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, 1999

                        Commission file number
                               0-24368


                    Flexpoint Sensor Systems, Inc.
        (Exact name of registrant as specified in its charter)

               Deleware                          87-0620425
        (State or other jurisdiction of    (IRS employer identification
              incorporation)                       number)

    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 x  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 $773,233.

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 2, 2000 was $34,091,134.

The number of shares outstanding of the issuer's Common Stock as of
March 2, 2000 was 19,107,639, $.001 par value.

<PAGE>


TABLE OF CONTENTS TO ANNUAL REPORTON FORM 10-KSB YEAR ENDED December 31, 1999



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

                                    PART II

Item 5. Market for Common Equity and Related Stockholder Matters . . . . .  11
Item 6. Management's Discussion and Analysis or Plan of Operation. . . . .  12
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.. . . . . . . .  19
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. . . . . . . . . . . . . . . . .  24

                                   2

<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." ("Flexpoint") and
Sensitron became a wholly owned subsidiary of Flexpoint. During the
shareholders meeting in June of 1999 the Company's name was changed
to Flexpoint Sensor Systems, Inc., subsequently the Company's symbol
was change to "FLXP". At the closing of the Acquisition, the
officers and directors of Flexpoint resigned and the nominees of
Sensitron were appointed as the officers and directors of Flexpoint.
In addition, the outstanding securities of Sensitron became
outstanding securities of Flexpoint. Prior to the Acquisition,
neither Sensitron nor any affiliate of Sensitron had an interest in
Flexpoint. Sensitron is engaged in the business, through Flexpoint,
Inc. 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(R) technology (the "Technology"). Except as otherwise
stated or implied by the context, all references to the "Company"
herein will be deemed to refer to Flexpoint, Sensitron, Flexpoint,
Inc. and Tamco on a consolidated basis. Sensitron and Flexpoint,
Inc. were incorporated in 1995 as Utah corporations. Since 1995
Flexpoint, Inc. has been engaged in the research and further
development of the Technology.

The Company manufactures a technology that reduced the dimensions of
typical sensor devices by as much as ninety percent. Management
believes this thin flexible plastic is the lightest, most robust and
cost-effective variable resistor available. Flexpoint is able to
offer superior solution for applications that require accurate
measurement and sensing of deflection, acceleration, and range of
motion. Flexpoint has produced over 7,000,000
sensors for the toy and consumer industries to date.

In June 1998, the Company entered into a Purchase and Supply
Agreement ("Supply Agreement") with Delphi Automotive Systems
("Delphi") under which Delphi may purchase proprietary sensor mats
incorporating the Technology from the Company for integration into a
"smart" air bag system being developed for General Motors. Due to a
number of factors including technical issues with the sensor and
production readiness of various suppliers, production of the seat
sensors was delayed from the fall of 1999 to late 2000 or early
2001. The Company believes that General Motors and Delphi continue
to be committed to purchasing the Company's proprietary sensor mats
under the Supply Agreement. The Company currently has one production
line in place and it has demonstrated required capability by
producing over 15,000 pre-production seat sensors so far. The
Company believes all known technical and production issues have been
properly identified and resolutions are being implemented. It is not
anticipated that production will begin until the second half of 2000
or early 2001. There can be no assurance that General Motors and
Delphi will acquire seat sensors under the Supply Agreement, that
additional technical and production difficulties will not arise,
that production will be in the amounts anticipated, or that
production will begin when anticipated or at all.

The Company believes the potential market for the Technology
includes, among other products, automobile horn assemblies, crash
sensors, instrument switches, computer switch devices, industrial
control devices, instrument controls, medical devices and surgical
equipment.

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, Inc. products and
for its manufacturing facilities. Tamco also operates a third party
business to the extent that excess capacity remains after servicing
Flexpoint, Inc.

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

                                   3
<PAGE>


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.

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 and automotive occupant
classification. Other patent applications, such as accelerometers,
various automobile seat sensors and function controls, are pending.

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
----------------------------------------------


Air Bag Applications

Automakers and regulators agree that smart air bag systems are the
solution to the rising concerns over deaths of children and small
adults by air bags. 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 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 technology are a key component of the system.

General Motors, Ford, Chrysler, TRW, Lear, Takata, Magna, Allied
Signal, Autoliv, Johnson Controls, Siemens, and Delphi have asked
Flexpoint, Inc. to demonstrate its Bend Sensor(R) Technology in seat
occupant detection applications. Response continues to be positive.
By automatically sizing up a car's passenger, the Company's 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 substantial
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 $300,000,000
in sales under the Supply Agreement based on estimates that were
produced jointly by General Motors, 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.

                                   4
<PAGE>

Automobile Horn Applications


The Company has also developed an 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, Inc.
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. 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.

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 December 1999, the license with Ohio Art expired and in 2000 the
Company will market direct to the various toy manufacturers.
Presently, there are three different toy products that utilize the
Technology which are manufactured by Irwin Toys Limited, Toy Biz,
Inc. and Jakks Toys. These toys can now be found at major retailers,
including Target, Wal-Mart and Toys R Us.  The Company expects toy
revenues for 2000 to exceed 1999 due to an increase in product
designed to utilize the Company's sensor. Further, the Company will
seek the opportunity to sell the sensor assembly potentially raising
the average sale price and gross sales opportunity. There can be no
assurance as to what level, if any, of sales that the Company will
secure in the future.

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 for products used by customers that emphasize
functionality, reliability, quality, and user convenience.

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 customer's system. The
standard product line is expected to be sold directly to the
customer and through manufacturer's representatives, 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 or
partnership arrangements.  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.

                                   5
<PAGE>

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 $3,339,916 and
$1,382,101 in research and development activities during 1999 and
1998, respectively. Of said amounts, $1,907,623 and $705,265 in 1999
and 1998, respectively,  were spent to fund development of the
software that will used with the smart air bag system. 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
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 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 marketing employees in strategic areas and
manufacturers representatives nationwide to generate OEM customers.
Currently the Company is selling directly to the automotive industry
and utilizes outside representatives in the toy industry.  Further,
the Company has expanded its inside support to expand market
opportunities.  As the market grows in North American, 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.

                                   6
<PAGE>

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.
In preparation to supply Delphi, the Company has completed the first
phase of its automotive sensor production facility at its 60,000
square foot leased facility located near the Salt Lake International
Airport. The Company will  continue to use its Midvale, Utah
facility for research and development and non-automotive sensor
production.

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,
Inc. has developed its own proprietary inks for the Flexpoint, Inc.
products. The Company has  established some long-term contractual
relationships 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 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. Due to production delays and financial constraints,
the Company's efforts to obtain QS 9000 quality certification has
been delayed. However, management believes it has built its
operating foundation on such principles and will be able to obtain
the appropriate certification in due time. 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 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 and capabilities
which compete directly 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.

                                   7
<PAGE>

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 six 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 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. TAMCO
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, Inc. 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, 1999, the Company had thirty-nine full-time
employees and three part-time employees. The Company is also
utilizing the services of outside contractors and consultants in
connection with its ink, hardware and software development. The
Company is currently spending more on its outside contractors and
consultants than it spends to compensate its employees. As
development of its air bag sensor mat system is completed it is
expected that the amount spent on outside contractors and
consultants will decrease. 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.

                                   8
<PAGE>

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 was extended  to
October 2000 , with a monthly rent of approximately $5,700. 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 Company has the
option to extend the existing lease for an additional one year term.
 The Midvale facility is currently being used for research and
development and non-automotive production. 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 is
using this facility for it automotive sensor production. 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.  The Company intends to  move its headquarters and
principal  manufacturing  from its current location at 6906 South
300 West to the new International Center facility.

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 and in March 1999 denied both
motions. Additional discovery has been conducted and the parties
resubmitted their cross motions for summary judgment. These cross
motions are scheduled to be argued on May 1, 2000.

In October, 1996, John Clayton and Blaine Taylor filed suit against
Sensitron, Flexpoint, Inc. 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 were
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.
In November 1999, the Company issued to plaintiffs one hundred
thousand shares of its restricted Common Stock in full settlement of
the claims and the lawsuit was dismissed with prejudice.


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

No matter was submitted to a vote of security holders during the
fourth quarter of 1999.

Stockholders Proposals
----------------------

The Company anticipates holding its Annual Stockholders Meeting on
or about August 29, 2000.  Any stockholder who desires to have a
proposal included in the Company's proxy soliciting material
relating to the Company's 2000 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 June 1, 2000.


                                   9
<PAGE>


                                 PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholers 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. During the shareholders
meeting in June of 1999 the Company's name was changed to Flexpoint
Sensor Systems, Inc., subsequently the Company's symbol was changed
to "FLXP".  The following table sets forth the high and low bid
information of the Common Stock for the periods indicated. The price
information was obtained from IDD Information Services, Inc. and
other sources the Company believes is reliable. 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

1999
----
March 31 . . . . . . . .     $6.8281              $4.25
June 30  . . . . . . . .     $4.9375             $2.825
September 30 . . . . . .      $3.875            $1.9375
December 31  . . . . . .      $2.875           $1.59375

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
-----------------

As  of , 2000, there were 453 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
----------------------

In March 1999, the Company completed a private placement wherein it
raised gross proceeds of approximately $3,362,137 through the sale
of 840,534 shares of Common Stock to accredited investors at $4.00
per share (the "March Offering"). During the March Offering the
Company began discussions with several people regarding a private
offering that the Company began in May (the "May Offering"). In the
May Offering the Company sold 536 Units, each Unit being comprised
of one share of Series A Convertible Preferred Stock and Series A
Warrants to Purchase 250 shares of Common Stock. The Company gave
March Offering investors the right to exchange the securities
purchased in the March Offering for the securities the investor
could have purchased in the May Offering had the investment been
made under the May Offering terms rather than the March Offering
terms. In July and August, investors who acquired 489,523 shares of
Common Stock in the March Offering elected to convert to the May
Offering terms. As a result, 489,523 shares of outstanding Common
Stock were cancelled and the Company issued 2,238 shares of Series A
Convertible Preferred Stock and Series A Warrants to purchase
559,551 shares of Common Stock. The transactions were exempt from
registration under Rule 506 of Regulation D, Section 4(2) of the
Securities Act and Section 4(6) of the Securities Act. The Company
did not use an underwriter in connection with the transaction.

                                   10
<PAGE>

In October 1999, there were 130,000 shares of Common Stock that were
issued upon exercise of outstanding stock options at an exercise
price of $.77 per share. The Common Stock issued upon exercise of
the stock options was exempt from registration under Rule 506 of
Regulation D, Section 4(2) of the Securities Act and Section 4(6) of
the Securities Act. The Company did not use an underwriter in
connection with the exercise of the warrants and stock options.

In November and December 1999, the Company issued convertible notes
in the principal amount $865,001. The notes were convertible into
Common Stock at the conversion rate of $1.70 per share and upon
conversion the holder received a Series C Warrant to acquire a
number of shares of Common Stock equal to the number of shares of
Common Stock issued on the conversion date. The Series C Warrants
are exercisable at prices ranging from $2.00 per share for a period
of three years from the date of grant. In December 1999, all of the
notes were converted and the Company issued 508,825 shares of Common
Stock and Series C Warrants to acquire 508,825 shares of Common
Stock. The notes and the Common Stock and warrants issued upon
conversion of the notes were exempt from registration under Rule 506
of Regulation D, Section 4(2) of the Securities Act and Section 4(6)
of the Securities Act. The Company did not use an underwriter in
connection with the exercise of the warrants and stock options.

In November 1999, the Company issued 100,000 shares of
Common Stock in full settlement of the John Clayton and Blaine
Taylor litigation. See "Legal Proceedings." The Common Stock was
exempt from registration under Rule 506 of Regulation D, Section
4(2) of the Securities Act and Section 4(6) of the Securities Act.
The Company did not use an underwriter in connection with the
exercise of the warrants and stock options.

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 Flexpoint, Sensitron, Flexpoint, Inc. and Tamco, on a
consolidated basis, except where the context clearly indicates to
the contrary. Prior to the Acquisition, Flexpoint 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, 1999, the
Company had cumulative losses applicable to common shareholders
totaling $15,041,600. The Company is primarily engaged in the sensor
business and is currently marketing proprietary patented sensor
technology know as the Bend Sensor  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 $134,642 in cash as of December 31, 1999. This
represented a decrease of $523,133 from December 31, 1998. Working
capital (deficit) as of December 31, 1999 also decreased to
($2,167,065) as compared to $2,317,976 at December 31, 1998. These
decreases were largely due to funds spent on operating and capital
expenditures during 1999.

Years Ended December 31, 1999 and 1998
--------------------------------------

During the year ended December 31, 1999, the Company had operating
revenues $773,233, compared with operating revenues of $1,915,628
for the year ended December 31, 1998. In 1999 operating revenues
were comprised of $332,182 in product sales and $441,051 in
engineering fee revenues. In 1998 operating revenues were comprised
of $1,767,476 in product sales, including $511,291 in royalties
associated with the Ohio Art agreement, and $201,786 in engineering
fee revenues.

                                   11
<PAGE>

The Company has entered into a Purchase and Supply Agreement
("Supply Agreement") with Delphi Automotive Systems ("Delphi") under
which Delphi may purchase proprietary sensor mats incorporating the
Technology from the Company for integration into a "smart" air bag
system being developed for General Motors. Due to a number of
factors including technical issues with the sensor and production
readiness of various suppliers, production of the seat sensors was
delayed from the fall of 1999 to late 2000 or early 2001. The
Company believes that General Motors and Delphi continue to be
committed to purchasing the Company's proprietary sensor mats under
the Supply Agreement. The Company currently has one production line
in place and it has demonstrated required capability by producing
over 15,000 pre-production seat sensors so far. The Company believes
all known technical and production issues have been properly
identified and resolutions are being implemented. It is not
anticipated that production will begin until the second half of 2000
or early 2001. There can be no assurance that General Motors and
Delphi will acquire seat sensors under the Supply Agreement, that
additional technical and production difficulties will not arise,
that production will be in the amounts anticipated, or that
production will begin when anticipated or at all.

The Company was producing Sensors for plush toys under a license
agreement (the "License Agreement") with Ohio Art, Inc.
(manufacturer of Etch-A-Sketch). The License Agreement expired
December 31, 1999. There are several toys for the 2000 Christmas
season designed to use the Bend Sensor.  Further, the Company is
seeking opportunity to supply the electronic assembly, including the
sensor, to increase sales potential.  Due to the seasonality, the
Company currently has no agreements relating to the production of
sensors in the toy market and there can be no assurance that the
Company will successfully enter into toy related agreements in the
future. The Company expects that revenues from toy sales, if any,
will be substantially greater in the second half of any given year.

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 $3,915,562 for 1999,
compared with $1,953,432 for the prior year. Of the 1999 total,
$418,350 is comprise of salary and wages and fees relating to the
grant of stock options and warrants to employees and consultants at
less than market price. The increase in expenditures between 1999
and 1998 is also related to increases in salary and wage expenses as
a result of hiring additional production employees, depreciation
expenses relating to leasehold improvements, equipment at the
Company's new manufacturing facility, and travel expenses relating
to the Supply Agreement and consulting expenses.

Research and development expenses were $3,339,916 for 1999, compared
with $1,382,101 for the prior year. Of the 1999 total, $1,907,623 is
comprised of consulting expenses relating to software development of
the Company's proprietary sensor mats. The increase in expenditures
between 1999 and 1998 is primarily related to increases in salary
and wage expenses as a result of hiring additional engineering
personnel and increased consulting expenses.

Interest expense was $194,229 for 1999, compared to $17,157 for the
prior year. The difference between the periods relates mainly to an
increase in outstanding debt during the periods. Interest income was
$23,288 for 1999, compared with $22,177 for the prior year. The
difference in interest income between said periods relates mainly to
interest earned on funds on deposit.

Amortization of debt discount was $1,666,936 in 1999 and no
amortization of debt discount was incurred in the prior year. The
amortization of debt discount related primarily to the Company's
issuance  of warrants with notes payable and convertible notes
payable.  Notes totaling $865,001 were convertible into
Common Stock and, as additional consideration, for each share of
Common Stock received upon conversion the holder received a warrant

                                   12
<PAGE>


to acquire one share of Common Stock. The convertible notes were
converted into Common Stock and warrants in November and December
1999. Warrants were issued with the notes payable. Proceeds from the
notes were allocated between the fair value of the warrants and the
notes, resulting in a discount to the notes of $1,265,000. This
resulted in the Company recognizing $1,557,136 in amortization of
interest expense discount. The $1,557,136 amortization of the debt
discount includes the $1,153,074 recording the value of the warrants
and $404,062 in beneficial conversion of the convertible notes. The
$1666,936 in amortization of debt discount also included $109,800 in
recording the warrants issued as additional consideration for two
$100,000 promissory notes. The Company anticipates recognizing an
additional $112,826 in 2000 as the balance of the discount is
amortized.

Net other income (expense) was ($120,311) in 1999 and $12,493 in the
prior year. The difference between the two periods relates primarily
to the issuance of 100,000 restricted shares to settle the
litigation.  At the time of the settlement the share price was
$1.75, therefore the Company recognized an expense of $175,000
related to the settlement. Also included as other income was the
collection of over $54,000 of previously written off receivables.

Preferred dividends were ($693,551) in 1999 and no preferred
dividends were paid in the prior year. The preferred dividends
related to the issuance of Series A Convertible Preferred Stock and
Series A Warrants. Proceeds from the issuance were allocated to the
preferred stock and the warrants based upon their relative fair
values. The resulting preferred stock discount of $693,551 was
amortized immediately as a preferred stock dividend.

Restatement of Quarterly Financial Statements
---------------------------------------------

During 1999, the Company's quarterly financial statements did not
account for the (i) $418,350 in non-cash salary, wages and
consulting fees relating to the grant of stock options and warrants
to employees and consultants at less than market price; (ii) the
Amortization of debt discount of $1,666,936; or (iii) the
($693,551) in preferred dividends, which items are discussed
above. The Company anticipates restating its first, second and third
quarter financial statement to reflect these transactions.

Liquidity and Capital Resources
-------------------------------

To date, the Company has financed its operations principally through
private placements of debt and equity securities and sales. The
Company generated $11,326,833 and $6,117,703 in net proceeds through
financing activities from inception through December 31, 1999 and in
1999, respectively. The Company has used net cash in operating
activities of $9,912,264 and $4,695,288 and has used $1,279,927 and
$1,945,548 in investment activities from inception through December
31, 1999 and in 1999, respectively. As of December 31, 1999, the
Company's current and total liabilities were $2,542,436. The Company
had a working capital (deficit) as of December 31, 1999 of
($2,167,065).

On March 3, 2000, the Company closed on a financing of up to
$5,000,000 pursuant to a Securities Purchase Agreement, dated March
3, 2000 (the "Securities Purchase Agreement"). Under the terms of
the financing, an investor initially provided the Company with
proceeds of $2,000,000 (less a ten percent placement fee and other
offering costs of investor and the Company of approximately $15,000)
in exchange for an 8% Convertible Debenture (the "Debenture") in the
principal amount of $2,000,000 and Series 2000-A Warrants (the
"2000-A Warrants") exercisable for 1,283,697 shares of the Company's
Common Stock for a four year period as further described below.
Under the Securities Purchase Agreement and subject to certain
contingencies, the investor has agreed to make additional
investments of $500,000 each in April, May, June, July, August and
September 2000. The additional investments will be reduced by a ten
percent placement fee and certain offering costs. The terms of the
subsequent investments provide that the investor will receive a
Debenture in the principal amount of the funds invested plus 2000-A
Warrants. The Debentures are convertible into Common Stock and the
2000-A Warrants are exercisable for a number of shares of Common
Stock and at an exercise price that vary depending on the market
price of the Company's securities and other factors.

The estimated relative fair value of the warrants as of March 3,
2000 was $1,026,301. This amount is estimated due to the holders
option to convert at the lower of the fifteen trading days at
closing or the fifteen days prior to conversion.  The actual
relative fair value of the warrants will be amortized over 60 days
and recorded as amortization of debt discount.

                                   13
<PAGE>

The Company has committed to spend $248,265 in lease payment for its
physical facilities during the remainder of 2000 and $309,850,
$249,900 and $249,900 in physical facilities lease payments for the
years 2001 through 2003, respectively. In connection therewith, the
Company contracted for certain improvements to its physical
facilities. As of March 13, 2000, the Company does not have material
commitments for capital expenditures. At December 31, 1999, the
Company also has short term loan obligations in the principal
amounts of $1,047,174. These loans bear interest at various rates
between ten percent per annum and twenty percent per annum.

As of March 13, 2000, the Company currently has outstanding stock
options and warrants to acquire 9,943,613 shares of Common Stock.
The exercise of all the outstanding stock options and warrants would
result in an equity infusion to the Company of approximately
$16,727,999. The warrant exercise price for warrants to acquire
1,283,697 shares of Common Stock, however, fluctuates based on
market price so the amount of total equity infusion upon exercise is
an approximation and may differ materially from the amount
described. There is no assurance that any of such options or
warrants will be exercised.

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 any certain product utilizing the Technology to commercial
viability, the level of sales and marketing for the Company's
products and the amounts owed on any debt that is not converted. The
Company believes that existing funds, fund received under the
Securities Purchase Agreement and funds generated from sales will be
sufficient to support the Company's operations through September
2000. At a minimum, in 2000 the Company will need to raise
approximately $4,000,000 in additional funding to support its
operations during 2000 and the Company needs to raise in 2001 at
least $11,000,000 in additional funding to fully execute its
business plan assuming production proceeds as currently projected.

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.

Inflation
---------


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

Year 2000
---------

The Company had developed plans to address the possible exposures
related to the impact on its computer systems of the Year 2000.
Since entering the Year 2000, the Company has not experienced any
major disruptions to its business nor is it aware of any significant
Year 2000related disruptions impacting its customers and suppliers.
Furthermore, the Company did not experience any material impact on
business at calendar year end. The Company will continue to monitor
its critical systems over the next several months but does not
anticipate any significant impacts due to Year 2000 exposures from
its internal systems as well as from the activities of its suppliers
and customers.

Forward-Looking Statements
--------------------------

When used in this Form 10-KSB, 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.

                                   14
<PAGE>

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.

Risk Factors
------------

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.

DEFAULT RISKS. As of March 2, 2000, the Company had outstanding loan
obligations in the principal amount of approximately $3,282,174. The
Company's cash reserves are not sufficient to pay the principal or
interest payments due under the Company's outstanding loans.
Approximately $3 million of the outstanding debt is convertible into
Common Stock or Common Stock and warrants to purchase Common Stock.
There can be no assurance that any portion of the outstanding loan
obligations will be converted. The Company expects that if the loans
are not converted, the Company will need to raise funds to pay the
loan obligations. The Company does not have funding commitments in
place to pay off these loans. There can be no assurance that if the
debts are not converted, the Company will be able to obtain funding
to pay off the debts. Any inability to obtain funding to pay of the
debts will have a material adverse effect on the Company, including
possibly requiring the Company to significantly curtail or cease
operations.

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.

                                   15
<PAGE>

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 or 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.

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 and in March
1999 denied both motions. Additional discovery has been conducted
and the parties resubmitted their cross motions for summary
judgment. These cross motions are scheduled to be argued on May 1,
2000.

                                   16
<PAGE>

The PEP litigation is in the early stages and has unresolved issues.
The lawsuit is 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 the litigation or that the lawsuit will be resolved on
acceptable terms, and the Company may incur significant costs in
asserting its 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"),  of which 2,348 are outstanding. The Board 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 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.

EFFECT OF FAILURE TO COMPLY WITH SECURITIES LAW.  In the event that
it is later determined that any securities offering of the Company
was not exempt from registration under federal and any applicable
state securities laws, it is possible that an investor may have the
right to rescind his or her purchase of the securities.  If a number
of purchasers were to successfully seek rescission, the Company
could face severe financial demands that could adversely affect the
Company.

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.

                              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 13, 2000.

                                   17
<PAGE>
                                                                     With
                                                                      the
                                                                    Company
           Name               Age                 Position           Since
     ------------------      ----       --------------------------   ------
     Douglas M. Odom          38        President, Chief Executive    1995
                                         Officer and Director
     Thomas E. Danielson      37        Vice-President                1995
     Jeffrey A. Coleman       40        Director                      1998
     Don M. Jackson, Jr.      63        Director                      1998
     M. Richard Wadley        56        Director                      1999
     John Sindt               55        Director                      1999

------------------

DOUGLAS M. ODOM. Mr. Odom has been the President, Chief Executive
Officer and Director of Flexpoint since April 1998, and has held the
same positions with respect to Flexpoint, Inc. 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,
Massachusetts.

THOMAS E. DANIELSON. Mr. Danielson has been the Vice-President of
Flexpoint since 1995. Mr. Danielson was with Xymox Technologies,
Inc., Milwaukee, Wisconsin from 1993 to 1995, in an operations
management and sales management role. Prior to that, Mr. Danielson
was with W.H. Brady Company, Milwaukee, Wisconsin from 1986 to 1993,
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 E. COLEMAN. Mr. Coleman has been a director of Flexpoint
since April 1998, and served as a director of Sensitron since
January 1998. From 1998 to present, Mr. Coleman has been operating
as owner and partner of a national real estate development and
contractor company, Majestic West, LLC. Mr. Coleman has been a
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
Flexpoint since April 1998, and served as a director of Sensitron
since January 1998. Dr. Jackson founded SITEK Incorporated , a
semiconductor material and equipment business in July of  1998. 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.

M. RICHARD WADLEY. Mr. Wadley has served as a Director of the
Company since July, 1999. He has over 25 years of successful general
Management and marketing experience with almost 20 years of full
operational and P&L responsibility as General Manager/President/CEO
of organizations with yearly sales of $30-$400 million.  From
1993-1999, Mr. Wadley served as Board Chairman and Chief Executive
Officer for T-Chem Products, a private label household cleaning
product company. Prior to that he handled the acquisition of
Alta-Dena Dairy, a 150 million food products company and was its CEO
from 1989-1991.  From 1986 to 1988, Mr. Wadley was
Vice-President/General Manager of Tambrands' largest division with
sales of almost $400 million and responsibility for over 3,000
employees.  From 1981 to 1986, he was a Corporate Director of
Product Management for Hallmark Cards.. From 1968 to 1981, Mr.
Wadley held positions of increasing marketing management
responsibility with Proctor and Gamble including a successful launch
of several new products such as Dawn dishwashing liquid.  Mr. Wadley
has a BA degree from Brigham Young University and an MBA from
Northwestern University.

                                   18

<PAGE>

JOHN SINDT. Mr. Sindt has been a director of Flexpoint since
December 1999. Mr. Sindt is a Salt Lake County constable. He is the
president of the National Constables Association having previously
served as its corporate secretary and director. Mr. Sindt has owned
and operated a successful chain of retail consumer goods stores. Mr.
Sindt has served on the Governor's Task Force for the State of Utah
and has held office as a Senatorial District Chairman for the
Republican party.  Mr. Sindt currently has an ownership interest in
and provides business advisory services to a high speed internet
service provider.

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, 1999, except that (i) Mr. Jeff Coleman, a
director of the Company, filed a Form 4 in March 2000 reporting a
June 1999 distribution to the equity owners of an entity with whom
Mr. Coleman is affiliated of 225,303 shares of the Company's Common
Stock, (ii) Mr. Richard Wadley, a director of the Company, filed a
Form 3 in February 2000 reporting his initial beneficial ownership
in the Company upon his appointment to the Board July 1999; (iii)
Mr. Jules A. deGreef, a ten percent stockholder of the Company,
filed seven Forms 4 in March 2000 reporting transactions in the
Company's securities in January, March, July, August, September,
November, and December, 1999; and (iv) Mr. John A. Sindt, a director
of the Company, filed a  Form 4 in March 2000 reporting a
transaction in the Company's securities in July 1999.

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, 1999) (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.

<TABLE>
<CAPTION>



                                                 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)     1997     120,000               -                -              -     520,000(2)          -               -
President, CEO and      1998     120,000          10,000                -              -           -             -
Director                1999     120,000          15,000                -              -           -             -        $1,275(3)
-----------------

</TABLE>

                                   19

<PAGE>

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

(2)  These options were granted by Sensitron and converted
     into outstanding obligations of Flexpoint as part of the
     Acquisition. Options to acquire 5,000 shares were exercised in
     October 1998, options to acquire 415,000 shares are currently
     exercisable.

(3)  Represents terms life insurance premiums paid by the
     Company on behalf of Mr. Odom.

Compensation of Directors
-------------------------

Mr. Richard Wadley was 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 $2.00
per share. Of such options, twenty five percent vested on the date
of grant and the remaining options vest in equal installments of
twenty five percent as long as Mr. Wadley is a member of the Board.
Mr. Wadley is also entitled to compensation of $72,000 and options
exercisable for 75,000 shares of Common Stock at $2.00 for
consulting services during 1999. In 2000, Mr. Wadley will receive
stock options exercisable for 20,000 shares of Common Stock and
$24,000 for consulting services. Jeff Coleman and Don Jackson were
each granted options to acquire 80,000 shares of Common Stock on the
dates they were elected to the Board.  These stock options vest in
equal installments of twenty five percent per year beginning on the
date of grant. The other members of the Board did not receive any
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, Inc. entered into an
employment agreement with Mr. Odom as its Chief Executive Officer.
Under the Employment Agreement, Flexpoint, Inc. pays Mr. Odom an
annual base salary of $120,000 per year plus such discretionary
bonus as the Flexpoint, Inc. Board 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 Flexpoint at an exercise price between $.16 and $.77
per share under the Company's Omnibus Stock Option Plan (the
"Plan"). As of December 31, 1999, options to acquire 775,000 shares
of Common Stock were exercisable and options to acquire 5,000 shares
had been exercised. All of the above described options became
obligations of Flexpoint as part of the Acquisition. The Company
does not have employment agreements with any of its other employees.

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 4,733,221 shares of Common
Stock at exercise prices ranging from $.16 to $4.00 are presently
outstanding under the Plan.

                                   20
<PAGE>

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
March 2, 2000, 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 March 2, 2000,
the Company had 19,107,639 shares of Common Stock outstanding.


                                               Percentage
   Name and Address       Shares Benefically    of Total
of Beneficial Owner(1)       Owned (2)(3)        (2)(3)           Position
----------------------     -----------------   ----------     -----------------

Douglas Odom                 580,000(4)           3.0%       President, CEO and
                                                               Director
Jeffrey A. Coleman            77,553(5)            *         Director
Don M. Jackson, Jr.           40,000(6)            *         Director

M. Richard Wadley            153,334(7)            *         Director
John A. Sindt              1,463,610(8)           7.4%       Director

All officers and directors 2,314,497             11.3%
as a group (5 persons)

Northridge Investments,    1,447,750(9)           7.4%
LLC
47 East 7200 south, #221
Midvale, UT 84047
Jules A. deGreef           2,154,575(10)         10.7%
47 East 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.

(3)  The Company has Common Stock and Series A Convertible
Preferred Stock outstanding. The Common Stock and Series A
Convertible Preferred Stock vote as a single voting group, unless
otherwise required by law. The total outstanding Series A
Convertible Stock comprises less than five percent of the total
outstanding voting securities. As a result, no information relating
to the Series A Preferred Stock is included in the table.

(4)  Includes vested options to purchase 580,000 shares.

(5)  Includes 37,553 shares. Also includes options to acquire 40,000
shares of Common Stock. Does not include options to acquire 40,000
shares of Common Stock that vests in equal installments in July 2000
and 2001.

(6)  Includes options to acquire 40,000 shares of Common Stock. Does not
include options to acquire 40,000 shares of Common Stock that vests
in equal installments in July 2000 and 2001.

(7)  Includes 33,334 shares. Also includes options to acquire 120,000
shares of Common Stock. Does not include options to acquire 60,000
shares of Common Stock that vests in equal installments in July
2000, 2001 and 2002.

                                   21
<PAGE>

(8)  Includes15,860 shares held by Mr. Sindt and 894,250 shares  Mr.
Sindt claims beneficial ownership of through an entity.  Also Includes
warrants to acquire 553,500 shares of Common Stock.

(9)  Includes 894,250 shares of Common Stock and warrants to acquire
553,500 shares of Common Stock.

(10) Includes 311,292 shares. Also includes 769,783 shares
that Mr. deGreef claims beneficial ownership of through his
membership interest in an entity and warrants and stock options to
acquire 1,073,500 shares of Common Stock.

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 Flexpoint prior to the
April 1998 Acquisition, acted as legal counsel for Flexpoint.

Sens Partnership, LLC, with which Mr. Coleman was affiliated, 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 26 hereof.

Reports on Form 8-K
--------------------

No reports on Form 8-K were filed by the Company during the fourth
quarter ended December 31, 1999.


                                   22
<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.

                              FLEXPOINT SENSOR SYSTEMS, INC.
                              (Registrant)

Date March 30,2000            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 and Dirctor (Principal
Douglas M. Odom                    Exeuctive Officer)


/s/ Jeffrey Coleman                Director                      March 30, 2000
-----------------------------
Jeffrey Coleman


/s/ Don M. Jackson                 Director                      March 30, 2000
-------------------
Don M. Jackson


/s/ M. Richard Wadley
-----------------------------      Director                      March 30, 2000
M. Richard Wadley


/s/ Jon Sindt                      Director                      March 30, 2000
-----------------------------
Jon Sindt


/s/ Thomas N. Strong               Comptroller (Principal
-----------------------------      Financial and Accounting
Thomas N. Strong                   Officer)                      March 30, 2000


                                   23


<PAGE>

                      FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES



                                     TABLE OF CONTENTS


                                                                         Page

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

       Consolidated Balance Sheets - December 31, 1999 and 1998 . . . . .  2

       Consolidated Statements of Operations for the Years Ended
        December 31, 1999 and 1998 and for the Period from January 5,
        1995 (Date of Inception) through December 31, 1999. . . . . . . .  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, 1998 and 1999 . . . . . . . . . . . . . . . . . . . . . . .  4

       Consolidated Statements of Cash Flows for the Years  Ended
        December 31, 1999 and 1998 and for the Period from January
        5, 1995 (Date of Inception) through December 31, 1999 . . . . . .  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
       Flexpoint Sensor Systems, Inc.

       We have audited the accompanying consolidated balance sheets of
       Flexpoint Sensor Systems, Inc. and subsidiaries (a company in the
       development stage) as of December 31, 1999 and 1998 and the related
       consolidated statements of operations, stockholders' equity
       (deficit), and cash flows for the years then ended and for the
       cumulative period from January 5, 1995 (date of inception) through
       December 31, 1999.  These financial statements are the responsibility
       of the Company'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 audits 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 Flexpoint Sensor Systems, Inc. and subsidiaries as of December 31,
       1999 and 1998 and the results of their operations and their cash
       flows for the years then ended and for the cumulative period from
       January 5, 1995 (date of inception) through December 31, 1999,  in
       conformity with generally accepted accounting principles.

       The accompanying financial statements have been prepared assuming
       that the Company will continue as a going concern. As discussed in
       Note 1 to the financial statements, the Company has suffered losses
       from operations and has had negative cash flows from operating
       activities during the years ended December 31, 1999 and 1998 and
       cumulative from inception through December 31, 1999. These conditions
       raise substantial doubt about the Company's ability to continue as a
       going concern. Management's plans in regard to those matters are also
       described in Note 1. The financial statements do not include any
       adjustments relating to the recoverability and classification of
       asset carrying amounts or the amount and classification of
       liabilities that might result should the Company be unable to
       continue as a going concern.


                                         HANSEN, BARNETT & MAXWELL

       March 24, 2000
       Salt Lake City, Utah
                                  1
 <PAGE>


                      FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES
                            (A Company in the Development Stage)
                                CONSOLIDATED BALANCE SHEETS
 <TABLE>
 <CAPTION>
                                    ASSETS
                                                                  December 31,
                                                            ------------------------
                                                               1999        1998
                                                            -----------  -----------
 <S>                                                       <C>          <C>
   Current Assets
     Cash. . . . . . . . . . . . . . . . . . . . . . . . .  $   134,642  $   657,775
     Trade accounts receivable, net of allowance
      for doubtful accounts of $3,000 and $ 90,721,
      respectively . . . . . . . . . . . . . . . . . . . .       36,656      298,586
     Royalty receivable. . . . . . . . . . . . . . . . . .           -       152,570
     Receivable from shareholder . . . . . . . . . . . . .           -     1,573,750
     Inventory . . . . . . . . . . . . . . . . . . . . . .      174,750       42,691
     Prepaid expenses. . . . . . . . . . . . . . . . . . .       29,323       50,915
                                                            -----------  -----------
       Total Current Assets. . . . . . . . . . . . . . . .      375,371    2,776,287
                                                            -----------  -----------
   Property and Equipment. . . . . . . . . . . . . . . . .    3,403,651    1,273,326
     Less accumulated depreciation . . . . . . . . . . . .     (847,172)    (387,858)
                                                            -----------  -----------
       Net Property and Equipment. . . . . . . . . . . . .    2,556,479      885,468
                                                            -----------  -----------
   Deposits. . . . . . . . . . . . . . . . . . . . . . . .       54,549      246,441
   Patents, net of accumulated amortization of
    $59,418 and $45,018. . . . . . . . . . . . . . . . . .      119,921      101,331
   Goodwill, net of accumulated amortization of
    $101,832 and $77,871 . . . . . . . . . . . . . . . . .       17,970       41,931
                                                            -----------  -----------
   Total Assets. . . . . . . . . . . . . . . . . . . . . .  $ 3,124,290  $ 4,051,458
                                                            ===========  ===========

                     LIABILITIES AND STOCKHOLDERS' EQUITY

   Current Liabilities
     Trade accounts payable. . . . . . . . . . . . . . . .  $   956,206  $   348,473
     Related party payable . . . . . . . . . . . . . . . .           -         1,234
     Accrued liabilities . . . . . . . . . . . . . . . . .      539,056      100,290
     Accrued income taxes. . . . . . . . . . . . . . . . .           -         8,314
     Notes payable, net of discount of $112,826. . . . . .    1,047,174           -
                                                            -----------  -----------
       Total Current Liabilities . . . . . . . . . . . . .    2,542,436      458,311
                                                            -----------  -----------
   Stockholders' Equity
     Preferred stock - $0.001 par value; 1,000,000
      shares authorized; 4,500 shares designated
      Series A Convertible Preferred; $875 stated
      value per share; 2,438 and 0 shares issued
      and outstanding; liquidation preference -
      $2,133,250 . . . . . . . . . . . . . . . . . . . . .    2,125,175           -
     Common stock - $0.001 par value; 100,000,000
      shares authorized; 19,077,310 and 16,990,296
      shares issued and outstanding. . . . . . . . . . . .       19,077       16,990
     Additional paid-in capital. . . . . . . . . . . . . .   13,615,677    9,127,091
     Deficit accumulated during the development stage. . .  (15,041,600)  (5,550,934)
     Unearned compensation . . . . . . . . . . . . . . . .     (136,475)          -
                                                            -----------  -----------
       Total Stockholders' Equity. . . . . . . . . . . . .      581,854    3,593,147
                                                            -----------  -----------
   Total Liabilities and Stockholders' Equity. . . . . . .  $ 3,124,290  $ 4,051,458
                                                            ===========  ===========
 </TABLE>
    The accompaning notes are an integral part of these consolidated
      financial statements.
                                        2
 <PAGE>


                      FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES
                            (A COMPANY IN THE DEVELOPMENT STAGE)
                           CONSOLIDATED STATEMENTS OF OPERATIONS
 <TABLE>
 <CAPTION>
                                                                                For the Period
                                                                                January 5, 1995
                                                         For the Years Ended  (Date of Inception)
                                                             December 31,          Through
                                                       ------------------------  December 31,
                                                          1999         1998          1999
                                                       -----------  -----------  ------------
 <S>                                                  <C>          <C>          <C>
   Sales . . . . . . . . . . . . . . . . . . . . . . . $   773,233  $ 1,915,628  $  4,063,958

   Cost of goods sold. . . . . . . . . . . . . . . . .     356,682      819,931     1,884,985
                                                       -----------  -----------  ------------
   Gross Profit. . . . . . . . . . . . . . . . . . . .     416,551    1,095,697     2,178,973

   General and administrative expenses . . . . . . . .   3,915,562    1,953,432     7,858,600
   Research and development. . . . . . . . . . . . . .   3,339,916    1,382,101     6,643,865
                                                       -----------  -----------  ------------
   Loss From Operations. . . . . . . . . . . . . . . .  (6,838,927)  (2,239,836)  (12,323,492)

   Interest expense. . . . . . . . . . . . . . . . . .    (194,229)     (17,157)     (265,430)
   Interest from amortization of debt discount . . . .  (1,666,936)          -     (1,666,936)
   Interest income . . . . . . . . . . . . . . . . . .      23,288       22,177        58,899
   Other income (expense), net . . . . . . . . . . . .    (120,311)      12,493      (151,090)
                                                       -----------  -----------  ------------
   Net Loss. . . . . . . . . . . . . . . . . . . . . .  (8,797,115)  (2,222,323)  (14,348,049)

   Preferred dividends . . . . . . . . . . . . . . . .    (693,551)          -       (693,551)
                                                       -----------  -----------  ------------
   Loss applicable to common shareholders. . . . . . . $(9,490,666) $(2,222,323) $(15,041,600)
                                                       ===========  ===========  ============
   Basic and diluted loss per common share . . . . . . $     (0.54) $     (0.16) $      (1.22)
                                                       ===========  ===========  ============
   Weighted average number of common
    shares used in per share calculation . . . . . . .  17,684,212   14,259,935    12,323,797
                                                       ===========  ===========  ============
 </TABLE>
   The accompanying notes are an integral part of these consolidated
    financial statements.
                                     3
 <PAGE>


                     FLEXPOINT SENSOR SYSTEMS, 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  Stockholders'
                                                          ------------------------   Paid-In     Development    Equity
                                                            Shares       Amount      Capital        Stage      (Deficit)
                                                          -----------  -----------  -----------  -----------  -----------
 <S>                                                     <C>          <C>          <C>          <C>          <C>
   Balance - January 5, 1995
    (Date of inception) . . . . . . . . . . . . . . . .            -   $        -   $        -   $        -   $        -

   1995:
   Issuance for cash, $0.00 per share . . . . . . . . .     3,705,000        3,705       (1,705)          -         2,000
   Issuance for cash, $0.46 per share . . . . . . . . .       649,987           65      299,350           -       300,000
   Issuance for cash, $0.74 per share . . . . . . . . .       852,800           85      631,147           -       632,000
   Contribution of patents by stockholder, no additional
    shares issued . . . . . . . . . . . . . . . . . . .            -            -        22,232           -        22,232
   Issuance to acquire Flexpoint, Inc., $(0.02) per share   5,395,000        5,395      (99,579)          -       (94,184)
   Issuance to acquire Tamco, $0.46 per share . . . . .       130,000           13       59,870           -        60,000

   1996:
   Issuance for services, $0.77 per share . . . . . . .       260,000           26      199,740           -       200,000
   Issuance for cash, $0.77 per share . . . . . . . . .       123,500           12       94,876           -        95,000
   Issuance for cash, $0.54 per share, net of offering
    costs of $246,547 . . . . . . . . . . . . . . . . .     1,957,111        1,957    1,051,496           -     1,053,453

   1997:
   Issuance for cash, $0.97 per share . . . . . . . . .       143,000           14      109,857           -       110,000
   Issuance for cash, $0.04 per share . . . . . . . . .     1,820,000        1,820       78,180           -        80,000
   Issuance for cash and a $390,000 receivable,
    $0.72 per share . . . . . . . . . . . . . . . . . .     1,116,375        1,116      802,884           -       804,000
   Redemption from officers, $0.03 per share. . . . . .    (6,308,666)      (6,309)    (193,691)          -      (200,000)
   Conversion of debt, $0.57 per share. . . . . . . . .       100,672           10       53,852           -        53,952

   Cumulative net loss. . . . . . . . . . . . . . . . .            -            -            -    (3,328,611)  (3,328,611)
                                                          -----------  -----------  -----------  -----------  -----------
   Balance - December 31, 1997. . . . . . . . . . . . .     9,944,779       10,976    3,108,509   (3,328,611)    (210,158)

   Issuance of 30,303 warrants for services . . . . . .            -            -        22,727           -        22,727
   Issuance for cash, $4.00 per share . . . . . . . . .       288,841           28    1,155,073           -     1,155,362
   Conversion of notes payable, $0.80 per share . . . .       248,833           24      199,751           -       200,000
   Conversion of debt, $0.61 per share. . . . . . . . .        69,602           69       42,759           -        42,828
   Acquisition of Nanotech Corporation, $0.50 per share     6,000,000        6,000    2,977,275           -     2,983,275
   Exercise of options, $0.16 per share . . . . . . . .        14,500           15        2,296           -         2,311
   Exercise of warrants, $0.00 per share. . . . . . . .        30,303           30          (30)          -            -
   Issuance for receivable from shareholder . . . . . .       393,438          394    1,573,356           -     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. . . . . . . . . . . . .    16,990,296  $    16,990  $ 9,127,091  $(5,550,934) $ 3,593,147
                                                          ===========  ===========  ===========  ===========  ===========
                                                                                                              (Continued)
 </TABLE>
   The accompanying notes are an integral part of these financial statements.
                                 4
 <PAGE>


                      FLEXPOINT SENSOR SYSTEMS, INC. AND SUBSIDIARIES
                            (A Company in the Development Stage)
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                        (CONTINUED)
 <TABLE>
 <CAPTION>
                                                                                              Deficit
                                                                                            Accumulated                  Total
                                  Common Stock             Common Stock        Additional    During the              Stockholders'
                            ------------------------  -----------------------   Paid-In     Development   Unearned      Equity
                               Shares       Amount       Shares      Amount     Capital        Stage    Compensation   (Deficit)
                             -----------  ----------  -----------  ----------  -----------  -----------  -----------  -----------
<S>                         <C>          <C>          <C>         <C>         <C>          <C>          <C>          <C>
 Balance - December 31, 1998          -   $       -    16,990,296  $   16,990  $ 9,127,091  $(5,550,934) $        -   $ 3,593,147

 Issuance for cash, $4.00
  per share. . . . . . . .            -           -       158,258         158      632,867           -            -       633,025
 Issuance of convertible
  preferred stock and
  134,000 warrants for
  cash, net of offering
  costs of $8,263. . . . .          536      326,738           -           -       134,000           -            -       460,738
 Conversion of common shares
  into convertible preferred
  stock and 559,551 warrants      2,238    1,398,886     (489,523)       (490)  (1,398,396)          -            -            -
 Amortization of preferred
  stock discount as
  preferred dividend . . .           -       693,551           -           -            -      (693,551)          -            -
 Issuance of common shares
  and 476,600 warrants for
  cash, $2.00 per share,
  net of offering costs of
  $12,000. . . . . . . . .           -            -       476,600         477      940,723           -            -       941,200
 Conversion of Convertible
  preferred stock into
  common stock and 147,000
  warrants, $2.00 per
  share. . . . . . . . . .         (336)    (294,000)     147,000         147      293,853           -            -            -
 Beneficial conversion
  feature of 8% convertible
  promissory notes                   -            -            -      404,062           -            -       404,062
 Conversion of 8% convertible
  promissory notes into
  common stock, $1.70 per
  share. . . . . . . . . .           -            -       508,825         509      864,492           -            -       865,001
 Compensation related to
  grant of stock options .           -            -            -           -       369,825           -      (369,825)          -
 Amortization of unearned
  compensation . . . . . .           -            -            -           -            -            -       233,350      233,350
 Exercise of options for
  cash, $0.16 to $0.47 per
  share. . . . . . . . . .           -            -       919,094         919      306,521           -            -       307,440
 Issuance of 508,825
  warrants in connection
  with notes payable . . .           -            -            -           -     1,265,900           -            -     1,265,900
 Issuance of 45,000 warrants
  in payment of interest .           -            -            -           -       109,800           -            -       109,800
 Compensation related to
  100,000 warrants granted
  for services . . . . . .           -            -            -           -       185,000           -            -       185,000
 Exercise of warrants for
  cash, $0.77 per share. .           -            -       237,510         238      182,545           -            -       182,783
 Exercise of warrants for
  services, $0.77 per
  share. . . . . . . . . .           -            -        29,250          29       22,494           -            -        22,523
 Issuance in settlement
  of lawsuit, $1.75 per
  share. . . . . . . . . .           -            -       100,000         100      174,900           -            -       175,000
 Net loss. . . . . . . . .           -            -            -           -            -     (8,797,115)         -    (8,797,115)
                             ----------  -----------  -----------  ----------  -----------  ------------  ----------  -----------
 Balance - December 31, 1999      2,438  $ 2,125,175   19,077,310  $   19,077  $13,615,677  $(15,041,600) $ (136,475) $   581,854
                             ==========  ===========  ===========  ==========  ===========  ============  ==========  ===========
 </TABLE>

  The accompanying notes are an integral part of these consolidated
   financial statements.
                                      5
 <PAGE>


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

 <TABLE>
 <CAPTION>
                                                                                For the Period
                                                                                January 5, 1995
                                                         For the Years Ended  (Date of Inception)
                                                             December 31,          Through
                                                      -------------------------  December 31,
                                                          1999         1998          1999
                                                      ------------  -----------  ------------
 <S>                                                 <C>           <C>          <C>
  Cash Flows From Operating Activities
    Net Loss. . . . . . . . . . . . . . . . . . . . . $ (9,490,666) $(2,222,323) $(15,041,600)
    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. . . . . . . . .      497,675      227,233     1,020,758
       Amortization of debt discount. . . . . . . . .    1,557,136           -      1,557,136
       Preferred dividend . . . . . . . . . . . . . .      693,551           -        693,551
       Issuance of warrants for interest. . . . . . .      109,800           -        109,800
       Compensation paid with stock options . . . . .      233,350       45,375       278,725
       Compensation paid by grant of warrants . . . .      185,000           -        185,000
       Issuance of common stock to settle lawsuit . .      175,000           -        175,000
       Exercise of warrants in exchange for services.       22,523           -         22,523
       Stock issued for services. . . . . . . . . . .           -        22,727       222,727
       Allowance for doubtful accounts. . . . . . . .      (87,721)      90,721       154,567
    Changes in operating assets and liabilities:
       Accounts receivable. . . . . . . . . . . . . .      349,651     (343,484)      (55,182)
       Other receivable . . . . . . . . . . . . . . .      152,570     (152,570)           -
       Inventory. . . . . . . . . . . . . . . . . . .     (132,059)     (42,691)     (174,750)
       Accounts payable . . . . . . . . . . . . . . .      607,733     (157,259)      777,392
       Accrued liabilities. . . . . . . . . . . . . .      438,766     (263,428)      470,072
       Deferred revenue . . . . . . . . . . . . . . .           -      (200,000)       (6,163)
       Other assets . . . . . . . . . . . . . . . . .       (7,597)    (284,075)     (289,822)
                                                      ------------  -----------  ------------
       Net Cash Used In Operating Activities. . . . .   (4,695,288)  (3,291,772)   (9,912,264)
                                                      ------------  -----------  ------------
  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. . . . . . . . . .   (1,912,558)    (379,263)   (2,913,355)
    Proceeds from sale of equipment . . . . . . . . .           -        14,592        22,682
    Issuance of note receivable . . . . . . . . . . .           -            -        (12,507)
    Payments received on note receivable. . . . . . .           -         4,950        12,505
    Payments for patents. . . . . . . . . . . . . . .      (32,990)     (39,029)     (143,314)
                                                      ------------  -----------  ------------
       Net Cash Provided By (Used In) Investing
        Activities. . . . . . . . . . . . . . . . . .   (1,945,548)   1,648,725    (1,279,927)
                                                      ------------  -----------  ------------
  Cash Flows From Financing Activities
    Proceeds from issuance of preferred stock . . . .      460,738           -        460,738
    Proceeds from issuance of common stock. . . . . .    2,064,448    1,157,664     6,155,112
    Cash payments to officers to repurchase stock . .           -            -        (50,000)
    Cash paid for offering costs. . . . . . . . . . .           -            -       (123,020)
    Cash paid for loan costs. . . . . . . . . . . . .       (5,000)          -         (5,000)
    Collection of receivables from issuance of
     common stock . . . . . . . . . . . . . . . . . .    1,573,750      390,000     1,963,750
    Proceeds from borrowings. . . . . . . . . . . . .      865,001           -      1,168,961
    Principal payments of debt. . . . . . . . . . . .           -      (353,336)     (398,751)
    Borrowings from Nanotech prior to acquisition . .           -     1,000,000     1,000,000
    Proceeds from related party notes . . . . . . . .    1,510,000           -      1,570,208
    Principal payments of related party notes . . . .     (351,234)          -       (415,165)
                                                      ------------  -----------  ------------
       Net Cash Provided By Financing Activities. . .    6,117,703    2,194,328    11,326,833
                                                      ------------  -----------  ------------
  Net Change In Cash. . . . . . . . . . . . . . . . .     (523,133)     551,281       134,642
  Cash - Beginning of Period. . . . . . . . . . . . .      657,775      106,494            -
                                                      ------------  -----------  ------------
  Cash - End of Period. . . . . . . . . . . . . . . . $    134,642  $   657,775  $    134,642
                                                      ============  ===========  ============
 </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>


                     FLEXPOINT SENSOR SYSTEMS, 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

      Through April 1998, the Company operated through Sensitron, Inc, a
      Utah Corporation, at which time it changed its name to Micropoint,

      Inc.  In June 1999 the name was changed to Flexpoint Sensor Systems, Inc.

      PRINCIPLES OF CONSOLIDATION - The accompanying consolidated financial
      statements include the accounts of Flexpoint Sensor Systems, Inc.
      (Flexpoint) and its wholly-owned subsidiaries.  The operations of
      acquired entities have been included from the dates of their
      acquisitions.  Intercompany transactions and accounts have been
      eliminated in consolidation.

      NATURE OF OPERATIONS -The Company has been 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
      Flexpoint's sales were to toy manufacturers. Flexpoint has negotiated
      a significant contract to supply flexible sensors to an automobile
      component manufacturer.  Sales under the contract are scheduled to
      begin upon Flexpoint's completion of required  research and
      development of applicable sensors 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 these estimates.

      BUSINESS CONDITION - The accompanying financial statements have been
      prepared in conformity with generally accepted accounting principles,
      which contemplates continuation of Flexpoint as a going concern.
      However, Flexpoint has suffered losses from operations and has had
      negative cash flows from operating activities during the years ended
      December 31, 1999 and 1998 and cumulative from inception through
      December 31, 1999, which conditions raise substantial doubt about
      Flexpoint's ability to continue as a going concern. Flexpoint's
      continued existence is dependent upon its ability to obtain additional
      financing. Subsequent to year end, the Company has received $1,800,000
      in net proceeds from the issuance of a convertible debenture.
      Management plans to obtain the remainder of the $5,000,000 commitment
      under the convertible debenture agreement and to obtain additional
      financing through issuance of debt or equity securities.  The Company
      is negotiating with other possible financing sources.  However, no
      agreements have been reached and there is no assurance that additional
      financing will be realized.

      FAIR VALUES OF FINANCIAL INSTRUMENTS - The amounts reported as cash,
      trade accounts receivable, other receivable, trade accounts payable,
      accrued liabilities and notes payable are considered to be reasonable
      approximations of their fair values.  The fair value estimates were
      based on information available to management at the time of the
      preparation of the financial statements.

      INVESTMENT IN SECURITIES - During the year ended December 31, 1998,
      Flexpoint sold marketable securities for $455,082 and  realized gross
      gains of $21,225. The gain is included in other income (expense), net
      in the accompanying statements of operations.

      CONCENTRATION OF RISK AND MAJOR CUSTOMERS -The Company has
      concentration of risk with respect to cash on deposit with a bank  in
      excess of insured limits, and from doing business in one-industry.
      The latter subjects Flexpoint to a concentration of credit risk
      relating to trade accounts receivable.  During the year ended December
      31, 1999, 76% of Flexpoint's revenues were from customers in the auto
      industry.  During 1999, revenue from two major customers totaled 59%
      and 17% of sales, respectively.  During the year ended December 31,
      1998, 85% of Flexpoint's revenues were from customers in the toy
      industry. During 1998, revenues from two major customers totaled 40%
      and 35% of sales, respectively.  Flexpoint relies on a few significant
      production contracts for its revenue and generally does not require
      collateral from its customers with respect to trade receivables.

      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 operations.  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 three 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, 1999.

      REVENUE RECOGNITION - Revenue from the sale of products is recorded at
      the time of shipment to the customers. Revenue from research and
      development engineering contracts is recognized as the services are
      provided and accepted by the customer.  Revenue from contracts to
      license Flexpoint's technology to others is deferred until all
      conditions under the contracts are met and then recognized as
      licensing royalty over the remaining term of the contracts.

      ADVERTISING COSTS - During the years ended December 31, 1999 and 1998,
      Flexpoint incurred $260,983 and $65,635 of advertising costs,
      respectively.  Flexpoint 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 the options are granted. Flexpoint also
      presents pro forma results of operations assuming compensation had
      been measured by the fair-value method.

      BASIC AND DILUTED LOSS PER SHARE - 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 and options using the treasury stock
      method and convertible preferred stock and convertible notes payable
      using the if-converted method.  Stock warrants and options,
      convertible preferred stock, and convertible notes payable are not
      included in diluted loss per share during loss periods when those
      potentially issuable common shares would decrease the loss per share.
      The effects of 9,174,055 and 6,944,310 potentially issuable common
      shares at December 31, 1999 and 1998, respectively,  were excluded
      from the calculation of diluted loss per share as they would have
      decreased loss per share.

      NOTE 2 - ACQUISITIONS

      Nanotech Corporation ("Nanotech") was incorporated June 11, 1992 under
      the laws of the state of Delaware, and was a publically-held shell
      corporation.  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 subsequently to Flexpoint Sensor Systems, Inc.
      ("Flexpoint"), and the shareholders of Sensitron exchanged each of
      their shares of common stock for 13 shares of Flexpoint 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 Flexpoint in a transaction
      intended to qualify as a tax-free reorganization.

      The Agreement has been accounted for as a recapitalization of
      Sensitron in a manner similar to a stock split.  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 Flexpoint shares.  The accompanying
      financial statements have been restated for the effects of the stock
      split for all periods presented.  The agreement was further considered
       to be the issuance of 6,000,000 common shares for Nanotech's net
      assets of $2,983,275, which were primarily cash and cash equivalents.
      The accompanying consolidated financial statements include the
      operations of Flexpoint from the date of the reorganization.

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

      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.

      NOTE 3 - PROPERTY AND EQUIPMENT

      Property and equipment consisted of the following:

                                                          December 31,
                                                    ------------------------
                                                        1999        1998
                                                    -----------  -----------
           Furniture and fixtures . . . . . . . . . $    90,350  $    75,356
           Machinery and equipment. . . . . . . . .   1,692,100      674,682
           Office equipment . . . . . . . . . . . .     276,255      143,234
           Software . . . . . . . . . . . . . . . .      34,979       29,924
           Leasehold improvements . . . . . . . . .   1,309,967      350,130
                                                      -----------  -----------
           Total. . . . . . . . . . . . . . . . . . $ 3,403,651  $ 1,273,326
                                                    ===========  ===========

      Depreciation expense for the years ended December 31, 1999 and 1998
      was $459,314 and $188,873, respectively.

      NOTE 4 - OTHER ASSETS

      Costs to obtain patents have been capitalized and are being amortized
      over a five year period. Flexpoint currently has the rights to several
      patents. Flexpoint is in the process of developing new patents and
      protecting its existing patents internationally.  Cost associated with
      the development of new patents are capitalized. Amortization of
      patents is recognized from the date the patents are awarded. The total
      patent cost capitalized as of December 31, 1999 and 1998 was $179,339
      and $146,349, respectively, of which $73,470 and $73,470 relates to
      patents being amortized, respectively.  Amortization expense from
      patents for the years ended December 31, 1999 and 1998 was $14,400 and
      $14,400, respectively.

      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, 1999 and 1998 was
      $23,960 and $23,960, respectively.

      NOTE 5 - LICENSE AGREEMENT

      In May 1997, Flexpoint granted an otherwise unrelated third party the
      worldwide exclusive license to use and sell flexible potentiometers
      covered under Flexpoint's patents for use in toys, traditional games
      and video game industries.  The license does not include the right to
      manufacture sensors manufactured by Flexpoint. 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 Flexpoint 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.  Minimum payments
      were not received under the agreement during the year ended December
      31, 1999.  As a result, the exclusive rights under the agreement are
      no longer in force.

      Under the agreement, Flexpoint guaranteed that it would deliver
      flexible potentiometers in marketable quantities to the licensee by
      June 1, 1998.  That obligation was fulfilled by Flexpoint 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, Flexpoint had a royalty
      receivable as a result of this licensing agreement of $152,570 which
      was included in trade accounts receivable, and was subsequently
      collected.

      NOTE 6 - CASH FLOW INFORMATION

      SUPPLEMENTAL CASH FLOW INFORMATION - Cash payments for interest were
      $5,000 and $15,726 for the years ended December 31, 1999 and 1998,
      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, Flexpoint 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
                                                               ===========

      On September 26, 1995, the Company acquired all of the common stock of
      Flexpoint, Inc. in exchange for 5,395,000 shares of common stock.  The
      following assets and liabilities were acquired at their historical
      cost basis:

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

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

      During the year ended December 31, 1997, $111,816 of notes payable
      were issued to acquire leasehold improvements. The Company 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. The
      Company 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.  The Company
      issued 393,438 shares of common stock for a subscription receivable of
      $1,573,731 which was collected subsequent to year end.

      During the year ended December 31, 1999, $865,001 of notes payable
      were converted to common stock as described in Note 10.

      NOTE 7 - NOTES PAYABLE

      Notes payable consisted of the following:

                                                            December 31,
                                                       ----------------------
                                                          1999        1998
                                                       ----------  ----------
    Note payable to shareholder, due June 18, 2000,
    interest accrues at 20%                            $  100,000  $       -

    Note payable to a shareholder, due February 10,
    2000, original interest rate of 14%, interest of
    $70,000 was to be prepaid, the Company defaulted
    by not prepaying the interest, default interest
    rate of 28%, default interest of $56,611 has been
    accrued                                             1,000,000          -


    Note payable to a shareholder, due July 15, 1999,
    monthly interest accrues at 10%, the Company is
    is default, additional interest totaling $59,877
    has been accrued since default                         60,000          -

                                                       ----------  ----------
    Total Notes Payable                                 1,160,000          -
    Less: Discount on notes payable                       112,826          -
                                                       ----------  ----------
    Notes Payable, net of discount                     $1,047,174  $       -
                                                       ==========  ==========

      On November 20, 1998, Flexpoint obtained a $50,000 credit facility
      from a bank which is available through January 15, 2001.  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 had been drawn under the note payable or
      letter of credit at December 31, 1998, 1999 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.  Subsequent to December 31, 1999,
      the credit facility was reduced to $40,000.

      From January through March of 1998, management of the Company
      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
      the conversion terms were established.  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.

      During the year ended December 31, 1999, the Company issued several 8%
      convertible promissory notes.  The notes were convertible into common
      stock during 1999 as further discussed in Note 9.  In addition to the
      convertible notes, the Company issued non-convertible notes.  Warrants
      to purchase 780,000 shares of the common stock were issued with the
      notes.  The proceeds of the notes were allocated between the fair
      value of the warrants and to the note payable based upon their
      relative fair values.  This resulted in a discount on the notes of
      $1,265,900 which was credited to additional paid-in capital.  The
      discount is being amortized over the maturity of the notes.  During
      the year ended December 31, 1999, $1,153,074 of the discount was
      amortized to interest expense.

      NOTE 8 - EMPLOYMENT AND COMPENSATION AGREEMENTS

      Effective August 26, 1997, two officers resigned from the Board of
      Directors and sold 6,308,666 shares of common stock to the Company for
      $200,000, or approximately $0.03 per share.  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.

      The Company has an employment agreement with an officer which includes
      an annual base salary $120,000 per year through December 31, 2001.

      Effective May 1, 1995, Flexpoint entered into a royalty agreement
      whereby an officer was to provide  technical assistance and be paid a
      monthly fee of $8,333 for five years.  During 1997, Flexpoint
      suspended payments under the royalty agreement. An agreement was
      signed April 15, 1998 whereby Flexpoint 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.

      The Company entered an agreement with a board member for marketing,
      business development, investor and financial advisory services
      effective July 1, 1999.  The terms of the agreement require the
      Company to pay $12,000 per month.  No formal term was stated in the
      contract; however, no services were provided after February 2000.

      The Company entered an agreement for financing and business management
      advisory services effective August 1, 1999.  The terms of the
      agreement require the Company to pay $6,250 per month for eighty hours
      of services per month.  Any service over and above the eighty hours
      will be billed at $80 per hour.  The agreement is effective for three
      years from the effective date.

                                         12
 <PAGE>

      NOTE 9 - STOCKHOLDERS' EQUITY

      PREFERRED STOCK-During the year ended December 31, 1999, 4,500 shares
      of preferred stock were designated as Series A convertible preferred
      stock with a stated value of $875.  The preferred stock will rank,
      with respect to rights on liquidation, senior to all classes of common
      stock and each other class of capital stock or series of preferred
      stock established after the date designated by the Board of Directors.
      The preferred stock has no stated dividend rate and no dividends will
      be payable thereon unless declared by the  Board of Directors. Each
      share of preferred stock outstanding is entitled to 250 votes. The
      preferred shares are entitled to a preference in liquidation over the
      common shares equal to $875 per  preferred share.

      Shares of preferred stock may be convertible at any time, in whole or
      in part, at the option of the holder thereof into common stock at a
      conversion price of $3.50 per share. The outstanding shares of
      preferred stock will automatically be converted into common stock if
      the closing bid price for the common stock for 15 successive trading
      days is equal to or greater than $12.00 per share.

      Series A convertible preferred stock and Series A warrants to purchase
      250 shares of common stock were issued as a unit in an offering from
      May through July 1999. In addition to units sold, shareholders who
      purchased common stock under the Company's prior private offering were
      given the option of converting the shares of common stock purchased
      into units of the new offering.  The offering resulted in the issuance
      of 536 shares of convertible preferred stock and Series A warrants to
      purchase 134,000 shares of common stock at $4.00 per share. The
      conversion resulted in the cancellation of 489,523 shares of common
      stock and the issuance 2,238 shares of convertible preferred stock and
      Series A warrants to purchase 559,551 of common stock at $4.00 per
      share.  The gross proceeds from the offering before $8,263 offering
      costs were $469,000. These proceeds and the conversion of the common
      shares  were allocated on the dates received to (a) the Series A
      Warrants to purchase common stock based upon their  fair value in the
      amount of $ 693,551 and (b) $1,725,624 was allocated to the
      convertible preferred stock.  The resulting discount on the preferred
      stock of $693,551 was immediately amortized as a preferred stock
      dividend on the dates the convertible preferred stock was issued. The
      convertible preferred stock is convertible into 693,551 shares of
      common stock through January 1, 2001.

      As the result of a subsequent offering of common stock 336 shares of
      Series A convertible preferred stock were cancelled and converted into
      common stock.

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

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

      On March 18, 1996, the Company entered into a share purchase agreement
      whereby the Company 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 the Company's cash flow needs. Offering costs incurred in
      connection with the offering were $246,547.

      On August 26, 1997, the Company entered into a settlement agreement
      with two officers of the Company whereby the relationship between the
      officers and the Company was terminated. As part of the agreement, the
      Company redeemed 6,308,666 shares of common stock from the officers
      for $200,000, or approximately $0.03 per share by paying $50,000 in
      cash and by issuing $150,000 of notes payable.

                                        13
 <PAGE>

      On December 24, 1997, the Company 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, the Company recognized compensation related to an
      agreement with a shareholder whereby the shareholder would be able to
      maintain a 1% equity interest in the Company 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, Flexpoint issued 618,588 shares of common stock
      in exchange for a stock subscription in the amount of $2,474,350
      receivable from the investor. The Company collected $1,573,750 of the
      subscription through February 16, 1999. On March 31, 1999, the Company
      closed the private placement offering,  released a shareholder from a
      $900,600 receivable under the subscription contract and cancelled the
      related 225,150 shares of common stock.

      Units consisting of 10,000 shares of common stock and Series B
      warrants to purchase 10,000 shares of common stock were issued as a
      unit in an offering from July through October 1999. In addition to
      units sold, shareholders who purchased convertible preferred stock
      under the Company's prior private offering were given the option of
      converting the shares of convertible preferred stock purchased into
      units of the new offering.  The offering resulted in the issuance of
      476,600 shares of common stock and Series B Warrants to purchase
      476,600 shares of common stock at $3.50 per share. The conversion
      resulted in the cancellation of 336 shares of Series A Convertible
      Preferred Stock and the issuance of 147,000 shares of common stock and
      Series B Warrants to purchase147,000 shares of common stock at $3.50
      per share.  The gross proceeds from the offering before $12,000
      offering costs were $953,200.

      Convertible debt and Series C warrants to purchase common stock were
      issued as a unit in an offering in November 1999. The offering
      resulted in the issuance of warrants to purchase 508,825 shares of
      common stock at priced ranging from $2.00 to $2.25 per share and
      $865,001 of notes payable which were convertible into common stock at
      $1.70 per share. The excess of the market value of the common stock
      over the conversion price at the dates the notes payable were issued
      ranged from $0.52 to $1.02 per share and was a beneficial conversion
      feature of the convertible debt. The gross proceeds from the offering
      were $865,001 and were allocated on the dates received to (a) to the
      beneficial conversion feature of the notes payable based upon the
      excess of the fair value of the common stock over the conversion price
      in the amount of $404,062, and (b) $460,939 to the notes payable. The
      resulting discount to the notes payable was  amortized immediately as
      the notes were convertible upon issuance and resulted in $404,062 of
      interest expense. The notes payable were converted into 508,825 shares
      of common stock in December 1999.

      In November 1999, the Company issued 100,000 shares of common stock in
      settlement of a stock ownership claim as explained further in Note 15.

      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, Flexpoint may grant options to employees,
      directors and consultants to purchase up to 5,037,500 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 Flexpoint'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 or vested.

                                     14
 <PAGE>

      In October 1995, the Company granted options, exercisable at $0.77 per
      share, to an officer for 195,000 shares of common stock which vested
      upon Flexpoint obtaining specified levels of sales and gross profit.
      During August 1997, the Company agreed upon the terms of a new
      employment agreement with the officer.  The agreement was executed in
      December 1997 and included canceling 130,000 options exercisable at
      $0.77 and granting 390,000 options exercisable at $0.38, which
      management considered to be the fair value of the Company's common
      stock in August 1997.  The new options vest through 2001 and do not
      have any performance criteria for vesting. The modification to the
      options did not result in additional compensation over the amount
      referred to below.

      Flexpoint measures compensation under stock-based options and plans
      using the intrinsic value method prescribed in Accounting Principles
      Board Opinion 25, Accounting for Stock Issued to Employees, and
      related interpretations, for stock options granted to employees, and
      determines compensation cost granted to non-employees based on the
      fair value at the grant dates consistent with the alternative method
      set forth under Statement of Financial Accounting Standards No. 123,
      (SFAS 123)  Accounting for Stock-Based Compensation. Stock-based
      compensation charged to operations was $233,350 and $45,375 for the
      years ended December 31, 1999 and 1998, respectively.  Had
      compensation cost been determined based on the fair value of the
      options at the grant dates consistent with the alternative
      method of SFAS No. 123, Accounting for Stock-Based Compensation,
      Flexpoint'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,
                                               ---------------------------
                                                   1999           1998
                                               ------------   ------------
      Net Loss
            As reported . . . . . . . . . . .  $ (9,490,666)  $ (2,222,323)
            Pro forma . . . . . . . . . . . .    (9,790,042)    (2,342,574)
      Primary and Diluted Loss per share
            As reported . . . . . . . . . . .        $(0.54)        $(0.16)
            Pro forma . . . . . . . . . . . .        $(0.55)        $(0.16)
      Weighted-Average Assumptions:
            Divided yield . . . . . . . . . .           0.0%          0.0 %
            Expected volatility . . . . . . .         77.29%         53.42%
            Risk-free interest rate . . . . .          5.44%          5.53%
            Expected life of options, in years         6.34           5.0

      A summary of the status of stock options as of December 31, 1999 and
      1998 and changes during the years  ended on those dates are presented
      below:

 <TABLE>
 <CAPTION>
                                                       Options Outstanding
                                          ----------------------------------------------
                                                   1999                   1998
                                          ----------------------  ----------------------
                                                      Weighted-              Weighted-
                                                       Average                Average
                                                       Exercise               Exercise
                                            Shares      Price      Shares       Price
                                          ----------  ----------  ----------  ----------
 <S>                                     <C>         <C>         <C>         <C>
  Outstanding at beginning of period. . .  5,507,550  $     0.42   4,717,050  $     0.42
  Granted . . . . . . . . . . . . . . . .    315,000        3.06     805,000        0.75
  Exercised . . . . . . . . . . . . . . .   (919,094)       0.34     (14,500)       0.16
  Forfeited . . . . . . . . . . . . . . .   (195,000)                     -         0.00
                                          ----------              ----------
  Outstanding at end of year. . . . . . .  4,708,456        0.62   5,507,550        0.42
                                          ==========              ==========
  Options exercisable at end of year. . .  3,456,411        0.51   3,617,554        0.41
                                          ==========              ==========
  Weighted-average fair value of
   options granted during period. . . . . $     3.25              $     0.47
                                          ==========              ==========
 </TABLE>

      The following table summarizes information about stock options
      outstanding at December 31, 1999:

 <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
    ---------------  ------------  --------------  ---------------  ------------  ---------------
   <C>              <C>           <C>             <C>              <C>           <C>
     $ 0.00 - 0.50      3,350,000      2.3 years      $    0.34        2,494,119     $  0.33
       0.51 - 0.99      1,063,550      4.3                 0.76          876,886        0.76
       2.00 - 2.99        106,000      5.6                 2.01           45,500        2.01
       3.00 - 3.99         43,000      6.1                 3.50           11,500        3.51
       4.00 - 4.99        145,906      5.6                 4.00           37,406        4.00
                     ------------                                   ------------
     $ 0.00 - 4.99      4,708,456      3.0                 0.62        3,456,411        0.51
                     ============                                   ============
 </TABLE>

      NOTE 11 - STOCK PURCHASE WARRANTS

      In connection with the acquisition of Flexpoint, Inc.  and Tamco
      during 1995, the Company 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 for services.
      Additionally, the Company 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.

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

      During 1997, Flexpoint issued warrants to purchase 260,000 shares of
      common stock at $0.77 per share to equity investors. 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 the above warrants had no material fair value on the date
      issued. On the date issued, the fair value of each warrant was
      estimated using the Black-Scholes option-pricing model.

      During 1999, warrants to purchase 1,722,048 shares of common stock
      were issued as part of offerings as further described in Note 10.
      Warrants to purchase 780,000 shares of common stock were issued with
      notes payable as further discussed in  Note 7.  An additional 100,000
      warrants were issued to a consultant for services.  Compensation of
      $185,000 was recognized from the grant of these warrants.

      The following table summarizes information about warrants outstanding
      at December 31, 1999:

                                                Weighted-Average
                                 Warrants          Remaining
             Exercise Prices    Outstanding     Contractual Life
             ---------------    ------------    -----------------
             $  0.00 - 0.99          260,000         1.7 years
                1.00 - 1.99          910,000         0.7
                2.00 - 2.99        1,053,825         3.8
                3.00 - 3.99          938,600         2.8
                4.00 - 4.99          609,623         1.0
             $  0.00 - 4.00        3,772,048         2.2


      NOTE 12 - PRODUCTS AND SERVICES

      Flexpoint'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, 1999 and 1998 were as follows:

                                                       1999         1998
                                                    -----------  -----------
            Products
               Sales of sensors. . . . . . . . . .  $   289,264  $ 1,051,023
               Licensing royalty . . . . . . . . .          250      511,291
               Tooling and dies. . . . . . . . . .       42,668      205,162
                                                    -----------  -----------
                  Total Products . . . . . . . . .      332,182    1,767,476

            Engineering Services . . . . . . . . .      441,051      148,152
                                                    -----------  -----------
            Total Sales. . . . . . . . . . . . . .  $   773,233  $ 1,915,628
                                                    ===========  ===========

      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 as of  December
      31, 1999 and 1998 were as follows:

                                                       1999          1998
                                                    -----------  -----------
           Operating loss carry forwards . . . . .  $ 5,132,458  $ 1,921,033
           Allowance for doubtful accounts . . . .        1,119           -
           Amortization of intangibles . . . . . .       14,711       11,167
                                                    -----------  -----------
              Total Deferred Tax Assets. . . . . .    5,145,288    1,932,200
           Valuation Allowance . . . . . . . . . .   (5,148,288)  (1,932,200)
                                                    -----------  -----------
              Net Deferred Tax Asset . . . . . . .  $        -   $        -
                                                    ===========  ===========

      For tax reporting purposes, the Company had net operating loss carry
      forwards in the amount of $14,081,751at December 31, 1999 that will
      expire beginning in the year 2012.

      The following is a reconciliation of the amount of 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, 1999
      and 1998:


                                                     For the Years Ended
                                                         December 31,
                                                   -------------------------
                                                       1999         1998
                                                   ------------  -----------
      Tax at statutory rate (34%). . . . . . . . . $ (2,991,019) $  (755,590)
      Non-deductible expenses. . . . . . . . . . .      100,275        1,030
      Increase in valuation allowance. . . . . . .    4,177,296      937,153
      State tax benefit, net of federal tax effect     (290,305)     (73,337)
      Change in effective tax rate . . . . . . . .     (996,247)    (109,256)
                                                   ------------  -----------
        Provision for Income Taxes . . . . . . . . $         -   $        -
                                                   ============  ===========

      NOTE 14 -- LONG-TERM CONTRACTS

      On May 28, 1998, Flexpoint entered into a purchase and supply
      agreement with an automotive manufacturer. Under the terms of the
      agreement, Flexpoint is to provide engineering and support to the
      automotive manufacturer.  For the years ended December 31, 1999 and
      1998, Flexpoint received $424,551 and $148,152, respectively from such
      services.  The agreement for the engineering and support services runs
      through December 31, 2001 and is to provide Flexpoint with an
      additional $455,382 of related revenue. Flexpoint is also to provide
      the automotive manufacturer with sensors for use as a component in
      automobile manufacturing. 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

      Flexpoint is obligated under operating lease agreements for its
      facilities and office space. Flexpoint has an option to renew one
      lease for an additional three year period. Flexpoint 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 Flexpoint falls into default under
      the lease, the lessor may drawn upon the letter of credit.  The letter
      of credit is to be reduced by $10,000 per year.  The unused balance
      of the letter of credit as of December 31, 1999 was $40,000.  Future
      minimum lease payments under operating leases at December 31, 1999
      are as follows:

               Year Ending December 31:
                       2000. . . . . . . . . . . . . . . . . . $   322,922
                       2001. . . . . . . . . . . . . . . . . .     309,850
                       2002. . . . . . . . . . . . . . . . . .     249,900
                       2003. . . . . . . . . . . . . . . . . .     249,900
                                                               -----------
                       Total . . . . . . . . . . . . . . . . . $ 1,132,570
                                                               ===========

      Lease expense for the years ended December 31, 1999 and 1998 was
      $366,270 and  $82,751, respectively.

      In 1995, a third party entity loaned $35,000 to a former officer of
      the Company as a personal loan. This entity made a claim against the
      former officer for repayment of the advance and for other
      consideration. Flexpoint was required to provide compensation to the
      former officer sufficient to settle the claim during the year ended
      December 31, 1998, in the amount of $48,618 in settlement of the
      loan.  During the year ended December 31, 1999, the third party
      appealed its share ownership claim.  In November 1999, the Company
      settled the share ownership claim by issuing 100,000 shares of common
      stock valued at $1.75 per share, the fair market value on the date of
      settlement.  As a condition of the settlement agreement, each party
      released the other party from any further liability.

      In February of 1998, an unrelated third party filed suit against
      Flexpoint alleging it provided investment banking and financial
      advisory services pursuant to an agreement with Flexpoint. 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 a 2%
      equity interest in Flexpoint at a price of $5.00 per share. In
      addition, the plaintiff is seeking punitive damages of $5,000,000.
      Flexpoint answered the complaint in March 1998 and the action is in
      the discovery stage. Flexpoint has been and continues to contest the
      case vigorously. Given the early stage of the action, legal counsel
      for Flexpoint 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 Flexpoint 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 Flexpoint owes the plaintiff is $75,000.
      Flexpoint has accrued a liability of $75,000 relating to this action
      in its financial statements at December 31, 1999 and 1998.

      NOTE 16 - SUBSEQUENT EVENTS

      The Company issued a note payable dated January 17, 2000 to an
      individual.  The note was for $100,000 with an interest rate of 14%.
      The note is due April 1, 2000.  As additional consideration, the
      Company issued warrants to purchase 100,000 shares of common stock at
      $1.80 per share.  The warrant has a three-year term from January 17,
      2000.  The loan is secured by certain equipment.  The proceeds from
      the loan will be allocated to the warrants based upon their fair
      value. The resulting discount to the note of $100,000 will be
      recognized and amortized over the term of the note.

      Subsequent to year end, the Company issued 8% convertible promissory
      notes totaling $135,000.  The notes are convertible into 79,412 shares
      of common stock and Series C warrants to purchase an additional 79,412
      shares of common stock.  Allocation of the proceeds to the warrants
      will result in a discount to the notes of $81,391 which will be
      recognized as interest expense.

      On March 3, 2000, the Company signed a convertible debenture for up to
      $5,000,000. At signing, the Company received $1,785,000 net of
      related costs of $215,000 in exchange for an 8% convertible debenture
      in the principal amount of $2,000,000 and Series 2000-A warrants to
      purchase 1,283,697 shares of common stock for a four year period.  The
      note is due March 1, 2001 and interest at an annual rate of 8% is
      payable quarterly. If the Company's stock price falls below $1.00 per
      share for five consecutive days, the principal balance will become
      redeemable at the option of the purchaser. The redemption amount is
      equal to 125% of the outstanding principal plus accrued interest.
      Under the agreement and subject to certain contingencies the investor
      may purchase additional debentures of $500,000 each in subsequent
      months.  Subsequent purchases will be reduced by a ten percent
      placement fee and certain other offering costs.

      The debenture is convertible to common stock of the Company at the
      option of the purchaser at a  conversion price which is the lower of
      the average of the three lowest closing bid prices for the common
      stock during the 15 trading days preceding the date of the purchase
      agreement, or the average of the three lowest closing bid prices for
      the common stock during the 15 trading days preceding conversion,
      subject to a maximum price of $3.00 per share and a minimum price of
      $1.00 per share.  Up to 33% of the aggregate principal and accrued
      interest may be converted immediately, on or after the 30th day
      following the date of the agreement, of the aggregate principal and
      accrued interest 67% may be converted and the entire aggregate
      principal balance and accrued interest may be converted after 60 days.
      If the stock price on the due date of the debenture is greater than
      $2.00, the purchaser is obligated to convert all of the outstanding
      debenture into common shares.

      The estimated relative fair value of the warrants as of March 3, 2000
      was $1,026,301.  The estimated relative fair value will be recorded as
      a discount on the debenture and amortized over 60 days, the period
      until the debenture is fully convertible.

      The purchaser of the debenture is not obligated to purchase the
      remaining $3 million in debentures if the Company is in default or has
      breached any of its obligations under the agreement or the average of
      the closing bid price for the Company's common stock is less than or
      equal to $1.

      Subsequent to year end, the Company defaulted on its note payable to a
      shareholder by not making payment on February 10, 2000, the maturity
      date. The Company was already in default of the prepaid interest of
      $70,000 due August 11,1999. The shareholder offered to extend the note
      for an additional six months and waive any default interest  for
      consideration of 500,000 warrants with an exercise price of $2.15. In
      order to extend the maturity of the note, the shareholder also
      required a prepayment of interest of $70,000, payment of the $70,000
      pre-payment due August 11, 1999, plus attorney fees.  The entire
      payment required in addition to the warrants totals $141,920.
      Management accepted the offer to extend the note for six months by
      effectively issuing the warrants and making payment of the default and
      pre-payment interest on March 27, 2000.






                              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 Flexpoint (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, Inc. (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 Flexpoint (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, Inc. (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) (Incorporated by reference to Exhibit 10.4
          of the Company's Annual Report on Form 10-KSB, dated December 31,
          1998).

10.5      Industrial Space Lease between Prudential Insurance
          Company of America and Flexpoint. (Incorporated by reference to
          Exhibit 10.5 of the Company's Annual Report on Form 10-KSB, dated
          December 31, 1998).

10.6      Securities Purchase Agreement between the Company and
          Aspen Capital Resources, LLC, (Incorporated by reference to Exhibit
          10.1 of the Company's Current Report on Form 8-K, dated March 16,
          2000).

10.7      Promissory secured promissory note between the Company
          and Jerry and Vicki Moyes Family Trust, dated August 10, 1999.
10.8      Security Agreement between the Company and Jerry and
          Vicki Moyes Family Trust, dated August 10, 1999.

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

                                   24

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