock and issuance of common stock
pursuant to the Plan will dilute current shareholder interests.
Pre-petition options, warrants or executory contracts for acquisition of
equity are cancelled upon confirmation of the Plan. Preferred stock and
super-voting preferred stock are also cancelled upon confirmation. The
creditors and all expenses of the bankruptcy are paid in full upon the
effective date of the confirmation of the Plan by equity or with proceeds from
the credit line.
The settlement of these claims enables Flexpoint Sensor to emerge from
bankruptcy with our technology intact and with sufficient financial backing to
operate our business and take our technology applications to market. The term
of the Plan will be dependent upon the time required for Flexpoint Sensor to
challenge the merits of Delco Electronics, Inc. creditor's claim.
Delco Electronics, Inc. filed a creditor's claim of $1,700,000, which is
related to our agreement with Delphi Automotive Systems ("Delphi").
Management has decided to allow the bankruptcy court to settle this claim
because the bankruptcy court is familiar with the facts and issues related to
the creditor's claim. We will file a
grievance challenging the Delphi creditor claim and Delphi must file an answer
to our grievance. After the bankruptcy court reviews Delphi's answer, then it
will issue a final decision regarding this creditor claim. Management
believes the claim will be settled in our favor and will result in no further
payments due. However, if the creditor claim is decided against us we will be
required to pay the claim.
The bankruptcy court will retain jurisdiction over our bankruptcy case until
the Delphi credit claim is resolved. Once the Delphi claim is resolved the
bankruptcy court is expected to enter a final decree closing the Flexpoint
Sensor bankruptcy case.
ITEM 5. OTHER EVENTS
Common Stock Reverse
Flexpoint Sensor has effected a 7-to-1 reverse of its issued and outstanding
common and the NASD granted an effective date of March 5, 2004 for the
reverse. As a result of the reverse, the 76,534,709 shares of our common
stock that are issued and outstanding will reverse to 10,933,529. Our
authorized shares will remain at 100,000,000. In addition, the trading symbol
for our common stock listed on the Pink Sheets will change to "FLXT" at the
beginning of trading on March 5, 2004.
Credit Line
On January 14, 2004, Broad Investment Partners agreed to grant Flexpoint
Sensor a $1.5 million credit line, which was contingent upon approval of the
Plan by the bankruptcy court. This credit line includes a 2% loan origination
fee of $30,000 and annual interest of 10%. The accrued fees and interest are
payable in full on January 14, 2007. The principal is due and payable on the
earliest to occur of the following:
.. within three years of the signing date of the credit line (January 14,
2007);
.. a default per the terms of the credit line;
.. upon closing of any public offering by Flexpoint Sensor which
registers our shares under the Securities Act of 1933; or
.. five days after any breach by Flexpoint Sensor of any agreement with
Broad Investment Partners or any of its affiliates.
We may repay the credit line in full at any time without penalty. Any
payments not paid when due will be subject to a late fee of 5% and all amounts
outstanding shall bear interest of 15% per annum until all payments are
brought current. Broad Investment Partners may convert the principal and
interest due under the credit line into Flexpoint common stock at a conversion
rate of $0.50 per share. These shares will be issued from the 3,000,000
shares held in escrow. Any provision of the credit line may be amended,
waived, modified, discharged or terminated solely upon the written consent of
both the parties.
New Principal Office
We have immediate plans to move our office and equipment into a facility
located in Draper, Utah.
ITEM 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Exhibits
2.1 Order Confirming Plan, dated February 24, 2004.
2.2 Debtor's Plan of Reorganization, dated January 14, 2004
10.1 Credit Line Agreement between Flexpoint Sensor and Broad Investment
Partners, LLC, dated January 14, 2004
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FLEXPOINT SENSOR SYSTEMS, INC.
/s/ John A. Sindt
Date: March 5, 2004 By: _______________________________________
John A. Sindt
President, CEO and Director