SECURITIES AND EXCHANGE COMMISSION

                      Washington, D.C. 20549
                      ______________________

                           FORM 10-KSB

                      Annual Report Pursuant
                  to Section 13 or 15(d) of the
                 Securities Exchange Act of 1934

                    For the fiscal year ended
                        December 31, 1998

                      Commission file number
                             0-24368

                         MICROPOINT, INC.
      (Exact name of registrant as specified in its charter)

       Delaware                                           87-0620425
(State or other jurisdiction of incorporation)           (IRS employer         
                                                       identification no.)

6906 South 300 West Midvale, UT 84047                  (801) 568-5111
(Address of principal executive offices)       (Registrant's telephone number, 
                                                       including area code)

   Securities registered pursuant to Section 12(g) of the Act:

     Title of each class             Name of each exchange on which registered
     -------------------             -----------------------------------------
Common Stock, $.001 Par Value                        None

     Check whether the issuer (1) 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 xx  No

     Check if there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.

     The issuer's revenues for its most recent fiscal year were $1,915,628.

     The aggregate market value of the voting stock held by non-affiliates
(i.e., does not include directors, executive officers or ten percent
stockholders identified in Item 11 hereof) of the issuer as of March 3, 1999
was $83,172,782.

     The number of shares outstanding of the issuer's Common Stock as of March
3, 1999 was 16,506,408, $.001 par value.

<PAGE>




Micropoint, Inc.

TABLE OF CONTENTS TO ANNUAL REPORT ON FORM 10-KSB YEAR ENDED December 31, 1998


                              PART I

Item 1. Description of Business..........................................  3
Item 2. Description of Properties........................................  9
Item 3. Legal Proceedings................................................ 10
Item 4. Submission of Matters to a Vote of Security Holders.............. 10

PART II

Item 5. Market for Common Equity and Related Stockholder Matters......... 12
Item 6. Management's Discussion and Analysis or Plan of Operation ....... 13
Item 7. Financial Statements............................................. 19
Item 8. Changes In and Disagreements With Accountants on Accounting and
        Financial Disclosure............................................. 19

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons;
        Compliance with Section 16(a) of the Exchange Act................ 20
Item 10. Executive Compensation.......................................... 21
Item 11. Security Ownership of Certain Beneficial Owners and Management.. 23
Item 12. Certain Relationships and Related Transactions.................. 24
Item 13. Exhibits and Reports on Form 8-K................................ 25

<PAGE>

                              PART I

Item 1. Description of Business.

Company Background

     The registrant was incorporated in 1992 as a Delaware corporation under
the name Nanotech Corporation. The registrant had no operations until April
1998. On that date, the registrant acquired Sensitron, Inc. ("Sensitron"), a
Utah corporation, through a merger with a subsidiary of the registrant (the
"Acquisition"). The registrant changed its name to "Micropoint, Inc."
("Micropoint") and Sensitron became a wholly owned subsidiary of Micropoint.
At the closing of the Acquisition, the officers and directors of Micropoint
resigned and the nominees of Sensitron were appointed as the officers and
directors of Micropoint. In addition, the outstanding securities of Sensitron
became outstanding securities of Micropoint. Prior to the Acquisition, neither
Sensitron nor any affiliate of Sensitron had an interest in Micropoint.
Sensitron is engaged in the business, through Flexpoint, Inc. ("Flexpoint")
and Technology and Machine Company, Inc. ("Tamco") which are wholly owned
subsidiaries of Sensitron, of developing manufacturing and marketing
proprietary patented sensor technology know as the Bend Sensor   technology
(the "Technology"). Except as otherwise stated or implied by the context, all
references to the "Company" herein will be deemed to refer to Micropoint,
Sensitron, Flexpoint and Tamco on a consolidated basis.

      Sensitron and Flexpoint were incorporated in 1995 as Utah corporations.
Since 1995 Flexpoint has been engaged in the research and further development
of the Technology. The Company has five issued United States patents and five
additional pending applications for patents in the United States. The Company
has one issued patent in Canada and has four patent applications pending in
foreign countries which are based upon one application under the Patent
Cooperation Treaty. All of the patents and patent applications relate to the
Technology and are licensed to Flexpoint. The Technology measures changes in
deflection and allows for electronic devices to respond to such changes by
registering a signal or other response. The Company has entered into an
exclusive agreement to use, sell and sublicense the Technology with Ohio Art,
Inc. (manufacturers of Etch-A-Sketch) with respect to the toy industry. The
Company has also entered into a Purchase and Supply Agreement with Delphi
Automotive Systems ("Delphi") for the Company to supply its proprietary sensor
mats to Delphi for integration into a weight based suppression system for use
with automobile air bags. See "Production Contracts and Specific Applications.
Management believes the potential market for the Technology also includes
using the Technology in automobile horn assemblies, instrument switches,
computer switch devices, industrial control devices, instrument controls,
medical devices, surgical equipment and in other products. 

     Tamco was incorporated in 1990 as a Utah corporation. Tamco is a
manufacturing and machining company which machines metal parts and injection
molds based on custom orders for third parties. Generally, Tamco receives
orders for molds and tools then used by Tamco's customers to produce a final
product. The Company uses Tamco to perform machining and manufacturing for
Flexpoint products and for its manufacturing facilities. Tamco also operates
its third party business to the extent that excess capacity remains after
servicing Flexpoint. 

     The Company's principal executive offices are located at 6906 South 300
West, Midvale, Utah 84047. Its telephone number is (801) 568-5111.

The Sensor Business

     Sensing devices can be used to measure or sense changes in deflection and
are typically used to trigger an electronic device when the sensor is
activated. The worldwide market for sensing devices has grown significantly as
a result of better technology and new applications for sensing technology.
This growth has resulted in a corresponding increase in demand for high
performance sensing products. Management believes this worldwide market growth
will continue.
                                3
<PAGE>

     The Company believes that the sensing devices that are most likely to
compete with the Technology are force transducer sensors and certain fiber
optic sensors. Management believes, however, that force transducer sensors are
not as reliable as the Technology and that they are not capable of measuring
the same range of motion as the Technology. The Company also believes that
fiber optic sensors are not as cost effective as the Technology.

The Bend Sensor(R) Technology

     The Technology is a potentiometer product consisting of a coated
substrate such as plastic that changes in electrical conductivity as it is
bent. Electronic systems can connect to the sensor and measure with fine
detail the amount of bending or movement that occurs. Certain applications of
the Bend Sensor(R) potentiometer have been patented, including automobile horn
switches. Other patents applications, such as accelerometers, automobile seat
sensors and function controls, are pending.

     An example of a potentiometer application is one where a sensor is
attached to a door. As the door is opened one can measure how far the door has
opened and how fast it is moving. Management believes the Technology is
lightweight, small, easily packaged and reliable. The breadth of the
applications for products incorporating the Technology are very broad and can
be utilized in a wide variety of industries.

     A typical potentiometer functions through the means of metal contacts
swiping or rubbing across a resistive element. The Bend Sensor(R)
potentiometer is a single layer with no mechanical assembly making it more
reliable, significantly smaller and lighter weight than mechanical
potentiometers. Management believes many sensor applications can be improved
using the Technology and utilization of the Technology will result in new
products and new sensor applications.

Production Contracts and Specific Applications

     Toy Applications

     In May, 1997 the Company entered into a License Agreement (the "License
Agreement"). Whereby the Company granted to Ohio Art the exclusive right to
sell products incorporating the Bend Sensor(R)Technology in the toy,
traditional games and video markets. The License Agreement provided for
certain up front fees and minimum royalties in order for Ohio Art to maintain
such exclusive rights. In 1998 the Company produced over 7,000,000 toy sensors
and approximately $1,580,000 in revenues in connection with the License
Agreement, which includes both manufacturing revenues and royalty payments.
Presently, there are three different toy products that utilize the Technology
which toys are manufactured by Irwin Toys Limited, Toy Biz, Inc. and Ohio Art
Company. These toys can now be found at major retailers, including Target,
Wal-Mart and Toys R Us. Certain toy customers, however, have indicated that
they will be getting out of the plush toy business and/or will not be
manufacturing products using sophisticated sensor systems. As a result, the
Company believes that revenues under the License Agreement and from the toy
industry will be less during 1999 than during 1998. There can be no assurance
as to what level, if any, of sales that the Company will secure in future
years.

     Air Bag Applications

     According to the National Highway Transportation Safety Administration
("NHTSA"), deaths of at least 130 children and small adults, mostly women,
have been attributed to passenger-side air bags from their speed and force of
inflation. This toll is expected to rise to one death per week by the turn of
the century, by which time passenger-side air bags will be mandatory on all
cars and light trucks sold in the United States. An article in Pediatrics,
Vol. 102, No. 1 (July 1998), reprints a study from the Harvard Center for Risk
Analysis concluding that "it is apparent that more lives of children are being
lost than saved because of passenger-side air bags." NHTSA now requires bold
warning labels on all vehicles equipped with passenger-side air-bags stating
that "Children 12 and under can be killed by an air bag."

     Automakers and regulators agree that smart air bag systems are the
solution. Smart air bag systems are those that can detect not only the
presence of a seat occupant, but also the size and positioning of the seat
occupant. This data
                                4
<PAGE>

is used to tailor the speed and force of the air bag deployment to the seat
occupancy conditions at the time of impact. Reliable analog seat sensors such
as the Bend Sensor(R) technology are a key component of the system.

     In November and December 1997, seat sensor applications of the Technology
for use in smart air bag systems were showcased by Lear Corporation in
Germany, France and Spain. Other European corporations have since expressed
interest in the seat sensor applications. In February 1998, Lear demonstrated
the seat sensor applications of the Technology in a new system that is
currently being shown around the world.

     General Motors, Ford, Chrysler, TRW, Lear, Takata, Magna, Allied Signal,
Autoliv, Johnson Controls, Siemens, and Delphi have asked Flexpoint to
demonstrate its Bend Sensor(R) Technology in seat occupant detection
applications. Response has been positive. The sensor can distinguish between
an infant car seat and an adult passenger and deactivate an air bag when a
person under 60 pounds or a car seat is in the seat. The market opportunity is
tremendous considering a market of 15,000,000 vehicles in North America and
55,000,000 worldwide. 

     In June 1998, the Company entered into a Purchase and Supply Agreement
(the "Supply Agreement") with Delphi Automotive Systems ("Delphi") for the
Company to supply its proprietary sensor mats to Delphi for integration into a
weight based suppression system as a critical part of a smart air bag system.
The Supply Agreement provides that such sensor mats will be supplied to
General Motors, through Delphi. The Company's sensor mat system is in the
final stages of development. After development is completed, of which there
can be no assurance, the Company could have over $135,000,000 in sales under
the Supply Agreement based on estimates that were produced jointly by Delphi
and the Company. Delphi is not obligated under the terms of the Supply
Agreement, however, to purchase any minimum number of sensor mats and there
can be no assurance that the Supply Agreement will result in a material amount
of sales. As of the date of this filing, the Company had not entered into any
firm agreement for a continued supply of Bend Sensor(R) products that are
currently in effect. Although management is highly confident that significant
contracts can be obtained, there can be no assurance as to future sales levels
of Bend Sensor(R) products. 

     Automobile Horn Applications

     The Company has also developed a automobile horn application of the
Technology. Traditional automobile horn assemblies, when receiving pressure on
any part of the horn assembly surface, activate the horn control system. On
current airbag configurations, horn switches are generally placed on sides of
the column. Because the Flexpoint switch is a thin sheet of screen printed
plastic that can be laminated between the airbag assembly and a flexible cover
to the steering wheel, the device can be placed over the airbag assembly on
the steering wheel in place of the traditional switch that has been placed on
the side of the airbag assembly. All products will be integrated with
electronic assembly counterparts in their configuration. The Company has not
entered into any sales, license or distribution agreements with respect to the
horn application that are currently in effect. The Company has two patents
relating to the horn switch assembly.

     Other Applications

     Management believes the potential market for the Technology includes
using the Technology to replace or upgrade devices used in industrial control
systems, medical equipment and instrumentation, computer peripherals,
automotive transmission equipment, commercial vending equipment and other
devices. The Company intends to further identify applications of the
Technology in numerous fields and industries.  A core sales strategy is to
seek applications of the Technology to products used by customers that
emphasize functionality, reliability, quality, and user convenience. 

                                5
<PAGE>

Business Strategy

     Management believes that its success will depend upon its ability to
coordinate its product design, manufacturing, distribution and service
strategies in a long-term business model. A sales strategy of the Company is
to offer a line of standard sensor products with corresponding hardware and
software to facilitate ease of implementation of the Technology into a
customers system. The standard product line is expected to be sold through
manufacturer's reps, distributors and the internet. The Company will further
seek to expand its product offering to include substantially complete value-
added assemblies. The Company will continue to consider licensing and/or
partnership arrangements as it has done with Ohio Art and Delphi. The Company
anticipates selling primarily to original equipment manufacturers ("OEMs")
initially in the United States and eventually worldwide. For the international
and smaller volume domestic customers, the Company plans to contract, sell and
distribute its products through various manufacturer representatives and
distributors.

     Since the Company's intended customers are typically technology
companies, the design phase of the sales cycle is extremely important. The
Company anticipates that the OEM will typically approach the Company with a
conceptual product requiring the Company to produce a prototype. The prototype
will then be tested in the environment in which the ultimate product will be
placed. During this process, customer contact with the Company's application
engineers and internal sales support individuals will be critical for a
successful design to occur.

     In the long term the Company will attempt to add value by expanding its
sensor product line through licensing, strategic agreements, and/or
acquisition of other entities. It is anticipated that such diversification of
sensor products will enhance the ability of the Company to offer sensor
"system " solutions to its customer. These product lines, when combined, could
create a much larger value added profit margin. There is, however, no
assurance that such profit margins will be achieved. Eventually, by adding
circuit boards, enclosures, etc., management expects to integrate to a more
extensive product line.

Research and Development

     The applications of the Technology are wide spread. The Bend Sensor(R)
coatings can be applied to many different substrates from metal wire to
plastic film. Industries with potential applications range from aerospace to
toys.

     Although the Company holds the patent to the base Bend Sensor(R) product
as well as other applications there will be others working to develop
competing technologies. To stay on the forefront of the technology, and to
serve the needs of the customer, the Company will need to aggressively pursue
improvements to existing systems and develop new systems as well. The Company
spent $1,382,101 and $593,540 in research and development activities during
1998 and 1997, respectively. During 1998, $705,265 of its research and
development expenses were spent to fund development of the software that will
used with the smart air bag system. The Company expects to spend at least as
much in 1999 as it spent in 1998 in research and development activities. There
can be no assurance that the Company will be successful in pursuing
improvements to existing systems and/or developing new systems.

     The Company believes that the coatings for the Bend Sensor(R) products
are difficult to duplicate. The Company must develop new coatings to fit
emerging customer needs and to stay ahead of the competition. There can be no
assurance that the Company will be successful in developing new coatings.

Marketing, Distribution, Sales and Customers

     The Company will principally market its products to OEMs. The Company's
primary marketing objectives are to generate demand for its products, enhance
name recognition and support OEMs. The Company's products are expected to be
purchased primarily by OEMs. The Company believes that the successful use of
its products by OEMs
                                6
<PAGE>

will create additional demand for higher quantity of existing products. The
Company also anticipates that the success of its existing products will allow
the Company to successfully introduce new products to the market.

     The Company will seek to support OEMs through telephone access to the
Company's in-house sales force and regular mailing of product. The Company
will also seek to generate interests and explore additional applications to
its Technology through attendance and participation at trade shows and
publicity in trade magazines. The Company is developing a strategy to use
value added resellers ("Var's"). Var's are independent engineering contractors
that will be trained to design the Bend Sensor(R) products into systems they
are responsible for. The Var's can provide applications engineering and more
quickly support implementation of the Technology.

     The Company believes that its relationship with OEMs is an important part
of its overall sales strategy. The Company believes that the OEMs will
initiate purchase orders for its products. To date they have not done so in
significant quantities. The loss of any of the major OEMs with which the
Company has developed a relationship could have a significant adverse effect
on its results of operations until alternative distribution channels could be
established. The Company would consider contractual commitments to OEMs in
exchange for fees and royalties. In addition, because the Company does not
sell directly to end users, the Company is dependent, in part, on its OEM for
information about retail product sales. Accordingly, any rapid cessation of
purchases or switch to other companies' products by end users may not be
immediately evident to the Company, and could result in increased product
returns.

     The Company intends to develop a field sales force including direct
employees in strategic areas and manufacturers representatives nationwide to
generate OEM customers. Currently the Company is selling direct to the
automotive industry and utilize outside representatives in the toy industry. 
Further, the Company has expanded its inside support to expand market
opportunities.  As the market grows in North America the Company anticipates
expanding its distribution network throughout the world.  There can be no
assurance that the Company will be successful in developing such a sales force
or in expanding its distribution network.

Manufacturing and Suppliers

     The Company currently owns equipment installed in its facility located at
6906 South 300 West, Midvale, Utah, enabling it to manufacture up to 25
million finger size Bend Sensors(R) per year. Upon completion of the build out
of its newly leased facility located in the Salt Lake International Center,
the Company will use the Midvale facility for Research and Development and non
automotive sensor production. The Company is currently purchasing equipment to
manufacture auto seat size Bend Sensors(R), sometimes referred to as the Bend
Sensor(R) Mat. The equipment will be housed in the Company's newly leased
facility and upon installation will be capable of producing enough auto seat
size Bend Sensor(R) products to satisfy the Company's expected demand during
the next three years. The equipment is being installed in anticipation of
orders generated from the Supply Agreement with Delphi. There is no assurance,
however, that such orders will materialize. If such orders materialize, there
is no assurance that they will be on terms that are advantageous to the
Company or that they will result in sufficient volume to sustain reasonable
profitable levels.

     The Company uses standard components for its products and has taken steps
to eliminate dependence on components which can be obtained from a single or a
limited number of sources. Currently, all components necessary to manufacture
the products, other than ink, are standard components available from several
sources. Flexpoint has developed its own proprietary inks for the Flexpoint
products. The Company intends to establish long-term contractual relationship
with certain strategic suppliers which require these suppliers to maintain
increased inventory levels of materials provided to the Company. In keeping
with the Company's goal of producing quality products at a low cost, the
Company will also work with its strategic suppliers to minimize component
cost.

     Certain domestic and international organizations set recognized standards
for production quality and certify manufacturers who are able to comply with
those standards. Those standards are commonly known in the industry as
International Standards of Organization ("ISO"). There are different ISO
levels. The automotive industry has embraced the ISO standards but the
organization has augmented these requirements. The organization developed what
is known as QS 9000 compliance for automotive suppliers. The Company is
seeking QS 9000 quality

                                7
<PAGE>

certifications for its manufacturing facilities and those of its contract
manufacturers. In order to obtain a QS 9000 certification, the Company must
apply to the organization that sets those standards and prove to the
organization that those standards have been met. Management believes it has
built its operating foundation on such principles and will be able to obtain
the appropriate certification within 18 months. However, there is no assurance
the Company will obtain the required certification. 

Competition

     The sensor business is highly competitive and competition is expected to
continue to increase. The Company will compete directly with firms that have
longer operating histories, more experience, substantially greater financial
resources, greater size, more substantial research and development and
marketing organizations, established distribution channels and that are better
situated in the market than the Company. The Company does not have an
established customer base and is likely to encounter a high degree of
competition in developing a customer base.

     As per management's knowledge and except as noted below, technology
similar to that of the Company is not currently in production by any
competitor. Management believes that the Company's products will be
sufficiently distinguishable from the existing products so that it will not
compete directly with existing sensor products. A majority of all sensing
devices require physical contacts. The Company is aware of one other
manufacturer who utilizes similar potentiometer technology, but to
management's knowledge such use is not widespread. Certain force transducer
sensors and fiber optic sensors are comparable to the Company's Bend
Sensors(R). However, management believes that the force transducer sensor is
not as reliable as the Company's Bend Sensor(R) and that the fiber optic
sensors are not as cost effective as the Bend Sensor(R). As this new area
grows, additional manufacturers may attempt to introduce similar products and
competition could intensify.

     In the medical electronics field the Company's competitors are the
numerous potentiometer manufacturers. In the auto seat field the Company's
competitors are the numerous capacitive, piezo, infrared, and ultrasonic
sensor manufacturers. Such competitors may use their economic strength to
influence the market to continue to buy their existing products. One or more
of these competitors could use their resources to improve their current
products or develop new products that may compete more effectively with the
Company's products. New competitors may emerge and may develop products which
compete with the Company's products. No assurance can be given that the
Company will be successful in competing in this industry.

     The Company intends to compete on the basis of early entry into the
market with its products, enhanced features, performance, ease of use,
compatibility, reliability, price, marketing, distribution, quality and
support. Management also believes its intellectual property provides it an
advantage over its competitors. Although management believes that its products
will be well received in its markets because of innovative features,
performance characteristics and cost-effective pricing, there can be no
assurance that comparable or superior products incorporating more advanced
technology or other features or having better price/performance
characteristics will not be introduced by competitors.

Intellectual Property

     The Company regards certain of its product designs as proprietary and
attempts to protect them with patents and by restricting disclosure of such as
trade secrets. The Company has five issued United States patents and five
additional pending applications for patents in the United States. The Company
also has one issued patent in Canada and has four patent applications pending
in foreign countries evolving from and based upon one application under the
Patent Cooperation Treaty. All patents and patent applications relate to the
Technology. The Company is aware of one potentially conflicting patent which
the Company believes will not affect the Company's current or planned use of
the Technology.

     There can be no assurance that the protection provided by patents and
patent applications, if issued, will be broad enough to prevent competitors
from introducing similar products or that such patents, if challenged, will be

                                8
<PAGE>

upheld by the courts of any jurisdiction. Patent infringement litigation,
either to enforce the Company's patents or defend the Company from
infringement suits, would be expensive and, if it occurs, could divert Company
resources from other planned uses. Any adverse outcome in such litigation
could have a material adverse effect on the Company. Patent applications filed
in foreign countries and patents in such countries are subject to laws and
procedures that differ from those in the United States. Patent protection in
such countries may be different from patent protection under U.S. laws and may
not be as favorable to the Company. The Company also attempts to protect its
proprietary information through the use of confidentiality agreements and by
limiting access to its facilities. There can be no assurance that the
Company's program of patents, confidentiality agreements and restricted access
to its facilities will be sufficient to protect the Company's proprietary
Technology. 

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

Business of Tamco

     Tamco is an operating manufacturing and machining company. It derives
revenue from contracting machining services to third parties . Generally,
Tamco receives orders for molds and tools used by Tamco's customers to produce
final products. The Company uses Tamco for its manufacturing facilities and to
perform machining and manufacturing for Flexpoint products and to outside
parties to the extent excess capacity remains. Tamco's business is extremely
competitive. Competitors range from small part-time shops to large shops with
significantly greater resources.

Employees

     As of December 31, 1998, the Company had twenty-seven full-time employees
and one part-time employee. The Company is also utilizing the services of
outside contractors and consultants in connection with its ink, hardware and
software development. The Company is spending more on its outside contractors
and consultants than it spends to compensate its employees and its expects
that this trend will continue through 1999. Although there is competition for
qualified personnel in the business operated by the Company, to date the
Company has not had significant problems recruiting and retaining qualified
personnel. None of the Company's employees are subject to collective
bargaining agreements, and the Company has experienced no work stoppages.
Management believes that its employee relations are good.

Item 2. Description of Property.

     The Company's principal offices are located at 6906 South 300 West,
Midvale, Utah, under terms of a lease which expires in October 1999, with a
monthly rent of approximately $4,900. The lease covers approximately 13,000
square feet of space which is anticipated to accommodate the manufacture of up
to 25 million finger size Bend Sensor(R) units per year. The physical
condition of the leased property is adequate for the Company's needs. 

     On November 18, 1998, the Company entered into an Industrial Space lease
with Prudential Insurance Company of America for approximately 61,250 square
feet of manufacturing space located at 635 North Billy Mitchell Road in Salt
Lake's International Center. The Company believes that the physical condition
of the property is adequate for the Company's needs. The lease expires in the
year 2004 and contains an extension option for an additional three year term,
with a monthly rent of approximately $20,825 per month. The lease also
includes a Right of First Offer for an additional 60,000 square feet of space
adjacent to the premises in two 30,000 square feet increments. Negotiations
are currently underway for the additional space. The Company intends to move
its headquarters and principal manufacturing facilities from its current
location at 6906 South 300 West to the new International Center facility.

                                9
<PAGE>

Item 3. Legal Proceedings.

     On February 13, 1998, Private Equity Partners LLC ("PEP") filed suit
against Sensitron in the Third Judicial District Court in Salt Lake County,
Utah. PEP alleges, among other things, that Sensitron owes PEP investment
banking fees and warrants with respect to an agreement, and that Sensitron's
refusal to pay such fees constitutes fraud. The suit seeks to obtain
investment banking fees equal to 6.5% of all money raised by Sensitron,
warrants to purchase 2% of Sensitron's equity, punitive damages of $5,000,000
and other relief. Discovery has been completed and both PEP and Sensitron
filed Cross-Motions for Summary Judgment. The Court took the Cross-Motions for
Summary Judgment under advisement on December 18, 1998 after oral arguments
were presented. The parties are awaiting a decision on the Cross-Motions for
Summary Judgment.

     In October, 1996, John Clayton and Blaine Taylor filed suit against
Sensitron, Flexpoint and certain of their officers in the Third Judicial
District Court in Salt Lake County, Utah. The suit alleges, among other
things, that the plaintiffs had a binding agreement pursuant to which the bend
sensor technology of Gordon Langford would be transferred to a public shell
company for which the plaintiffs would raise investment capital. The
plaintiffs are seeking (I) declaratory judgment that they own a 21.72%
interest in the company that owns the Technology, or actual and punitive
damages, and (ii) repayment of certain costs and expenses.   The defendants
have responded that there was no binding agreement with the plaintiffs, and
that in any event the plaintiffs failed to perform. The Defendants did not
dispute the repayment claim and paid the plaintiffs the sum of $48,016.17 to
resolve the repayment claim in full. In August of 1998, the Court granted
defendants' Motion for Summary Judgment dismissing all other claims asserted
by plaintiffs with prejudice, except for the remaining claim as to attorney
fees. After the court rules on the remaining issue Clayton and Taylor have
intimated that they will file an appeal. If an appeal is filed Sensitron
intends to vigorously defend the appeal.

Item 4. Submission of Matters to a Vote of Security Holders.

     The Company held its annual meeting of stockholders on October 14, 1998,
at which meeting the following proposals were presented and approved by the
described vote.

     The first proposal was to amend the Certificate of Incorporation to
provide that the board of directors of Micropoint to consist of three classes
of directors, with one class elected at each annual meeting of the
stockholders for a term of three years. 10,789,187 shares for the proposal and
0 shares voted against the proposal.

     The second proposal was to elect the nominee directors. The following
person received the following number of votes for director:

                                     Number of votes
                       ------------------------------------------------------
Name                         For                      Authority Withheld
----                         ---                      ------------------
Douglas M. Odom           10,798,187                           0
Don M. Jackson            10,798,187                           0
Jeffrey A. Coleman        10,798,187                           0

     The term of Douglas M. Odom expires in 2001, the term of Don M. Jackson
expires in 2000 and the term of Jeffrey A. Coleman expires in 1999. 

                                10
<PAGE>

     The third proposal was to increase to 6,000,000 the number of shares of
Common Stock that may be issued under the Micropoint, Inc. Omnibus Stock
Option Plan. 10,645,271 shares were voted for the proposal and 136,350 shares
voted against the proposal.

     The fourth proposal was to amend the Certificate of Incorporation to
eliminate the ability of the Company's stockholders to act by written consent.
10,461,401 shares were voted for the proposal and 280,286 shares against the
proposal.

Stockholders Proposals

     The Company anticipates holding its Annual Stockholders Meeting on June
16, 1999.  Any stockholder who desires to have a proposal included in the
Company's proxy soliciting material relating to the Company's 1999 Annual
Meeting of Stockholders should send to the Secretary of the Company a signed
Notice of Intent.  This Notice, including the text of the proposal, must be
received no later than April 23, 1999.


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                                11

<PAGE>

                             PART II

Item 5.     Market for Registrant's Common Equity and Related Stockholder
            Matters.

Share Price History 

     The Company's common stock (the "Common Stock") has been quoted on the
NASD Over-the-Counter market since September 14, 1998 under the trading symbol
"MICP." Prior to such date , no active trading market existed for the
Company's Common Stock. The following table sets forth the high and low bid
information of the Common Stock for the periods indicated. It should be
understood that such over the counter market quotations reflect inter-dealer
prices without retail markup, markdown or commission, and the quotations may
not reflect any actual market transactions in the Common Stock.

     Quarter Ended                      High             Low
     -------------                      ----             ---

     1998
     ----
     September 30                       $8.50            $5.50
     December 31                        $8.3125          $6.375

Dividend Policy

     To date, the Company has not paid dividends on its Common Stock. The
payment of dividends, if any, in the future is within the discretion of the
Company's Board of Directors (the "Board") and will depend upon the Company's
earnings, its capital requirements and financial condition, and other relevant
factors. See "Management's Discussion and Analysis or Plan of Operation." The
Board does not intend to declare any dividends in the foreseeable future, but
instead intends to retain all earnings, if any, for use in the Company's
operations.

Holders of Record

     At December 31, 1998, there were 345 holders of record of the Company's
Common Stock. The number of holders of record was calculated by reference to
the Company's stock transfer agent's books.

Issuance of Securities
  
     At December 31, 1998, the Company was conducting a private placement
whereby the Company had raised gross proceeds of $1,155,362 through an
offering of Common Stock to accredited investors for $4 per share. The Common
Stock was issued under Rule 506 of Regulation D and Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"). The Company did not
use an underwriter in connection with the private placement.

     In October 1998 the Company issued 10,000 shares of Common Stock to two
executive officers of the Company pursuant to the exercise of stock options.
The strike price of the options exercised was $.16 per share. Said Common
Stock was issued under Section 4(2) of the Securities Act.

     In July through October 1998 the Company also granted stock options to
acquire 415,000 shares of Common Stock at $.75 per share to certain directors,
officers and key employees of the Company. Of said options, 150,004 were
immediately exercisable and 264,996 vest during each of the three year periods
following the date of grant. Said options were granted under the Company's
Omnibus Stock Option Plan pursuant to Section 4(2) of the Securities Act. 

                                12
<PAGE>

     In October 1998 stock options to acquire 14,500 shares of common stock at
$.16 per share were exercised. In addition, 69,602 shares of common stock were
issued in cancellation of a $42,828 obligation of the Company. Said securities
were issued under Section 4(2) of the Securities Act.

     In December 1998 the Company issued 30,303 shares of Common Stock to an
affiliate of a director of the Company. Said shares were issued in full
satisfaction of certain obligations that the Company made to said director in
connection with his investment in the Company in December 1997.

Item 6. Management's Discussion and Analysis or Plan of Operation.

     The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
Company's consolidated results of operations and financial condition. The
discussion should be read in conjunction with the consolidated financial
statements and notes thereto. Wherever in this discussion the term "Company"
is used, it should be understood to refer to Micropoint, Sensitron, Flexpoint
and Tamco, on a consolidated basis, except where the context clearly indicates
to the contrary. Prior to the Acquisition, Micropoint had no operations. The
April 1998 Acquisition was accounted as a reorganization of Sensitron. The
historical financial statement prior to the Acquisition are those of Sensitron
and have been restated accordingly. See Note 2 to the Company's Notes to
Consolidated Financial Statements. 

Overview

      The Company is in the development stage and, since inception, has
incurred losses from operations. As of December 31, 1998, the Company had
cumulative net losses totaling $5,550,934. The Company is primarily engaged in
the sensor business and is currently marketing proprietary patented sensor
technology know as the Bend Sensor(R) technology (the "Technology"). Sensing
devices can be used to measure or sense changes in deflection and are
typically used to trigger an electronic device when the sensor is activated.
The worldwide market for sensing devices has grown significantly as a result
of better technology and new applications for sensing technology. This growth
has resulted in a corresponding increase in demand for high performance
sensing products. Management believes this worldwide market growth will
continue.

Financial Position

     The Company had $657,775 in cash as of December 31, 1998. This
represented an increase of $551,281 from December 31, 1997. Working capital as
of December 31, 1998, also increased to $2,317,976 as compared to ($1,084,918)
at December 31, 1997. These increases were largely due to funds generated from
the sale of securities and funds generated from operations during 1998.

Years Ended December 31, 1998 and 1997

     During the year ended December 31, 1998, the Company had sales of
$1,915,628, compared with sales of $261,936 for the year ended December 31,
1997. Sales during both periods were comprised primarily of product sales and
engineering fees. 

     In May 1997, the Company entered into a License Agreement (the "License
Agreement") whereby the Company granted to Ohio Art the exclusive worldwide
right to sell products incorporation the Technology in the toy, traditional
games and video game markets. The License Agreement provided for certain up
front fees and minimum royalties in order for Ohio Art to maintain such
exclusive rights. Substantially all of the Company's product sales for 1997
and 1998 were derived under the License Agreement. In 1998, the Company had
orders for over 7,000,000 toy sensors and had invoiced and collected
approximately $1,580,000 relating thereto. It should be noted that the toy
industry is cyclical and the Company expects that royalty revenues under the
License Agreement will be greater in the second and third quarters of any
given year. In addition, certain customers of the Company have

                                13
<PAGE>

indicated that they will be getting out of the plush toy business and/or will
not be manufacturing products using sophisticated sensor systems. As a result,
the Company believes that revenues under the License Agreement and from the
toy industry will be less during 1999 than during 1998. There can be no
assurance as to what level, if any, of sales that the Company will secure in
future years.

     In June 1998, the Company entered into a Purchase and Supply Agreement
(the "Supply Agreement") with Delphi Automotive Systems ("Delphi") for the
Company to supply its proprietary sensor mats to Delphi for integration into a
weight based suppression system as a critical part of a smart air bag system.
The Supply Agreement provides that such sensor mats will be exclusively
supplied to General Motors, through Delphi, by the Company through 2002. The
Company is looking to the Supply Agreement to provide the bulk of its revenues
in the immediate future.  The Company could have over $135,000,000 in sales
under the Supply Agreement based on estimates that were produced jointly by
Delphi and the Company. Delphi is not obligated under the terms of the Supply
Agreement, however, to purchase any minimum number of sensor mats and there
can be no assurance that the Supply Agreement will result in any material
amount of sales. As of the date of this filing, the Company had not entered
into any firm agreement for a continued supply of Bend Sensor(R) products.
Although management is highly confident that significant contracts can be
obtained, there can be no assurance as to future sales levels of Bend
Sensor(R) products. The failure of the Company to generate substantial sales
under the Supply Agreement will materially and adversely effect the Company. 
License and supply arrangements, such as those discussed above, create certain
risks for the Company, including (I) reliance for sales of products on other
parties, and therefore reliance on the other parties' marketing ability,
marketing plans and credit-worthiness; (ii) if the Company's products are
marketed under other parties' labels, goodwill associated with use of the
products may inure to the benefit of the other parties rather than the
Company; (iii) the Company may have only limited protection from changes in
manufacturing costs and raw materials costs; and (iv) if the Company is
reliant on other parties for all or substantially all of its sales, the
Company may be limited in its ability to negotiate with such other parties
upon any renewals of their agreements.

     General and administrative expenses were $1,953,432 for 1998, compared
with $1,061,279 for the prior year. The increase in expenditures between 1998
and 1997 resulted primarily from increases in salary and wage expenses as a
result of hiring additional accounting, management and clerical employees and
increases in advertising and consulting expenses. General and administrative
expenses during 1997 were also limited by a lack of available funds.

     Research and development expenses were $1,382,101 for 1998, compared with
$593,540 for the prior year. The increase in expenditures between 1998 and
1997 resulted primarily from increases in salary and wage expenses as a result
of hiring additional engineering personnel and increases in consulting,
equipment and software costs. Specifically, during 1998 $705,265 of its
research and development expenses were paid mainly to third party consultants
to assist in the development of the software that will used with the smart air
bag system. Research and development expenses were also limited in 1997 by a
lack of available funds.

     Net interest and other income was $5,020 for 1998, compared with
($34,879) for the prior year. The difference in net interest and other income
between said periods relates mainly to interest earned on funds on deposit
less interest paid on borrowings.

                                14
<PAGE>

Liquidity and Capital Resources

     To date, the Company has financed its operations principally through
private placements of equity securities and sales. The Company generated
$5,209,130 and $2,194,328 in net proceeds through financing activities from
inception through December 31, 1998 and in 1998, respectively. The Company has
used net cash in operating activities of $5,216,976 and $3,291,772 from
inception through December 31, 1998 and in 1998, respectively. As of December
31, 1998, the Company's liabilities totaled $458,311. The Company had working
capital as of December 31, 1998 of $2,317,976.

     The Company's working capital and other capital requirements for the
foreseeable future will vary based upon a number of factors, including the
costs to expand facilities, complete development and bring the certain product
utilizing the Technology to commercial viability and the level of sales of and
marketing for the Company's products. The Company believes that existing funds
and funds generated from sales will not be sufficient to support the Company's
operations through 1999. With the award of the Supply Agreement, the Company
will need to materially increase spending for additional facilities, equipment
and personnel. At a minimum, in 1999 the Company will need to raise
approximately $8,000,000 in additional funding to support its operations
during 1999 and the Company needs to raise in 1999 at least $11,000,000 in
additional funding to fully execute its business plan. 

     The Company is working to obtain this additional funding from several
sources, but it has no firm commitments with respect thereto and there can be
no assurance that additional funding will be available to the Company on
commercially reasonable terms or in the necessary amounts. Any inability to
obtain additional financing in the amounts described above will have a
material adverse effect on the Company, including possibly requiring the
Company to significantly curtail or cease its operations.

     The Company currently has outstanding stock options and warrants to
acquire 6,944,310 shares of Common Stock. The exercise of all the outstanding
stock options and warrants would result in an equity infusion to the Company
of $3,801,704. There is no assurance, however, that any of such options or
warrants will be exercised.

Inflation

     The Company does not expect the impact of inflation on operations to be
significant.

Year 2000

     The Company uses computers systems and microprocessors that are embedded
in systems the Company uses. Computers and embedded microprocessors have the
potential for operational problems if they lack the ability to handle the
transition to the Year 2000. Because this issue has the potential to cause
disruption of the Company's business operations, the Company has and is
seeking to identify and remediate potential Year 2000 problems in its business
information systems and other systems embedded in its engineering and
manufacturing operations. In addition, the Company is initiating
communications with its suppliers, dealers, distributors and other third
parties in order to assess and reduce the risk that the Company's operations
could be adversely affected by the failure of these third parties to
adequately address the Year 2000 issue.

     The Company uses computers systems principally for product design,
product prototyping and administrative functions such as communications, word
processing, accounting and management and financial reporting. The Company
uses embedded microprocessors principally in its manufacturing and engineering
operations. The Company's principal computer systems (including the embedded
microprocessors systems) have been purchased since December 31, 1997 and the
vendors supplying such systems have generally represented that such systems
are year 2000 compliant. The software utilized by the Company is generally
standard "off the shelf" software, typically available from a number of
vendors. The Company is verifying with its software vendors that the services
and products provided are, or will be, year 2000 compliant. Based on such
verification, the Company believes that its computer systems and software is
year 2000 compliant in all material respects. The Company estimates that the
cost to redevelop, replace or repair its technology will not be material. The
Company is not using any independent verification or validation procedures.
There can be no assurance, however, that such systems 

                                15
<PAGE>

and/or programs are or will be year 2000 compliant and that the failure of
such would not have a material adverse impact on the Company's business and
operations. 

     In addition to its own computer systems, in connection with its business
activities, the Company interacts with suppliers, customers, and financial
service organizations who use computer systems. The Company is verifying with
such parties their state of year 2000 readiness. Based on its assessment
activity to date, the Company believes that a majority of the suppliers,
customers and financial service organizations with whom it interacts are
making acceptable progress toward Year 2000 readiness. The Company currently
believes that the most reasonable likely worst case scenario is that there
will be some localized disruptions of supplier, customer and/or financial
services that will affect the Company and its suppliers, and distribution
channels for a short time rather than systemic or long-term problems affecting
its business operations as a whole. In view of the foregoing, the Company does
not currently anticipate that it will experience a significant disruption of
its business as a result of the Year 2000 issue. However, there is still
uncertainty about the broader scope of the Year 2000 issue as it may affect
the Company and third parties that are critical to the Company's operations.
For example, lack of readiness by electrical and water utilities, financial
institutions, government agencies or other providers of general infrastructure
could pose significant impediments to the Company's ability to carry on its
normal operations in the area or areas so affected. The Company is currently
evaluating what contingency plans, if any, to make in the event the Company or
parties with whom the Company does business experience year 2000 problems.

     The statements made herein about the costs expected to be associated with
the year 2000 compliance and the results that the Company expects to achieve,
constitute forward looking information. As noted above, there are many
uncertainties involved in the year 2000 issue, including the extent to which
the Company will be able to successfully and adequately provide for
contingencies that may arise, as well as the broader scope of the year 2000
issues as it may affect third parties that are not controlled by the Company.
Accordingly, the costs and results of the Company's year 2000 program and the
extent of any impact on the Company's operations could vary materially from
those stated herein. 

Forward-Looking Statements

     When used in this Form 10-K, in filings by the Company with the SEC, in
the Company's press releases or other public or stockholder communications, or
in oral statements made with the approval of an authorized executive officer
of the Company, the words or phrases "would be," "will allow," "intends to,"
"will likely result," "are expected to," "will continue," "is anticipated,"
"estimate," "project," or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995.

     The Company cautions readers not to place undue reliance on any forward-
looking statements, which speak only as of the date made, are based on certain
assumptions and expectations which may or may not be valid or actually occur,
and which involve various risks and uncertainties, including but not limited
to risk of product demand, market acceptance, economic conditions, competitive
products and pricing, difficulties in product development, commercialization,
and technology, and other risks. Furthermore, manufacturing delays may result
from product redesigns or otherwise. In addition, sales and other revenues may
not commence as anticipated due to delays or otherwise and sales may not reach
the levels anticipated. As a result, the Company's actual results for future
periods could differ materially from those anticipated or projected.

     Unless otherwise required by applicable law, the Company does not
undertake, and specifically disclaims any obligation, to update any forward-
looking statements to reflect occurrences, developments, unanticipated events
or circumstances after the date of such statement.
Other Factors

                                16
<PAGE>

     The Company is subject to certain other risk factors due to its
development stage status, the industry in which it competes and the nature of
its operations. These risk factors include the following.

     History of Losses/Uncertain Profitability. The Company has a limited
operating history, having commenced operations in 1993. The Company's growth
has been limited by lack of working capital. There can be no assurance that
the Company will be able to achieve a significant level of sales or
profitability. In addition, future revenues will be dependent upon the ability
of the Company to market its proprietary Technology and develop new
applications therefor. The Company's ability to generate future revenues will
be dependent on a number of factors, many of which are beyond the Company's
control, including, among others, competition. Because of the foregoing
factors, among others, the Company is unable to forecast its revenues, if any,
or the rate at which it can generate revenues, if any, on its current products
with any degree of accuracy. There can be no assurance that the Company will
be able to increase its sales in accordance with its internal forecasts or to
a level that meets the expectations of investors.

     Management of Expanded Operations; Dependence on Key Personnel. The
Company may not be equipped to successfully manage any future periods of rapid
growth or expansion, which could be expected to place a significant strain on
the Company's managerial, operating, financial and other resources. The
Company is highly dependent upon the efforts of management, and the Company's
future performance will depend, in part, upon the ability of management to
manage growth effectively, which will require the Company to implement
financial controls systems, management information systems capabilities, to
develop its operating, administrative, financial and accounting systems and
controls, to maintain close coordination among engineering, accounting,
finance, marketing, sales and operations, and to hire and train additional
technical and marketing personnel. There is intense competition for
management, technical and marketing personnel in the areas of the Company's
activities. The loss of the services of any of the Company's management or the
failure to attract and retain additional key employees could have a material
adverse effect on the Company's business, operating results and financial
condition. 

     Competition. The market for sensor devices is extremely competitive, and
the Company expects that competition will intensify in the future. Many of the
Company's 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 the Company. Such 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 the Company. There can be no assurance that the Company will be able to
compete successfully against current or future competitors or that competitive
pressures faced by the Company will not materially adversely affect the
Company's business, operating results or financial condition. Further, as a
strategic response to changes in the competitive environment, the Company may
make certain pricing, service or marketing decisions or enter into
acquisitions or new ventures that could have a material adverse effect on the
Company's business, operating results or financial condition. 
 
     Risks of Technological Change. The market for electronic devices such as
sensors is characterized by rapid technological developments, frequent new
product introductions and evolving industry standards. The emerging nature of
these products and services and their rapid evolution will require that the
Company continually improve the performance, features and reliability of its
products particularly in response to competitive offerings. There can be no
assurance that the Company will be successful in responding quickly, cost
effectively and sufficiently to these developments. There may be a
time-limited market opportunity for the Company's products, and there can be
no assurance that the Company will be successful in achieving widespread
acceptance of its products before competitors offer products and services with
features and performance similar to the Company's current offerings. In
addition, the widespread adoption of new technologies or standards, could
require substantial expenditures by the Company to modify or adapt its
products and services and which could have a material adverse effect on the
Company's business, operating results and financial condition. In addition,
new products offered by the Company may contain design flaws or other defects
that could have a material adverse effect on the Company's business, operating
results and financial condition.
                                17
<PAGE>

     Dependence on Continued Research and Development. Most of the Company's
products that utilize the Technology are still in various stages of
development. The Company is also exploring additional applications for the
Technology. The continued development of its products and development of
additional applications of the Technology is important to the long-term
success of the Company. There can be no assurance that all of such
applications or products will be developed or, if developed, that they will be
successful. 

     Dependence on Patents and Proprietary Rights. The Company's future
success depends in part on its ability to protect its intellectual property
and maintain the proprietary nature of its Technology through a combination of
patents and other intellectual property arrangements. There can be no
assurance that the protection provided by patents, if issued, will be broad
enough to prevent competitors from introducing similar products or that such
patents, if challenged, will be upheld by the courts of any jurisdiction.
Patent infringement litigation, either to enforce the Company's patents or
defend the Company from infringement suits, would be expensive and, if it
occurs, could divert Company resources from other planned uses. Any adverse
outcome in such litigation could have a material adverse effect on the
Company. Patent applications filed in foreign countries and patents in such
countries are subject to laws and procedures that differ from those in the
United States. Patent protection in such countries may be different from
patent protection under U.S. laws and may not be as favorable to the Company.
The Company also attempts to protect its proprietary information through the
use of confidentiality agreements and by limiting access to its facilities.
There can be no assurance that the Company's program of patents,
confidentiality agreements and restricted access to its facilities will be
sufficient to protect the Company's proprietary Technology from competitors.

     Product Liability. The sale of the Company's devices entails an inherent
risk of liability in the event of product failure or claim of harm caused by
product operation. There can be no assurance that the Company will not be
subject to such claims, that any claim will be successfully defended or if the
Company is found liable, that the claim will not exceed the limits of the
Company's insurance. The Company maintains product liability insurance. There
is no assurance that the Company will maintain product liability insurance on
acceptable terms in the future. Product liability claims could have a material
adverse effect on the Company.

     Litigation. On February 13, 1998, Private Equity Partners LLC ("PEP")
filed suit against Sensitron in the Third Judicial District Court in Salt Lake
County, Utah. PEP alleges, among other things, that Sensitron owes PEP
investment banking fees and warrants with respect to an agreement, and that
Sensitron's refusal to pay such fees constitutes fraud. The suit seeks to
obtain investment banking fees equal to 6.5% of all money raised by Sensitron,
warrants to purchase 2% of Sensitron's equity, punitive damages of $5,000,000
and other relief. Discovery has been completed and both PEP and Sensitron
filed Cross-Motions for Summary Judgment. The Court took the Cross-Motions for
Summary Judgment under advisement on December 18, 1998 after oral arguments
were presented. The parties are awaiting a decision on the Cross-Motions for
Summary Judgment.

     In October, 1996, John Clayton and Blaine Taylor filed suit against
Sensitron, Flexpoint and certain of their officers in the Third Judicial
District Court in Salt Lake County, Utah. The suit alleges, among other
things, that the plaintiffs had a binding agreement pursuant to which the bend
sensor technology of Gordon Langford would be transferred to a public shell
company for which the plaintiffs would raise investment capital. The
plaintiffs are seeking (I) declaratory judgment that they own a 21.72%
interest in the company that owns  Technology, or actual and punitive damages,
and (ii) repayment of certain claims.   The defendants have responded that
there was no binding agreement with the plaintiffs, and that in any event the
plaintiffs failed to perform. The Defendants did not dispute the loan
repayment claim and paid the plaintiffs the sum of $48,016.17 to resolve the
loan  repayment claim in full. In August of 1998, the Court granted
defendants' Motion for Summary Judgment dismissing all other claims asserted
by plaintiffs with prejudice.  Defendants may stand to recover attorney fees
from plaintiffs.  After the court rules on that issue, Clayton and Taylor will
likely file an appeal. If an appeal is filed, Sensitron intends to vigorously
defend the appeal.

     The above referenced PEP litigation is in the early stages and the
Clayton/Taylor litigation has unresolved issues. Both lawsuits are subject to
all of the risks and uncertainties of litigation and the outcome cannot
presently be predicted. Specifically, there is no assurance that the Company
will be fully successful in these lawsuits or that

                                18
<PAGE>

these lawsuits will be resolved on acceptable terms, and the Company may incur
significant costs in asserting its claims and defenses. The Company is not
engaged in any other legal proceedings.

     Anti-takeover Effect of Preferred Stock and Delaware Corporate Law. The
Company has authorized 1,000,000 shares of Preferred Stock ("Preferred
Stock"), none of which are outstanding. The Board of Directors has the
authority to issue the Preferred Stock with such voting and other rights
superior to those of the Common Stock, which could effectively deter any
takeover attempt of the Company. In addition, the Delaware General Corporation
Law prohibits certain mergers, consolidations, sales of assets or similar
transactions between the Company on the one hand and another company which is,
or is an affiliate of, a beneficial holder of 15% or more of the Company's
voting power (defined as an "interested stockholder"), for three years after
the acquisition of the voting power, unless the acquisition of the voting
power was approved beforehand by the Company's Board of Directors or the
transaction is approved by a majority of Company shareholders, (excluding the
interested stockholder). The provisions prohibiting interested stockholder
transactions could also preserve control of the Company by management.

     Anti-Takeover Provisions of Certificate and Bylaws. The Certificate of
Incorporation of the Company provides for the division of the Board into three
classes substantially equal in number. At each annual meeting of stockholders
one class of directors is to be elected for a three-year term. Amendments to
this provision must be approved by a two-thirds vote of all the outstanding
stock entitled to vote; the number of directors may be changed by a majority
of the entire Board or by a two-thirds vote of the outstanding stock entitled
to vote. Meetings of stockholders may be called only by the Board, the Chief
Executive Officer or the President of the Company, and stockholder action may
not be taken by written consent. These provisions could have the effect of (I)
discouraging attempts at non-negotiated takeovers of the Company which may
provide for stockholders to receive a premium price for their stock or (ii)
delaying or preventing a change of control of the Company which some
stockholders may believe is in their interest.

     General Economic and Market Conditions. Use of devices in which Company
sensors are incorporated are dependent upon general economic conditions.
During recessionary periods, the markets in which the Company competes could
be characterized by decreased product demand and price erosion. Although the
Company does not believe such factors will affect the Company, there can be no
assurance that the Company will not be affected by such factors or by future
events in the industry.

Item 7. Financial Statements.
     
     See attached financial statements.

Item 8. Changes In and Disagreements With Accountants on Accounting and        
 Financial Disclosure.

     Not applicable.


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                                19
<PAGE>

                             PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons;
        Compliance with Section 16(a) of the Exchange Act.

     Set forth below is certain information concerning each of the directors
and executive officers of the Company as of March 3, 1999.
 
                                                                  With the
Name                  Age  Position                             Company Since
----                  ---  --------                             -------------

Douglas M. Odom       38   President, Chief Executive Officer
                           and Director                               1995

Thomas E. Danielson   37   Vice-President                             1995

Jeffrey A. Coleman    37   Director                                   1998

Don M. Jackson, Jr.   63   Director                                   1998
_______________


     Douglas M. Odom. Mr. Odom has been the President, Chief Executive Officer
and Director of Micropoint since April 1998, and has held the same positions
with respect to Flexpoint since 1995 and with respect to Sensitron since 1996.
From 1993 to 1995, Mr. Odom served as the Marketing and Sales Manufacturing
Director of Xymox Technologies, Inc. Xymox Technologies, Inc. is one of the
world's largest manufacturers of membrane switches and related electronic
interface devices. Prior to his employment at Xymox Technologies, Inc., Mr.
Odom was a key executive in the reorganization of EEC, Inc. from a public
company in bankruptcy to private company posting profits and positive cash
flow. From 1985 to 1990, Mr. Odom was Vice president of Operations of Comptec,
Inc., a world-wide plastic injection molder and electronic device corporation.
From 1983 to 1985, Mr. Odom was the manager of manufacturing engineering at
AMP Keyboard Technologies. Mr. Odom received a bachelors degree in General
Science/Chemistry from Grinnell College, Grinnell, Iowa in 1982. He completed
his masters studies at the American Graduate School of International
Management in Glendale, Arizona and furthered graduate studies at Harvard
University, Cambridge, MA.

     Thomas E. Danielson. Mr. Danielson has been the Vice-President of
Micropoint since 1995. Mr. Danielson was with Xymox Technologies, Inc.,
Milwaukee, WI from 1993-95, in an operations management and sales management
role. Prior to that, Mr. Danielson was with W.H. Brady Company, Milwaukee, WI
from 1986-93, in a variety of roles, including engineering, manufacturing and
sales. Mr. Danielson holds a bachelors of science degree in Civil Engineering
from the University of Wisconsin and a MBA in Production Operations Management
from the University of Wisconsin-Whitewater. 

     Jeffrey A. Coleman. Mr. Coleman has been a director of Micropoint since
April 1998, and served as a director of Sensitron since January 1998. Mr.
Coleman has been managing member of Coleman Capital Partners, a private equity
investment group, since 1996. From 1985 to 1997 he was Director of Operations
for the Pyramid Group, a national real estate development, investment and
management firm. From 1982 to 1983 he was a consultant in the Management
Information Consulting Division of Arthur Andersen & Co. Mr. Coleman received
an MBA from the Amos Tuck School of Business at Dartmouth College and a BA
(honors) from Stanford University.

     Don M. Jackson, Jr., PhD. Dr. Jackson has been a director of Micropoint
since April 1998, and served as a director of Sensitron since January 1998.
Dr. Jackson founded Global Semiconductor Technology, LLC, in May 

                                20
<PAGE>

1996. Global Semiconductor Technology, LLC is in the semiconductor materials
and equipment business and Dr. Jackson has been President and Chairman since
inception of that company. Dr. Jackson has been active in the founding and
operating of a number of semiconductor equipment and materials companies since
1976 when he founded ASM America in Phoenix. From 1960 until 1976, Dr. Jackson
held a number of technical and management positions in the semiconductor
industry, specifically Motorola and General Electric Corporation. Dr. Jackson
is a director of M & I Thunderbird Bank in Phoenix and three other high-
technology corporations. He received a Ph.D. in Electrical Engineering from
Arizona State University, an M.S. in Physics from Iowa State University and a
B.A. in Physics from William Jewell College. 

     Executive officers of the Company are elected by the Board on an annual
basis and serve at the discretion of the Board.

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officer, directors and persons who beneficially own more
than 10% of the Company's Common Stock to file initial reports of ownership
and reports of changes in ownership with the Securities and Exchange
Commission ("SEC"). Such persons are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms filed by such persons. 

     Based solely on the Company's review of such forms furnished to the
Company and representations from certain reporting persons, management
believes that all filing requirements under Section 16(a) applicable to the
Company's executive officers, directors and more than 10% stockholders were
complied with during the fiscal year ended December 31, 1998, except that (I)
Mr. Thomas E. Danielson filed a Form 5 reporting the exercise of stock options
in October 1998 which should have previously been reported on a Form 4, (ii)
30,303 shares of Common Stock were issued to an entity that, on information
and belief, Jeffrey A. Coleman is deemed to beneficially own, for which Mr.
Coleman filed an amended Form 5 in March 1999 reporting the transaction, (iii)
the Company has not received Form 5 filings or written representations that
such no such filing in required for  Jules A. DeGreef and Northridge
Investment, LLC. 

Item 10. Executive Compensation.

     The tables below set forth certain information concerning compensation
paid by the Company to its Chief Executive Officer and all other executive
officers with annual compensation in excess of $100,000 (determined for the
year ended December 31, 1998) (the "Named Executive Officers"). The tables
include information related to stock options granted to the Named Executive
Officers. 

     Summary Compensation Table. The following table provides certain
information regarding compensation paid by the Company to the Named Executive
Officers. 
 
                    SUMMARY COMPENSATION TABLE

<TABLE>


                           Annual Compensation               Long-Term Compensation Awards
                           -------------------               -----------------------------
                                                                        Securities
                                                             Restricted Underlying              All Other
Name and                                     Other Annual    Stock      Options/    LTIP        Compensation 
Principal Position  Year  Salary($) Bonus($) Compensation($) Awards     SARs(#)     Payouts($)     ($)
------------------  ----  --------- -------- --------------- ------     ----------  ----------  ------------
<S>                 <C>   <C>       <C>      <C>              <C>       <C>         <C>             <C>
Douglas M. Odom (1) 1996  103,750    --       --               --         --          --              --
President, CEO and  1997  120,000    --       --               --       520,000(2)    --              --
Director            1998  120,000    10,000   --               --         --          --              --

</TABLE>
                                        
_______________

(1)  Note Summary Compensation Table reflects salary and bonus compensation
     paid by Flexpoint to Mr. Odom. Mr. Odom received no compensation from
     Micropoint, Sensitron or TAMCO during the periods specified. 

                                21
<PAGE>

(2)  These options were granted by Sensitron and converted into outstanding
     obligations of Micropoint as part of the Acquisition. Options to acquire
     5,000 shares were exercised in October 1998, options to acquire 385,000
     shares are currently exercisable and options to acquire 130,000 shares do
     not become exercisable until January 1, 2000.

        AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
                  FISCAL YEAR END OPTION VALUES

<TABLE>
                                              Number of Securities       Value of Unexercised
                                             Underlying Unexercised          In-the-Money
                                             Options/SARs at Fiscal     Options/SARs at Fiscal
                    Shares                       Year-End($)                  Year-End($)
                  Acquired On      Value       (Exercisable/                 Exercisable/
Name              Exercise(#)   Realized($)    Unexercisable)              Unexercisable)(1)
---------------   -----------   -----------  ---------------------     ----------------------
<S>               <C>           <C>          <C>                       <C>
Douglas M. Odom   5,000         $35,550(2)     515,000/260,000(3)          $2,797,950/826,800

</TABLE>
______________

(1)  The closing price of the Company's Common Stock on December 31, 1998 was
     $6.75 per share.
(2)  Options exercisable for 5,000 shares of the Company's Common Stock at
     $.16 per share were exercised on October 11, 1998.(3)   Represents
     options currently exercisable for 125,000 shares of Common Stock at an
     exercise price of $.16 per share; options currently exercisable for
     130,000 shares of Common Stock at $.39 per share; options to acquire
     260,000 shares of Common Stock at an exercise price of $.39 per share
     vest in equal increments on January 1, 1999 and 2000; and options
     currently exercisable for 260,000 shares of Common Stock at $.77 per
     share. 

Compensation of Directors

    Non-employee directors are each being compensated for service on the Board
through the grant of stock options to purchase 80,000 shares of the Company's
Common Stock which stock options are exercisable at $.75 per share. An initial
20,000 options vested on the date of grant during 1998 and the remaining
options to acquire 60,000 shares of Common Stock vest equally in three annual
installments in July 1999, 2000 and 2001. During 1998 directors of the Company
who are also officers or employees of the Company did not receive and are not
expected to receive in the future any additional compensation for their
service as directors. All directors are entitled to reimbursement for
reasonable expenses incurred in the performance of their duties as Board
members. The Company has made no other agreements regarding compensation of
directors.

Employment Agreements

     Effective December 31, 1997, Flexpoint entered into an employment
agreement with Mr. Odom as its Chief Executive Officer. Under the Employment
Agreement, Flexpoint pays Mr. Odom an annual base salary of $120,000 per year
plus such discretionary bonus as the Flexpoint Board of Directors may deem
appropriate. The Employment Agreement has an initial term of three years and
will be automatically renewed successive one-year terms (the "Renewal Terms")
unless terminated by either party. The Employment Agreement also provides Mr.
Odom with options to acquire 780,000 shares of Common Stock of Micropoint at
an exercise price between $.16 and $.77 per share under the Micropoint Omnibus
Stock Option Plan (the "Plan"). As of December 31, 1998, options to acquire
515,000 shares of Common Stock were exercisable and options to acquire 5,000
shares had been exercised. Options to acquire an additional 260,000 shares of
Common Stock at $.39 per share vest in equal installments in January 1999 and
2000. All of the above described options became obligations of Micropoint as
part of the Acquisition. The Company does not have employment agreements with
any of its other employees.

                                22
<PAGE>

Indemnification for Securities Act Liabilities

     Delaware law authorizes, and the Company's Bylaws and Indemnity
Agreements provide for, indemnification of the Company's directors and
officers against claims, liabilities, amounts paid in settlement and expenses
in a variety of circumstances. Indemnification for liabilities arising under
the Act may be permitted for directors, officers and controlling persons of
the Company pursuant to the foregoing or otherwise. However, the Company has
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.

Stock Options 

     The Company has adopted an Omnibus Stock Option Plan for the benefit of
officers, directors, employees and consultants of the Company. The grant of
options to acquire an aggregate of 6,000,000 shares of Common Stock have been
authorized under the Plan. The Plan will permit the Company to grant "non-
qualified stock options" and/or "incentive stock options" to acquire shares of
the Company's Common Stock. The total number of shares authorized for the Plan
may be allocated between the non-qualified stock options and the incentive
stock options from time to time, subject to certain requirements of the
Internal Revenue Code of 1986, as amended (the "Code").

     The Plan is currently being administered by the Board, which will select
optionees and determine the number of shares of Common Stock subject to each
option. The Plan provides that no option which is to be a qualified option may
be granted at an exercise price less than the fair market value of the Common
Stock of the Company on the date of grant and in all cases the term of the
stock option shall not exceed ten years. Options to acquire 5,507,550 shares
of Common Stock at exercise prices ranging from $.16 to $.77 are presently
outstanding under the Plan. 

Compensation Committee Interlocks and Insider Participation

     No executive officers of the Company serve on the Compensation Committee
(or in a like capacity) for the Company or any other entity.

Item 11. Security Ownership of Certain Beneficial Owners and Management.

     The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock of the Company as of February 15,
1999, for: (I) each person who is known by the Company to beneficially own
more than five percent of the Company's Common Stock, (ii) each of the
Company's directors, (iii) each of the Company's Named Executive Officers
(defined below), and (iv) all directors and executive officers as a group. As
of February 15, 1999, the Company had 16,506,408 shares of Common Stock
outstanding.

Name and Address          Shares Beneficial   Percentage
of Beneficial Owner(1)    Owned(2)            of Total(2)   Position
----------------------    -----------------   -----------   --------
Douglas Odom              650,000(3)          3.8%          President, CEO and
                                                            Director

Jeffrey A. Coleman        245,303(4)          1.5%          Director

Don M. Jackson, Jr.       20,000(5)            *            Director

All officers and
directors as a group
(3 persons)               915,303     

Bull Ventures, Ltd.       832,654(6)          5.0% 
Katerina Court
101 E Hill Place
Nassau, Bahamas         

Northridge                1,647,750(7)        10.0%
Investment, LLC
47 E. 7200 South, #221
Midvale, UT 84047

John Sindt                1,366,620(8)        8.1%
47 E. 7200 South, #221
Midvale, UT 84047

Jules A. deGreef          2,152,667(9)       13%
47 E. 7200 South, #201
Midvale, UT 84047

* Less than 1%.
_______________

(1)  Except where otherwise indicated, the address of the beneficial owner is
     deemed to be the same address as the Company.
(2)  Beneficial ownership is determined in accordance with SEC rules and
     generally includes holding voting and investment power with respect to
     the securities. Shares of Common Stock subject to options or warrants
     currently exercisable, or exercisable within 60 days, are deemed
     outstanding for computing the percentage of the total number of shares
     beneficially owned by the designated person, but are not deemed
     outstanding for computing the percentage for any other person.
(4) (3)   Includes 5,000 shares and vested options to purchase 645,000 shares.
     Does not include options to acquire an additional 130,000 shares of
     Common Stock vest on January 1, 2000.Includes 225,303 shares owned by a
     limited liability company controlled by Sens Partners, LLC, of which Mr.
     Coleman is a Member of and options to acquire 20,000 shares of Common
     Stock. Does not include options to acquire 60,000 shares of Common Stock
     that vests in equal installments in July 1999, 2000 and 2001.
(5)  Includes options to acquire 20,000 shares of Common Stock. Does not
     include options to acquire 60,000 shares of Common Stock that vests in
     equal installments in July 1999, 2000 and 2001.
(6)  Represents the number of shares of Common Stock held of record by Bull
     Ventures, Ltd. Bull Ventures, Ltd. filed a Schedule 13D, dated April 9,
     1998, but has not made any subsequent filing under Section 13(d) or 13(g)
     reporting a change in beneficial ownership although it appears that such
     filing was required. As a result, the Company makes no representation
     concerning the number of shares beneficially owned by Northridge
     Investments, LLC.     
(7)  Represents 1,647,750 shares. Does not include shares, warrants or options
     owned by Messrs. Sindt and DeGreef, as to which Northridge disclaims
     beneficial ownership.
(8)  Represents 297,000 shares held by Mr. Sindt, 895,750 shares held by
     Northridge Investment LLC, and 455,000 shares underlying warrants held in
     the name of Jules A. DeGreef. Does not include 825,987 shares held by
     Bull Ventures, Ltd. with which Mr. Sindt is affiliated and as to which
     Mr. Sindt disclaims beneficial ownership.
(9)  Represents 1,386,917 shares held by Mr. DeGreef and 765,750 shares held
     by Northridge Investment LLC. Does not include 825,987 shares held by
     Bull Ventures, Ltd. with which Mr. DeGreef is affiliated and as to which
     Mr. DeGreef disclaims beneficial ownership.

     The Company is not aware of any arrangements, the operation of which may,
at a subsequent date, result in a change in control of the Company.

Item 12. Certain Relationships and Related Transactions.

     Mr. Jehu Hand, an officer and director of Micropoint prior to the April
1998 Acquisition, acted as legal counsel for Micropoint. In December 1997, the
Company issued 726,200 shares of Common Stock in connection 

                                24
<PAGE>
 
with the conversion of certain convertible debentures held by Mr. Hand, dated
April 1, 1995, in the principal amount of $2,421. 

     Sens Partnership, LLC, which is beneficially owed by Mr. Coleman who is a
director of the Company, was issued 30, 303 shares of the Company's Common
Stock in December 1998. These shares were issued to satisfy in full certain
obligations that the Company made to Mr. Coleman in connection with his
investment in the Company in December 1997. 

Item 13. Exhibits and Reports on Form 8-K.
     
Exhibits

     Listed on page 27 hereof.

Reports on Form 8-K

     No reports on Form 8-K were filed by the Company during the fourth
quarter ended December 31, 1998.



           [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                25
<PAGE>

                            SIGNATURES

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

                               Micropoint, Inc.(Registrant)


Date:   March 16,1999        By /s/ Douglas M. Odom
     -------------------       ----------------------
                               Douglas M. Odom, 
                               President, Chief Executive Officer and Director


     In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated. 



Signature              Title                                   Date
---------              -----                                   ----
/s/ Douglas M. Odom    President, Chief Executive Officer      March 16, 1999
Douglas M. Odom        Director (Principal Executive Officer)  


/s/ Jeffrey Coleman    Director                                March 16, 1999
Jeffrey Coleman              

/s/ Don M. Jackson     Director                                March 16, 1999
Don M. Jackson

/s/ Thomas N. Strong   Comptroller (Principal Financial     
Thomas N. Strong       and Accounting Officer)                 March 16, 1999

                                26
<PAGE>




                          EXHIBIT INDEX

EXHIBIT NO.                 DESCRIPTION OF EXHIBIT
-----------                 ----------------------

2.1     Agreement and Plan of Reorganization (Schedules are omitted)
        (Incorporated by referenced to Exhibit 2.1 of the Company's Current
        Report on Form 8-K, dated April 9, 1998).

3(i).1  Certificate of Incorporation of Micropoint (Incorporated by reference
        to Exhibit 3.1 of the Company's Registration Statement on Form 10-SB,
        dated June 17, 1994).

3(i).2  Certificate of Amendment to Certificate of Incorporation (Incorporated
        by referenced to Exhibit 3.1 of the Company's Current Report on Form
        8-K, dated April 9, 1998).

3(i).3  Articles of Incorporation of Sensitron (Incorporated by referenced to
        Exhibit 3.(i).3 of the Company's Annual Report on Form 10-KSB, dated
        March 31, 1998).

3(i).4  Articles of Incorporation of Flexpoint (Incorporated by referenced to
        Exhibit 3.(i).4 of the Company's Annual Report on Form 10-KSB, dated
        March 31, 1998).

3(i).5  Articles of Incorporation of Tamco (Incorporated by referenced to
        Exhibit 3.(i).5 of the Company's Annual Report on Form 10-KSB, dated
        March 31, 1998).

3(ii).1 Restated Bylaws of Micropoint (Incorporated by reference to Exhibit
        3.2 of the Company's Registration Statement on Form 10-SB, dated June
        17, 1994).

3(ii).2 Bylaws of Sensitron (Incorporated by referenced to Exhibit 3.(ii).2 of
        the Company's Annual Report on Form 10-KSB, dated March 31, 1998).

3(ii).3 Bylaws of Flexpoint (Incorporated by referenced to Exhibit 3.(ii).3 of
        the Company's Annual Report on Form 10-KSB, dated March 31, 1998).

3(ii).4 Bylaws of Tamco (Incorporated by referenced to Exhibit 3.(ii).4 of the
        Company's Annual Report on Form 10-KSB, dated March 31, 1998).

10.1    Employment Agreement with Douglas M. Odom (Incorporated by reference
        to Exhibit 10.1 of the Company's Current Report on Form 8-K, dated
        April 9, 1998).

10.2    Lease Agreement between 72nd South Associates and the Company
        (Incorporated by reference to Exhibit 10.2 of the Company's Current
        Report on Form 8-K, dated April 9, 1998).

10.3    Agreement between Ohio Art and the Company (Incorporated by reference
        to Exhibit 10.3 of the Company's Current Report on Form 8-K, dated
        April 9, 1998).

10.4    Purchase and Supply Agreement by and among Flexpoint, Inc. and Delphi
        Automotive Systems (certain portions of the agreement were omitted
        from the exhibit pursuant to a grant of confidential treatment).

10.5    Industrial Space Lease between Prudential Insurance Company of America
        and Micropoint.

21.1    Schedule of Subsidiaries (Incorporated by referenced to Exhibit 21.1
        of the Company's Annual Report on Form 10-KSB, dated March 31, 1998).

27.1    Financial Data Schedule

<PAGE>


               MICROPOINT, INC.  AND  SUBSIDIARIES





        REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
                               AND
                CONSOLIDATED FINANCIAL STATEMENTS






                        December 31, 1998


                    Hansen, Barnett & Maxwell
                    A Professional Corporation
                   CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>











                MICROPOINT, INC. AND SUBSIDIARIES


                        TABLE OF CONTENTS 
                                                                      Page

Report of Independent Certified Public Accountants.....................1

Consolidated Balance Sheet - December 31, 1998.........................2

Consolidated Statements of Operations for the Years
 Ended December 31, 1998 and 1997 and for the Period
 from January 5, 1995 (Date of Inception) through December
 31, 1998 .............................................................3

Consolidated Statements of Stockholders' Equity (Deficit)
 for the Period from January 5, 1995, (Date of Inception)
 through December 31, 1995, and for the Years Ended 
 December 31, 1996, 1997 and 1998......................................4

Consolidated Statements of Cash Flows for the Years 
 Ended December 31, 1998 and 1997 and for the Period 
 from January 5, 1995 (Date of Inception) through December 
 31,  1998 ............................................................6

Notes to Consolidated Financial Statements.............................7
                                                             

<PAGE>

HANSEN, BARNETT & MAXWELL
A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS

                                                                (801) 532-2200
Member of AICPA Division of Firms                           Fax (801) 532-7944
Member of SECPS                                  345 East 300 South, Suite 200
Member of Summit International Associates      Salt Lake City, Utah 84111-2693


        REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To the Stockholders and the Board of Directors
Micropoint, Inc.

We have audited the accompanying consolidated balance sheet of Micropoint,
Inc. and subsidiaries (a company in the development stage) as of December 31,
1998 and the related consolidated statements of operations, stockholders'
equity (deficit), and cash flows for the years ended December 31, 1998 and
1997, and for the cumulative period from January 5, 1995 (date of inception)
through December 31, 1998.  These financial statements are the responsibility
of Micropoint's management.  Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Micropoint, Inc.
and subsidiaries as of December 31, 1998 and the results of their operations
and their cash flows for the years ended December 31, 1998 and 1997, and for
the cumulative period from January 5, 1995 (date of inception) through
December 31, 1998,  in conformity with generally accepted accounting
principles.

HANSEN, BARNETT & MAXWELL

/s/ Hansen, Barnett & Maxwell

February 5, 1999
Salt Lake City, Utah


<PAGE>


                MICROPOINT, INC. AND SUBSIDIARIES
               (A Company in the Development Stage)
                    CONSOLIDATED BALANCE SHEET
                        DECEMBER 31, 1998

                              ASSETS

Current Assets
      Cash                                                    $     657,775
      Trade accounts receivable, net of allowance 
        for doubtful accounts of $90,721                            298,586
      Royalty receivable                                            152,570
      Receivable from shareholder                                 1,573,750
      Inventory                                                      42,691
      Prepaid expenses                                               50,915
                                                              --------------
      Total Current Assets                                        2,776,287
                                                              --------------
Property and Equipment                                            1,273,326
      Less accumulated depreciation                                (387,858)
                                                              --------------
      Net Property and Equipment                                    885,468
                                                              --------------
Deposits                                                            246,441
Patents, net of accumulated amortization of $45,018                 101,331
Goodwill, net of accumulated amortization of $77,871                 41,931
                                                              --------------

Total Assets                                                  $   4,051,458
                                                              ==============
               LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
      Trade accounts payable                                  $     348,473
      Related party payable                                           1,234
      Accrued liabilities                                           100,290
      Accrued income taxes                                            8,314
                                                              --------------
      Total Current Liabilities                                     458,311
                                                              --------------
Stockholders' Equity
      Preferred stock   $0.001 par value; 1,000,000 shares 
       authorized; no shares issued or outstanding                       - 
      Common stock   $0.001par value; 100,000,000 shares
       authorized; 17,215,446 shares issued and outstanding          17,215
      Additional paid-in capital                                 10,027,475
      Deficit accumulated during the development stage           (5,550,934)
      Less receivable from shareholder                             (900,609)
                                                              --------------
      Total Stockholders' Equity                                  3,593,147
                                                              --------------
Total Liabilities and Stockholders' Equity                    $   4,051,458
                                                              ==============

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

                                2
<PAGE>

                MICROPOINT, INC. AND SUBSIDIARIES
               (A Company in the Development Stage)
              CONSOLIDATED STATEMENTS OF OPERATIONS
                                                             For the Period
                                  For the years ended        January 5, 1995
                                     December 31,          (Date of Inception)
                                --------------------------       Through
                                    1998         1997       December 31, 1998
                                ------------  ------------  -----------------

Sales                           $  1,915,628  $    261,936  $      3,290,725

Cost of goods sold                   819,931        93,694         1,528,303
                                ------------  ------------  -----------------

Gross Profit                       1,095,697       168,242         1,762,422

General and administrative 
  expenses                         1,953,432     1,061,279         3,943,038
Research and development           1,382,101       593,540         3,303,949
                                ------------  ------------  -----------------
Loss From Operations              (2,239,836)   (1,486,577)       (5,484,565)

Interest expense                     (17,157)      (34,879)          (71,201)
Interest income                       22,177                          35,611
Other income (expense), net           12,493       (19,602)          (30,779)
                                ------------  ------------  -----------------
Net Loss                        $ (2,222,323) $ (1,541,058) $     (5,550,934)
                                ============  ============  =================

Basic and diluted loss per 
 common share                   $      (0.16) $      (0.13) $          (0.51)
                                ============  ============  =================

Weighted average number of 
 common shares used in per share 
  calculation                     14,259,935    11,721,842        10,980,011
                                ============  ============  =================

       The accompanying notes are an integral part of these
                consolidated financial statements.
                                3
<PAGE>

                     MICROPOINT, INC. AND SUBSIDIARIES
                    (A Company in the Development Stage)
         CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>

                                                                Deficit
                                                                Accumulated                         Total
                                Common Stock       Additional   During the   Receivable  Deferred   Stockholder's
                             --------------------- Paid-in      Development  From        Offering   Equity
                               Shares     Amount   Capital      Stage        Shareholder Costs      (Deficit)
                             ------------ -------- ------------ ------------ ----------- ---------- ------------
<S>                          <C>          <C>      <C>          <C>          <C>         <C>        <C>
Balance   January 5, 1995
   (Date of inception)                 -  $     -  $        -   $         -  $        -  $      -   $         -

Issuance for cash, January 
  1995, $0.00 per share         3,705,000    3,705      (1,705)           -           -         -         2,000

Issuance for cash, January 
  1995, $0.46 per share           649,987      650     299,350            -           -         -       300,000

Contribution of patents by
 stockholder, January 1995, 
 no additional shares issued          -         -       22,232            -           -         -        22,232

Issuance for cash, September and     
 October 1995, $0.77 per share    852,800      853     655,147            -     (24,000)        -       632,000

Issuance to acquire Flexpoint, 
 Inc. September 26, 1995, 
 $(0.02) per share              5,395,000    5,395     (99,579)           -           -         -       (94,184)

Issuance to acquire Tamco,
 September 26, 1995, $0.46 
 per share                        130,000      130      59,870            -           -         -        60,000

Offering costs incurred                -        -          -              -           -   (213,382)    (213,382)

Net loss                               -        -          -       (370,256)          -         -      (370,256)
                             ------------ -------- ------------ ------------ ----------- ---------- ------------
Balance December 31, 1995      10,732,787   10,733     935,315     (370,256)    (24,000)  (213,382) $   338,410

Issuance for services, 
 January 1996, $0.77 
 per share                        260,000      260     199,740            -           -         -       200,000

Issuance for cash, February 
 1996, $0.77 per share            123,500      124      94,876            -           -         -        95,000

Issuance for cash, March 
 through October 1996, net of
 $246,547 of offering costs, 
 $0.54 per share, net           1,957,111    1,957   1,051,496            -           -    213,382    1,266,835

Forgiveness of stock 
 subscription receivable               -        -      (24,000)           -      24,000         -            - 

Net loss                               -        -           -    (1,417,297)          -         -    (1,417,297)
                             ------------ -------- ------------ ------------ ----------- ---------- ------------

Balance   December 31, 1996    13,073,398 $ 13,074 $ 2,257,427  $(1,787,553) $        -  $      -   $   482,948
                             ============ ======== ============ ============ =========== ========== ============

                                                                                                (Continued)

The accompanying notes are an integral part of these consolidated financial statements.
                                     4

</TABLE>
<PAGE>

                     MICROPOINT, INC. AND SUBSIDIARIES
                    (A Company in the Development Stage)
         CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                 (CONTINUED)
<TABLE>
<CAPTION>

                                                                          Deficit
                                                                          Accumulated              Total
                                         Common Stock        Additional   During the   Receivable  Stockholder's
                                      ---------------------- Paid-in      Development  From        Equity
                                        Shares     Amount    Capital      Stage        Shareholder (Deficit)
                                      ------------ --------- ------------ ------------ ----------- -------------
<S>                                    <C>          <C>      <C>          <C>          <C>         <C>         
Balance   December 31, 1996            13,073,398  $ 13,074  $ 2,257,427  $(1,787,553) $        -  $    482,948

Issuance for cash, February through  
 July 1997, $0.97 per share               143,000       143      109,857           -            -       110,000

Redemption from officers for $50,000 
 and $150,000 notes, August 1997, 
 $0.03 per share                       (6,308,666)   (6,309)    (193,691)          -            -      (200,000)

Issuance for cash, September 1997, 
 $0.04 per share                        1,820,000     1,820       78,180           -            -        80,000

Conversion of debt, September 1997, 
 $0.57 per share                          100,672       100       53,852           -            -        53,952

Issuance for cash and a $390,000 
 receivable, September through December 
 1997, $0.78 per share                  1,031,875     1,032      802,968           -            -       804,000

Net loss                                       -         -            -    (1,541,058)          -    (1,541,058)
                                      ------------ --------- ------------ ------------ ----------- -------------
Balance   December 31, 1997             9,860,279     9,860    3,108,593   (3,328,611)          -      (210,158)

Expense related to warrants granted to 
 purchase 30,303 shares at $0.00 per 
  share, January 1998                          -         -        22,727           -            -        22,727

Additional shares issued for cash 
 received in December 1997, issued 
  March 1998                               84,500        84          (84)          -            -            - 

Conversion of notes payable, March 1998,
 $0.80 per share                          248,833       249      199,751           -            -       200,000

Acquisition of Nanotech Corporation,
 April 11, 1998, $0.50 per share        6,000,000     6,000    2,977,275           -            -     2,983,275

Conversion of debt, October 1998, 
$0.61 per share                            69,602        69       42,759           -            -        42,828

Exercise of options, October 1998, 
 $0.16 per share                           14,500        15        2,305           -           (9)        2,311

Exercise of warrant, October 1998, 
   $0.00 per share                         30,303        30          (30)          -            -            -

Issuance for cash, November through 
  December 1998, $4.00 per share          288,841       289    1,155,073           -            -     1,155,362

Issuance for receivable from shareholder,
 December 1998, $4.00 per share           618,588       619    2,473,731           -     (900,600)    1,573,750

Compensation related to grant of stock 
 options                                       -         -        45,375           -            -        45,375

Net loss                                       -         -           -     (2,222,323)          -    (2,222,323)
                                      ------------ --------- ------------ ------------ ----------- -------------

Balance - December 31, 1998            17,215,446  $ 17,215  $ 10,027,475 $(5,550,934) $ (900,609) $  3,593,147
                                      ============ ========= ============ ============ =========== =============

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

                                     5
</TABLE>

                MICROPOINT, INC. AND SUBSIDIARIES
               (A Company in the Development Stage)
              CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                   For the Period
                                           For the years ended     January 5, 1995
                                               December 31,        (Date of Inception)
                                      ---------------------------  Through
                                             1998         1997     December 31, 1998
                                      ------------- -------------  -----------------
<S>                                   <C>           <C>            <C>
Cash Flows From Operating Activities
    Net Loss                          $ (2,222,323) $ (1,541,058)  $     (5,550,934)
    Adjustments to reconcile net loss 
     to net cash used by operating 
     activities:
      Gain on sale of available-for
       -sale securities                    (21,225)           -             (21,225)
      Loss on sale of assets                 9,227            -               9,227
      Depreciation and amortization        227,233       166,040            523,083
      Compensation paid with stock 
       options                              45,375            -              45,375
      Stock issued for services             22,727            -             222,727
      Allowance for doubtful accounts       90,721            -             242,288
      Changes in operating assets and 
       liabilities:
         Accounts receivable              (343,484)      249,641           (404,833)
         Other receivable                 (152,570)           -            (152,570)
         Inventory                         (42,691)           -             (42,691)
         Accounts payable                 (157,259)       52,327            169,659
         Accrued liabilities              (263,428)      256,996             31,306
         Deferred revenue                 (200,000)      193,837             (6,163)
         Other assets                     (284,075)       (3,761)          (282,225)
                                      ------------- -------------  -----------------
      Net Cash Used In Operating 
       Activities                       (3,291,772)     (625,978)        (5,216,976)
                                      ------------- -------------  -----------------
Cash Flows From Investing Activities
    Payments to Flexpoint prior to 
     acquisition                                -             -            (268,413)
    Cash paid to acquire Tamco                  -             -             (25,000)
    Proceeds from sale of available-
     for-sale securities                   455,082            -             455,082
    Net cash received in Nanotech 
     acquisition                         1,492,907            -           1,492,907
    Payments received from related 
     parties                                34,661            -              34,661
    Collection of receivable from 
     escrow agent                           64,825            -              64,825
    Payments to purchase equipment        (379,263)      (92,008)        (1,000,797)
    Proceeds from sale of equipment         14,592         8,090             22,682
    Issuance of note receivable                 -             -             (12,507)
    Payments received on note receivable     4,950         6,252             12,505
    Payments for patents                   (39,029)      (11,769)          (110,324)
                                      ------------- -------------  -----------------
    Net Cash Provided By (Used In) 
      Investing Activities               1,648,725       (89,435)           665,621
                                      ------------- -------------  -----------------
Cash Flows From Financing Activities
    Proceeds from issuance of common 
     stock                               1,157,664       604,000          4,090,664
    Cash payments to officers to 
     repurchase stock                           -        (50,000)           (50,000)
    Cash paid for offering costs                -             -            (123,020)
    Collection of receivables from
     issuance of common stock              390,000            -             390,000
    Proceeds from borrowings                    -        303,960            303,960
    Principal payments of debt            (353,336)      (10,000)          (398,751)
    Borrowings from Nanotech prior 
     to acquisition                      1,000,000            -           1,000,000
    Proceeds from related party notes           -         39,562             60,208
    Principal payments of related 
     party notes                                -        (66,376)           (63,931)
                                      ------------  -------------   ----------------
    Net Cash Provided By Financing 
       Activities                        2,194,328       821,146          5,209,130
                                      ------------- -------------  -----------------

Net Increase In Cash                       551,281       105,733            657,775
Cash   Beginning of Period                 106,494           761                 - 
                                      -------------  -------------  ----------------

Cash   End of Period                  $    657,775  $    106,494   $        657,775
                                      ============= =============  =================
</TABLE>

 
Supplemental cash flow information and Noncash investing and financing
activities   Note 6

      The accompanying notes are an integral part of these 
                consolidated financial statements.
                                6
<PAGE>

                MICROPOINT, INC. AND SUBSIDIARIES
               (A Company in the Development Stage)
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1  NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation   The accompanying consolidated financial
statements include the accounts of Sensitron Inc. (Sensitron) for all periods
presented and the accounts of Micropoint, Inc. (formerly Nanotech
Corporation), Flexpoint, Inc. (Flexpoint) and Technology and Machine Company,
Inc. (Tamco) from the dates of their acquisitions discussed in Note 2.  These
entities are collectively referred to as "Micropoint" or the "Company."  All
significant intercompany transactions and account balances have been
eliminated in consolidation.

Nature of Operations   Sensitron Inc. was incorporated under the laws of the
State of Utah on January 5, 1995, which is considered Micropoint's date of
inception. Micropoint is a development stage enterprise engaged principally in
designing, engineering, and manufacturing sensors and related equipment using
its flexible potentiometer technology. Through December 31, 1998, a majority
of Micropoint's sales were to toy manufacturers. Micropoint has negotiated a
significant contract to supply flexible sensors to an automobile component
manufacturer.  Sales under the contract are scheduled to begin upon
Micropoint's completion of required  research and development and
establishment of a manufacturing facility.

Use of Estimates   The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts in the financial statements
and accompanying notes.  Actual results could differ from those estimates. 

Business Condition   The accompanying financial statements have been prepared
in conformity with generally accepted accounting principles, which
contemplates continuation of Micropoint as a going concern. However,
Micropoint has suffered losses from operations and has had negative cash flows
from operating activities during the years ended December 31, 1998 and 1997
and cumulative from inception through December 31, 1998, which conditions
raise substantial doubt about Micropoint's ability to continue as a going
concern. Micropoint's continued existence is dependent upon its ability to
achieve profitable operations. Micropoint's management has negotiated a
significant contract to supply flexible sensors to an automobile component
manufacturer. Management believes that sales from this contract should provide
the Company positive cash flows from operating activities.  Further,
management believes this and other similar potential sales contracts,
including contracts with toy industry customers, will provide sufficient cash
flows for Micropoint to continue as a going concern and to ultimately
establish profitable operations.

Fair Values of Financial Instruments   The amounts reported as cash, trade
accounts receivable, receivable from shareholder, other receivable, trade
accounts payable, and accrued liabilities are considered to be reasonable
approximations of their fair values.  The fair value estimates were based on
market information available to management at the time of the preparation of
the financial statements. 

Investment in Securities - During the year ended December 31, 1998, Micropoint
held investments in marketable securities which were designated as available-
for-sale. Realized gains and losses have been accounted for on the specific
identification method.  Total proceeds from the sale of securities were
$455,082 with gross realized gain of $21,225. The gain is included in other
income (expense), net in the accompanying statements of operations.

Concentration of Risk and Major Customers   At December 31, 1998 Micropoint
had cash in excess of insured limits of $557,175.  The concentration of
business in one-industry subjects Micropoint to a concentration of credit risk
relating to trade accounts receivable.  During the year ended December 31,
1998, 85% of Micropoint's sales were to customers in the toy industry. During
1998, sales to two major customers totaled 40% and 35% of sales, respectively.
Sales to major customers were not significant during 1997. Micropoint relies
on large production contracts for its business and generally does not require
collateral from its customers with respect to trade receivables. 


                                7
<PAGE>


                MICROPOINT, INC. AND SUBSIDIARIES
               (A Company in the Development Stage)
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Inventory   Inventory is valued at the lower of cost or market.  Cost is
determined using the first-in, first-out method.

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 retirement, sale or disposition, the cost and
accumulated depreciation of the items sold are eliminated from the accounts,
and any resulting gain or loss is recognized in operation.  Depreciation is
computed using the straight-line and the double-declining-balance methods and
is recognized over the estimated useful lives of the property and equipment,
which are five to seven years.

Long-Lived Assets   The realization of non-current assets is evaluated
periodically when events or circumstances indicate a possible inability to
recover the carrying amount.  Such evaluation is based upon various analyses,
including estimates of net future cash flows, and involves significant
management judgement.  No impairment losses were required to be recognized as
a result of the evaluation of these assets through December 31, 1998.

Revenue Recognition   Revenue from the sale of products is recorded at the
time of shipment to the customers. Revenue from research and development
contracts is recognized as the contracts are completed.  Revenue from
contracts to license Micropoint's technology to others is deferred until all
conditions under the contracts are met and then recognized as revenue over the
remaining term of the contracts. As of December 31, 1997, Micropoint had
$200,000 in deferred revenue from a licensing agreement with a customer which
was recognized during 1998. 

Advertising Costs   During the year ended December 31, 1998, Micropoint
incurred $65,635 of advertising costs. Micropoint follows the policy of
expensing these advertising costs at the time the advertising services are
rendered.

Stock-Based Compensation   Stock-based compensation arising from granting
stock options to employees is measured by the intrinsic-value method. This
method recognizes compensation expense based on the difference between the
fair value of the underlying common stock and the exercise price on the date
granted. Micropoint also presents pro forma results of operations assuming
compensation had been measured by the fair-value method.

Basic and Diluted Loss Per Share   Micropoint computes basic and diluted loss
per share in accordance with Statement of Financial Accounting Standards
No.128 ("SFAS 128"), Earnings Per Share.  SFAS 128 requires  128 specifies the
computation, presentation, and disclosure requirements for earnings per share. 
Loss per share for all periods presented was restated; however, the effect of
the change to loss per share for those periods was not material.

Basic loss per common share is computed by dividing net loss by the number of
common shares outstanding during the period. Diluted loss per share is
calculated to give effect to stock warrants, options and convertible notes
payable except during loss periods when those potentially issuable common
shares would decrease theloss per share.  The effects of 6,944,310 and
6,825,261 potentially issuable common shares outstanding at December 31, 1998
and 1997 were excluded from the calculation of diluted loss per share for the
years ended December 31, 1998 and 1997 and for the cumulative period from
inception through December 31, 1998, as they would have decreased the loss per
share.

                                8
<PAGE>

                MICROPOINT, INC. AND SUBSIDIARIES
               (A Company in the Development Stage)
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2   ACQUISITIONS

Nanotech Corporation ("Nanotech") was incorporated June 11, 1992 under the
laws of the state of Delaware, and has existed as a shell corporation looking
for investment opportunities.  On December 30, 1997, Sensitron entered into an
Agreement and Plan of Reorganization (the "Agreement") with Nanotech whereby
Sensitron became a wholly owned subsidiary of Nanotech. The agreement required
Nanotech to raise capital of approximately $3,000,000 in a private placement
prior to completion of the reorganization. The $3,000,000 was raised and the
reorganization was consummated in April 1998. Nanotech changed its name to
Micropoint, Inc. and the shareholders of Sensitron exchanged each of their
shares of common stock for 13 shares of Micropoint common stock which resulted
in the issuance of 9,860,279 shares of common stock to the Sensitron
shareholders.   As a result, the Sensitron shareholders became the majority
shareholders of Micropoint in a transaction intended to qualify as a tax-free
reorganization. 

The Agreement has been accounted for as a reorganization of Sensitron.  The
accompanying historical financial statements prior to the reorganization are
those of Sensitron and have been restated to reflect the effects of the
13-for-1 stock split resulting from the conversion of the outstanding
Sensitron common shares into Micropoint, Inc. shares.  The accompanying
financial statements have been restated for the effects of the stock split for
all periods presented.  The agreement was further considered the acquisition
of Nanotech by Sensitron using the purchase method of accounting.  There was
no market for Micropoint's common stock at or about the time of the
acquisition; therefore, the fair value of Nanotech's net assets of $2,983,275,
which were primarily cash and cash equivalents, was considered the fair value
of the 6,000,000 shares of Micropoint's common stock which remained
outstanding and which were deemed issued to the Nanotech shareholders.  No
goodwill was recognized in connection with the acquisition. The accompanying
consolidated financial statements include the operations of Micropoint from
the date of the reorganization.

The following table reflects the unaudited pro forma results of operations on
the basis that the reorganization and the acquisition occurred on January 1,
1997.  This pro forma financial information is presented only for comparative
purposes and is not necessarily indicative of the results of operations which
would actually have been obtained had the reorganization occurred on that date
or which may be obtained in the future:
                                                    For the Years Ended
                                                         December 31,
                                                -----------------------------
                                                     1998              1997
                                                --------------  -------------
      Sales                                     $   1,915,628   $    261,936
      Net loss                                     (2,211,688)    (3,210,704)
      Basic and diluted loss per common share           (0.16)         (0.20)

In April 1995, Sensitron acquired 100 shares of Flexpoint's common stock in
exchange for the forgiveness of $50,000 of accounts receivable.  On September
26, 1995, Sensitron completed the acquisition of Flexpoint by exchanging
5,395,000 shares (post-split) of Sensitron's common stock for the remaining
outstanding common stock of Flexpoint in a purchase business combination
accounted for in a manner similar to a pooling of interests.  Flexpoint and
Sensitron were principally owned by the same individuals prior to the
combination.  Flexpoint became a wholly owned subsidiary and is engaged in
manufacturing and selling various electronic components and sensors.

On September 26, 1995, Sensitron acquired all of the outstanding stock of
Tamco, a company engaged in manufacturing and selling various molds and dies.
The purchase price was approximately $170,000, consisting of $25,000 of cash,
a long-term note payable of $85,000 and 130,000 common shares (post-split)
valued at $60,000.  The purchase price was allocated based on the estimated
fair values of the net assets acquired.  This allocation resulted in recording
of goodwill of $119,802.  Goodwill is being amortized over five years using
the straight-line method.

                                9
<PAGE>
                MICROPOINT, INC. AND SUBSIDIARIES
               (A Company in the Development Stage)
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3   PROPERTY AND EQUIPMENT

At December 31, 1998 property and equipment consisted of the following:

            Furniture and fixtures      $      75,356
            Machinery and equipment           674,682
            Office equipment                  143,234
            Software                           29,924
            Leasehold improvements            350,130
                                        --------------
            Total                       $   1,273,326
                                        ==============

Depreciation expense for the years ended December 31,1998 and 1997 was
$188,873 and $130,051, respectively.

NOTE 4   OTHER ASSETS

Costs to obtain patents have been capitalized and are being amortized over a
five year period. Micropoint currently has the rights to several patents.
Micropoint is in the process of developing new patents and protecting its
existing patents internationally.  Cost associated for the development of
these new patents are capitalized. Amortization of patents is recognized from
the date perfected. The total patent cost capitalized as of December 31, 1998
was $146,349, of which $73,470 relates to perfected patents.  Amortization
expense from patents for the years ending December 31, 1998 and 1997 was
$14,400 and $12,021, respectively.

The Company has placed various orders for equipment that is to be received
during 1998. When the orders were placed, the Company paid deposits to the
vendors totaling $215,217. The Company also has a lease on a new production
facility. In conjunction with this lease, the Company paid a deposit of
$20,875. The lease for the new facility begins January 15, 1999. The Company
has various other deposits at December 31, 1998 totaling $10,349.

Goodwill associated with the acquisition of Tamco is being amortized over five
years using the straight-line method. Amortization expense from goodwill for
the years ended December 31, 1998 and 1997 was $23,960 and $23,960,
respectively.

NOTE 5   LICENSE AGREEMENT

In May 1997, Micropoint granted an otherwise unrelated third party the
worldwide exclusive license to use and sell flexible potentiometers covered
under Micropoint's patents for use in toys, traditional games and video game
industries.  The license does not include the right to manufacture sensors
which will be purchased from Micropoint. A licensing fee of $500,000 was
recognized as sales under the agreement relating to the exclusive use of the
technology through December 1998. After 1998, the exclusive license is to be
maintained under the agreement by the licensee providing revenue from
royalties and fees to Micropoint of at least $500,000 per year.  Royalties to
be received are 2% of sales of the licensee's products in the United States
and 3% of related products to the licensee's international partners.
Under the agreement, Micropoint guaranteed that it would deliver flexible
potentiometers in marketable quantities to the licensee by June 1, 1998, that
obligation was fulfilled by Micropoint and the initial $200,000 licensing fee
was recognized as sales at that date. Additional sales have been recognized as
products have been delivered under the agreement. At December 31, 1998,
Micropoint had a royalty receivable as a result of this licensing agreement of
$152,570.
                               10
<PAGE>

                MICROPOINT, INC. AND SUBSIDIARIES
               (A Company in the Development Stage)
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6   CASH FLOW INFORMATION

Supplemental Cash Flow Information   Cash payments for interest were $15,726
and $27,862 for the years ending December 31, 1998 and 1997, respectively.

Noncash Investing and Financing Activities   In connection with the
acquisition of Nanotech on April 11, 1998, liabilities were assumed as
follows:  

      Fair value of assets acquired                      $      1,991,589
      Advances from Nanotech prior to acquisition               1,000,000
      Fair value of common stock issued in acquisition         (2,983,275)
                                                         -----------------
            Liabilities assumed                          $          8,314
                                                         =================

On September 26, 1995, Micropoint acquired all of the common stock of Tamco. 
In connection with this acquisition, liabilities were assumed as follows:

      Fair value of assets acquired, including goodwill
       of $119,802                                       $        170,000
      Cash paid in acquisition                                    (25,000)
      Fair value of stock issued in acquisition                   (60,000)
                                                         -----------------
      Liabilities assumed                                $         85,000
                                                         =================

The liabilities assumed were paid in full during the year ended December 31,
1998. On September 26, 1995 Micropoint acquired all of the common stock of
Flexpoint in exchange for 5,395,000 shares of common stock of Micropoint.  The
following assets and liabilities were acquired at their historical cost basis:

      Historical cost of assets acquire                  $        394,660
      Capital deficiency                                           94,184
      Advances to Flexpoint prior to acquisition                 (268,413)
                                                         ------------------
            Liabilities assumed                          $        220,431
                                                         ==================

During the period ended December 31, 1995, Micropoint assumed $13,792 of legal
costs associated with the patents, in connection with the assignment of
patents to Micropoint by an officer. Micropoint accepted notes receivable for
$24,000 as consideration of 31,200 shares of common stock. During the year
ended December 31, 1996, Micropoint issued 260,000 shares of common stock
valued at $0.77 per share, or $200,000, for services.

During the year ended December 31, 1997, $111,816 of notes payable were issued
to acquire leasehold improvements. Micropoint issued 110,672  shares of common
stock upon conversion of $53,952 of accounts payable and notes payable. Common
stock was redeemed from officers in exchange for $50,000 of cash and $150,000
of notes payable. Micropoint issued common stock in exchange for stock
subscription receivables totaling $390,000 which were subsequently collected.
During the year ended December 31, 1998, 318,435 shares of common stock were
issued upon conversion of $242,828 of debt.  Micropoint issued 618,588 shares
of common stock for a subscription receivable of which $1,573,731 was
collected subsequent to year end.


                                11
<PAGE>

                MICROPOINT, INC. AND SUBSIDIARIES
               (A Company in the Development Stage)
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7   NOTES PAYABLE

On November 20, 1998, Micropoint established a $50,000 credit facility from a
bank which is available through January 15, 2000.  The credit facility is
evidenced by a promissory note dated November 20, 1998.  The bank issued a
$50,000 irrevocable standby letter of credit in connection with the execution
of a real estate lease for manufacturing facilities.  No amounts have been
drawn under the note payable or letter of credit at December 31, 1998 or
subsequently.  The promissory note and letter of credit are secured by $50,000
of cash on deposit with the bank.  In addition to the cash on deposit with the
bank, a commitment fee of 1% of the unused portion of the amount of the credit
facility is due annually.

From January through March of 1998, management negotiated the terms of
conversion of notes payable issued during 1997.  In March 1998, the holders of
$200,000 in notes payable accepted the conversion terms and converted those
notes into 248,833 shares of common stock.  The notes were converted at $0.80
per share which was at or above the fair value of the common stock at the time
of the conversion.  In addition, $42,828 of debt was issued during 1997 which
was convertible into common stock at $0.61 per share, which approximated  the
fair value of the common stock on the date the notes were issued.  The debt
was converted into 69,602 shares of common stock during October 1998. 

NOTE 8   EMPLOYMENT AND COMPENSATION AGREEMENTS

During the period ended December 31, 1995, Micropoint entered into employment
agreements with four officers. Two of the agreements included annual base
salaries of $50,000 and $75,000, respectively. Both agreements were renewed
for one year under the terms of the agreement.  Effective August 26, 1997,
both officers resigned from the Board of Directors and sold 6,308,666 shares
of common stock to Micropoint for approximately $0.03 per share (see Note 9). 
As part of the settlement agreement, one of the officers was granted options
to acquire 650,000 shares of common stock at $0.30 per share and 325,000
shares for $0.77 per share for a period of five years.  One of the officers
was retained as a consultant for a period of one year. Under the terms of the
agreement, Micropoint and the officers released each other from any future
obligation.

An agreement with a third officer included annual compensation payments of
$50,000. The agreement expired during 1998.  The fourth agreement included an
annual base salary of $90,000 during the first year of employment and $120,000
a year thereafter. This agreement had an initial term of three years and
included a $30,000 signing bonus.  On December 31, 1997, this agreement was
extended for an additional three years through December 31, 2001.  Under the
terms of the original and revised agreements, the officer was granted options
to purchase 650,000 shares of common stock at $0.38 to $0.77 per share.
Compensation related to the stock options is being recognized over the period
the options vest.

Effective May 1, 1995, Micropoint entered into a royalty agreement whereby an
officer was to provide Micropoint technical assistance and be paid a monthly
fee of $8,333 for five years.  During 1997, Micropoint suspended payments
under the royalty agreement. An agreement was signed April 15, 1998 whereby
Micropoint agreed to pay the officer $160,000 in settlement of all past and
future obligation under the compensation agreement. The amount paid was
recognized in general and administrative expense during 1998.

                                12
<PAGE>

                MICROPOINT, INC. AND SUBSIDIARIES
               (A Company in the Development Stage)
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9   STOCKHOLDERS' EQUITY

In connection with the reorganization agreement with Nanotech, Micropoint's
common stock was split 13-for-1 on April 11, 1998.  All references to shares
in these financial statements reflect the change in the number of shares
outstanding for all periods presented.

In January 1995, an officer and shareholder assigned certain patents to
Micropoint as an additional contribution to capital of $22,232. No additional
shares were issued to the shareholder for the contribution.

On March 18, 1996, Micropoint entered into a share purchase agreement whereby
Micropoint agreed to issue 1,957,111 shares of its common stock for $1,300,000
in a private placement offering. The proceeds were received and the shares
were issued throughout 1996 as required by Micropoint's cash flow needs.
Offering costs incurred in connection with the offering were $246,547. The
deferred offering costs consist primarily of legal and audit fees related to
the preparation of the private placement memorandum. 

On August 26, 1997, Micropoint entered into a settlement agreement with two
officers of Micropoint whereby the relationship between the officers and
Micropoint was terminated. As part of the agreement, Micropoint purchased
6,308,666 shares of common stock from the officers for approximately $0.03 per
share by paying $50,000 in cash and by issuing $150,000 of notes payable. 

On December 24, 1997, Micropoint issued 422,500 shares of common stock in
exchange for stock subscriptions in the amount of $390,000 receivable from the
investors. The subscriptions were collected in January 1998.

In January 1998, Micropoint recognized compensation related to an agreement
with a shareholder whereby the shareholder would be able to maintain a 1%
equity in Micropoint through the date of the merger with Nanotech.  The
agreement has been accounted for as the grant of a warrant to the shareholder
for the purchase of 30,303 shares of common stock at a zero purchase price.
$22,727 of compensation expense was recognized on the date the warrant was
granted, based upon a $0.75 fair value of  the stock on that date. The warrant
was exercised on October 14, 1998.

On December 23, 1998, Micropoint issued 618,588 shares of common stock in
exchange for a stock subscription in the amount of $2,474,350 receivable from
the investor. $1,573,750 of the subscription has been collected through
February 16, 1999 and has been classified as a current asset.

NOTE 10   STOCK OPTIONS

On April 1, 1995, the Board of Directors and shareholders adopted an Omnibus
Stock Option Plan (the "Plan").  Under the terms of the Plan as amended in
October 1997, Micropoint may grant options to employees, directors and
consultants to purchase up to 6,000,000 shares of common stock.  Incentive or
non-qualified options may be granted under the Plan. Options granted under the
Plan are exercisable over periods determined by the Board of Directors, not to
exceed 10 years from the date of grant. Options generally vest from
immediately to five years. The exercise price of options granted under the
Plan generally have been equal to or in excess of the fair value of
Micropoint's common stock on the date of grant. 

Generally, the only condition for exercise of options granted under the Plan
is that the employees remain employed through the date the options are
exercised. However, in October 1995, Micropoint granted options, exercisable
at $0.77 per share, to an officer for 195,000 shares of common stock which
vested  upon Micropoint obtaining specified levels of sales and gross profit. 
During August 1997 Micropoint agreed upon the terms of a new employment
agreement with the officer.  The agreement was executed in December 1997

                                13
<PAGE>

                MICROPOINT, INC. AND SUBSIDIARIES
               (A Company in the Development Stage)
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and included canceling 130,000 options exercisable at $0.77 and granting
390,000 options exercisable at $0.39, which management considered to be the
fair value of the Company's common stock in August 1997.  The new options vest
through 2000 and do not have any performance criteria for vesting.  No
compensation resulted from the grant of the new options. 

Micropoint applies APB Opinion 25, Accounting for Stock Issued to Employees,
and related interpretations in accounting for its Plan.  Accordingly, no
compensation cost has been recognized for stock options granted under the
Plan. Had compensation cost for the Plan been determined based on the fair
value at the grant dates for awards under the Plan consistent with the
alternative method of SFAS No. 123, Accounting for Stock-Based Compensation,
Micropoint's net loss and loss per share would have increased to the pro forma
amounts indicated below. The weighted average assumptions used to estimate the
fair value of each option grant, using the Black-Scholes option-pricing model,
are also presented:
            
                                              Years Ended December 31,
                                          --------------------------------
                                             1998               1997
                                          ---------------  ---------------
Net Loss
     As reported                          $   (2,222,323)  $    (1,541,058)
     Pro forma                                (2,342,574)       (1,567,655)

Primary and Diluted Loss per share
     As reported                                  $(0.16)           $(0.12)
     Pro forma                                    $(0.16)           $(0.13)

Weighted-Average Assumptions:
     Divided yield                                   0.0%              0.0%
     Expected volatility                           53.42%              0.0%
     Risk-free interest rate                        5.53%              5.0%
     Expected life of options, in years              5.0               4.5

A summary of the status of stock options as of December 31, 1998 and 1997 and
changes during the periods ended on those dates is presented below:

<TABLE>
<CAPTION>
                                                     Options Outstanding
                                          ------------------------------------------- 
                                                 1998                    1997
                                          ---------------------  -------------------- 
                                                       Weighted              Weighted-
                                                       Average               Average
                                                       Exercise              Exercise
                                          Shares       Price     Shares      Price
                                          ------------ --------- ----------- ---------
<S>                                       <C>          <C>       <C>         <C>
Outstanding at beginning of period          5,042,050  $    0.42  1,455,350  $   0.60
Granted                                       480,000       0.75  3,716,700      0.35
Exercised                                     (14,500)      0.16         -       0.00
Canceled                                           -        0.00   (130,000)     0.77
                                          ------------ --------- ----------- ---------
<PAGE>                                       

Outstanding at end of period                5,507,550       0.42  5,042,050      0.42
                                          ============ ========= =========== =========
Options exercisable at end of period        3,617,554       0.41  3,059,050      0.40
                                          ============ ========= =========== =========
Weighted-average fair value of
 options granted during period            $      .47             $      -
                                          ===========            ===========
</TABLE>
                                14
<PAGE>

                MICROPOINT, INC. AND SUBSIDIARIES
               (A Company in the Development Stage)
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The following table summarizes information about stock options outstanding at
December 31, 1998:

<TABLE>
<CAPTION>

                              Outstanding                                 Exercisable
                          ---------------------------------------   ---------------------------
                              Weighted-Average
Range of         Number        Remaining         Weighted-Average   Number       Weighted-Average
Exercise Prices  Outstanding  Contractual Life    Exercise Price    Exercisable  Exercise Price
---------------  ----------- ----------------    -----------------  -----------  ---------------
<S>              <C>         <C>                 <C>                <C>          <C>
     $0.15          856,500        3.7 years              $0.15        856,500            $0.15
      0.30          650,000        8.7                     0.30        650,000             0.30
      0.38        2,177,500        3.8                     0.38        552,500             0.38
      0.46          780,000        1.3                     0.46        780,000             0.46
      0.75          415,000        4.7                     0.75        150,004             0.75
      0.77          628,550        5.7                     0.77        628,550             0.77
                 -----------                                        ------------
$0.15 to 0.77     5,507,550        4.3                     0.42      3,617,554             0.41
                 ===========                                        ============
</TABLE>


NOTE 11   STOCK PURCHASE WARRANTS

In connection with the acquisition of Flexpoint and Tamco during 1995,
Micropoint issued warrants to purchase 22,750 shares of its common stock
exercisable at $0.77 per share (which was the fair value of the common stock
on the date of the issuance as determined by the Board of Directors) to its
outside legal counsel. Additionally, Micropoint issued warrants during 1995 to
purchase 23,010 shares of its common stock at a purchase price of $0.77 per
share to equity investors in Micropoint.  

During 1996, warrants were issued to purchase 214,500 shares of common stock
at $0.77 per share to equity investors in Micropoint, and warrants to purchase
6,500 shares at $0.77 per share were issued to outside legal counsel.  

During 1997, Micropoint issued warrants to purchase 260,000 shares of common
stock at $0.77 per share to equity investors in Micropoint.  Additionally,
warrants to purchase 910,000 shares of common stock at $1.15 per share were
issued to a retiring member of the Board of Directors.  

All of these warrants were deemed to have no material fair value and are
therefore not recorded in the accompanying consolidated balance sheet. The
fair value of each warrant was estimated on the date issued using the Black-
Scholes option-pricing model. 

The following table summarizes information about warrants outstanding at
December 31, 1998:

<TABLE>
<CAPTION>

              1998                                                 1997
----------------------------------------------   -----------------------------------------------
                              Weighted-Average                                   Weighted-Average
Range of         Warrants      Remaining          Range of          Warrants     Remaining
Exercise Prices  Outstanding  Contractual Life    Exercise Prices   Outstanding  Contractual Life
---------------  ----------- ----------------    -----------------  -----------  ----------------
<S>              <C>         <C>                 <C>                <C>          <C>
   $0.77             526,760        2.2 years             $0.77         526,760      3.2 years
    1.15             910,000        1.7                    1.15         910,000      2.7
                 -----------                                        -----------
$0.77 to 1.15      1,436,760        1.9           $0.77 to 1.15       1,436,760      2.9
                 ===========                                        ===========
</TABLE>

                                15
<PAGE>

                MICROPOINT, INC. AND SUBSIDIARIES
               (A Company in the Development Stage)
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12   DETAIL OF SALES

During the year ended December 31, 1998, Micropoint adopted Statement of
Financial Accounting Standards No. 131("SFAS 131"), Disclosures about Segments
of an Enterprise and Related Information. SFAS131 requires an entity to report
results of operations based on operating segments.  Micropoint's only business
relates to sales of electronic sensors and related engineering.  It produces
sensors for sale to customers in the toy and automotive industries.  The
components of sales for the years ended December 31, 1998 and 1997 are as
follows:

                                                1998              1997
                                         ---------------   ---------------
      Products
          Sales of sensors               $    1,313,528    $      19,222
          Royalty revenue                       248,786              -
          Tooling and dies                      205,162          159,477
                                         ---------------   ---------------

            Total Products                    1,767,476          178,699


      Engineering services                      148,152           83,237
                                         ---------------   ---------------
      Total Sales                        $    1,915,628    $     261,936
                                         ===============   ===============
                                       
NOTE 13   INCOME TAXES

There was no provision for, or benefit from, income tax for any period. The
components of the net deferred tax asset at December 31, 1998 were as follows:

      Operating loss carry forwards            1,921,033
      Amortization of intangibles                 11,167
                                              -----------
          Total Deferred Tax Assets            1,932,200
      Valuation Allowance                     (1,932,200)
                                              -----------
          Net Deferred Tax Asset              $      -
                                              ============
For tax reporting purposes, Micropoint had net operating loss carry forwards
in the amount of $5,150,294 at December 31, 1998 that will expire beginning in
the year 2012. 
      
The following is a reconciliation of the amount of tax (benefit) that would
result from applying the federal statutory rate to pretax loss with the
provision for income taxes for the years ended December 31, 1998 and 1997:

                                                For the Years Ended
                                                  December 31, 1998
                                             ----------------------------
                                                 1998           1997
                                             --------------  ------------
      Tax at statutory rate (34%)            $    (755,590)  $   (481,881)
      Non-deductible expenses                        1,030          9,915
      Increase in valuation allowance              937,153        524,831
      State tax benefit, net of federal 
       tax effect                                  (73,337)       (52,865)
      Change in effective tax rate                (109,256)             -
                                             --------------  -------------
          Net Income Tax Expense             $          -    $          -
                                             ==============  =============
                                16
<PAGE>

                MICROPOINT, INC. AND SUBSIDIARIES
               (A Company in the Development Stage)
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 -- LONG-TERM CONTRACTS

On May 28, 1998, Micropoint entered into a purchase and supply agreement with
an automotive manufacturer. Under the terms of the agreement, Micropoint is to
provide engineering and support to the automotive manufacturer and is to be at
the automotive manufacturers expense. For the year ended December 31, 1998,
Micropoint received $148,152 for support services. The agreement for the
engineering and support services runs through December 31, 2001 and is to
provide Micropoint with an additional $455,382 for their services. Micropoint
is also to provide the automotive manufacturer with sensors to be integrated
into the design of the automobiles. The agreement for the sensors runs through
December 31, 2003. The agreement may be renewed for one or more successive
one-year terms upon the mutual written agreement of both parties.

NOTE 15   COMMITMENTS AND CONTINGENCIES

Micropoint is obligated under two operating lease agreements for its
facilities and office space. In addition, Micropoint has entered into a third
operating lease to begin January 15, 1999 for additional facilities. On
December 31, 1998, Micropoint had $20,825 in prepaid rent for this facility.
This lease obligation is included in the future minimum lease payments
schedule below. 

Future minimum lease payments at December 31, 1998 are as follows:

      Year Ending December 31:
           1999      $     313,980
           2000            309,480
           2001            299,550
           2002            249,900
           2003            249,900
                     -------------
           Total     $   1,422,810
                     =============

Lease expense for the years ended December 31, 1998 and 1997 was $82,751 and
$93,254, respectively.

In conjunction with the new lease described above, Micropoint has an option to
renew the lease for an additional three year period on the same terms as
described in the lease with the exception of the base rent which will be
determined at the time the option is exercised. Micropoint is also required
under the terms of the lease to maintain a letter of credit with a federally
insured bank in the amount of $50,000.  The letter of credit has been issued
by a bank to the lessor and is secured by $50,000 of cash on deposit with the
bank.  If Micropoint falls into default under the lease, the lessor may be
drawn upon the letter of credit.  The letter of credit is to be reduced by
$10,000 per year.

In 1995, a third party entity loaned $35,000 to a former officer of Micropoint
as a personal loan. This entity has made a claim against the former officer
for repayment of the advance and for other consideration. Micropoint may be
required to provide compensation to the former officer sufficient to settle
the claim on behalf of the former officer. Management believes, after
consulting with legal counsel, that resolution of this claim may result in a
cost of approximately $52,000 to Micropoint. This amount has been accrued in
the accompanying consolidated balance sheet.

In February of 1998, an unrelated third party filed suit against Micropoint
alleging it provided investment banking and financial advisory services
pursuant to an agreement with Micropoint. The plaintiff claims to have
sustained damages for breach of contract and seeks damages in the amount of
6.5% of financing obtained from an equity investor, plus the issuance of a
warrant to purchase of 2% equity ownership interest

                                17
<PAGE>
                MICROPOINT, INC. AND SUBSIDIARIES
               (A Company in the Development Stage)
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in Micropoint at a price of $5.00 per share. In addition, the plaintiff is
seeking punitive damages of $5,000,000. Micropoint answered the complaint in
March 1998 and the action is in the discovery stage. Micropoint has been and
continues to contest the case vigorously. Given the early stage of the action,
legal counsel for Micropoint is unable to provide any evaluation of the
likelihood of an unfavorable outcome, if any, or the amount or range of
potential loss. Management believes, after consulting with legal  counsel,
that there is only a remote possibility that Micropoint will be subject to a
punitive damage award under the suit. Management has tendered $75,000 to the
plaintiff to completely settle the action and Management maintains that the
most Micropoint owes Plaintiff is $75,000. Micropoint has recorded $75,000 as
an expense relating to this action in the accompanying statement of operations
during the year ended December 31, 1997.

                                18
<PAGE>