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
Date of Report (Date of earliest event reported)
August 24, 2000
Flexpoint Sensor Systems, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-24368 87-0620425
(Commission file number) (IRS employer identification no.)
6906 South 300 West, Midvale, Utah 84047
(Address of principal executive offices) (Zip code)
(801) 568-5111
(Registrant's telephone number, including area code)
This document contains a total of 3 pages.
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Item 5. Other Events
In June 1998, the Flexpoint Sensor Systems, Inc. (the "Company") entered
into a Purchase and Supply Agreement (the "Supply Agreement") between the
Company and Delphi Automotive Systems ("Delphi"). Under the Supply Agreement,
Delphi anticipated purchasing sensor mats incorporating the Company's Bend
Sensor technology into a "smart" air bag system being developed under
arrangement between Dephi and General Motors (the "Delphi/GM Arrangement"). In
May 2000, the Company entered into an amendment to the Supply Agreement. Under
the terms of the amendment, Delphi was to provide the Company with a
$4,100,000 interest free loan. In May 2000, $800,000 was advanced to the
Company, additional $300,000 payments were advanced in June, July and August
and additional $300,000 payments are to be advanced during each of the
following eight months.
On August 24, 2000, the Company received written notice from Delphi (the
"Delphi Notice") that Delphi had received notice from General Motors
indicating that:
...Delphi has failed to make progress in the development and
implementation of the Flexpoint weight based suppression
system so as to endanger timely and proper delivery of goods
to GM. If Delphi does not correct such failure within ten
days after receipt of this notice, the Agreement [Delphi/
General Motors arrangement] will be terminated.
Delphi also stated that it does not believe the engineering problems can be
solved within said ten day period or in the foreseeable future.
Furthermore, Delphi quotes Section 13 of the Supply Agreement which
states that:
In the event that Delco [Delphi] is not selected by GM as
the Tier I supplier for the WBSS, then this [Supply] Agreement
and all of the Sections contained herein shall be deemed null
and void and this [Supply] Agreement shall be of no further
force and effect.
The Delphi Notice asserts that, effective upon termination of the Delphi/GM
Arrangement the Flexpoint Supply Agreement would be terminated pursuant to
Section 13 thereof. The Company believes that since General Motors had already
selected Delphi as the Tier I supplier under the Delphi/GM Arrangement, Delphi
does not have the right to terminate the Supply Agreement pursuant to this
provision.
Finally, Delphi asserted that the Company had materially breached the
Supply Agreement by failing to meet certain deliverables that were agreed to
in January 2000 relating to the Cadillac program. As a result, Delphi stated
that no further payments will be made under the Supply Agreement, as amended
in May 2000. The Company is perplexed by Delphi's assertion that the Supply
Agreement was breached since the deliverable date was modified by joint
agreement of the parties on numerous occasions after January 2000. This is the
first occasion that Delphi indicated that they believed that the Company had
breached the Supply Agreement as a result of failure to meet the purported
deliverable dates. In addition, the Company does not believe that Delphi has
followed the appropriate contractual provision relating to dispute resolution
and contract termination.
In the event the Company is not able to successfully and timely resolve
these matters through negotiations or otherwise with Dephi and General Motors,
of which there can be no assurance, there is substantial doubt whether the
Company will be able to secure sufficient funding to continue as a going
concern.
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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.
Date: August 24, 2000 FLEXPOINT SENSOR SYSTEMS, INC.
By /s/ John F. Trotter
________________________________
John F. Trotter
President and Chief Executive Officer
