SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-KSB/A
Annual Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended
March 31, 1998
Commission file number
0-24368
Micropoint, Inc.
(Exact name of registrant as specified in its charter)
Delaware 33-0615178
(State or other jurisdiction of (IRS employer identification no.)
6906 South 300 West Midvale, UT 84047 (801) 568-5111
- -------------------------------------- -------------------------------
(Address of principal executive (Registrant's telephone number,
offices) including area code)
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Name of each exchange on which
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. X - Yes
- 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 $15,349.
The aggregate market value of the voting stock held by
non-affiliates of the issuer as of March 31, 1998 was not
determinable since, to the knowledge of management, there is no
public trading market for the issuer's common stock.
The number of shares outstanding of the issuer's common stock as of
August 28, 1998 was 15,860,279 shares the common stock, $.001 par
value.
Item 7. Financial Statements.
See attached financial statements.
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 $100,000 (determined for the year ended
March 31, 1998) (the "Named Executive Officers"). The tables include
information related to stock options granted to the Named Executive Officers.
Summary Compensation Table
The following table provides certain information regarding compensation
paid by the Company to the Named Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation Awards
------------------- ------------------------------
Securities
Restricted Underlying All Other
Name and Other Annual Stock Options/ LTIP Compensation
Principal Position Year Salary ($) Bonus ($) Compensation($) Awards($) SARs (#) Payouts ($) ($)
------------------ ---- --------- --------- --------------- ---------- ---------- ---------- ------------
<S> <C> (C) (C) (C) (C) (C) (C) (C) (C)
Douglas M. Odom (1) 1996 103,750 -- -- -- 65,000(2) -- --
President, CEO and 1997 120,000 -- -- -- 195,000(2) -- --
Director 1998 120,000 10,000 -- -- 65,000(3) -- --
</TABLE>
- ----------------------
(1) The Summary Compensation Table reflects salary and bonus compensation paid
by Flexpoint to Mr. Odom. Mr. Odom received no compensation from Micropoint,
Sensitron or TAMCO during the periods specified.
(2) All of said options have vested.
(3) All of said options vest on October 31, 1998.
Option/SAR Grants in Last Fiscal Year. The following table provides
certain information regarding option/SAR grants to the Named Executive
Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL
UNDERLYING OPTIONS/SARs
OPTIONS/ GRANTED TO
SARs EMPLOYEES IN EXERCISE OR BASE PRICE
NAME GRANTED(#) FISCAL YEAR ($/Sh) EXPIRATION DATE
------------------ ---------- ------------ ---------------------- ---------------
<S> <S> (C) (C) (C) (C)
Douglas M. ODOM(1) 130,000 3.89% $0.16 2002
Douglas M. Odom(1) 65,000 1.94% $0.77 2003
</TABLE>
_______________
(1) Options to acquire 325,000 shares of common stock are currently vested
and options to acquire 65,000 shares of common stock vest on October 31, 1998.
Options to acquire an additional 130,000 of common stock vest on March 31,
1999, 2000 and 2001 provided Company achieves certain performance criteria
to be determined by the Board. These options became obligations of Micropoint
as part of the Acquisition.
COMPENSATION OF DIRECTORS
No cash fees or other consideration was paid to directors of Micropoint for
service on the Board during the fiscal year ended March 31, 1998. During
the fiscal year ended March 31, 1999 and for the next three years
thereafter, it is anticipated that the non-employee directors will be
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
will likely be exercisable at fair market value on the date of grant. An
initial 20,000 options will vest for current services on the Board and the
remaining options will vest annually at a rate of 20,000 options per year.
Directors of the Company who are also officers or employees of the
Company are not expected to receive any additional compensation for their
service as directors. All directors are entitled to reimbursement for
reasonable expenses incurred in the performance of their duties as Board
members. The Company has made no other agreements regarding compensation
of directors.
EMPLOYMENT AGREEMENTS
Effective December 31, 1997, Flexpoint entered into an employment agreement
with Mr. Odom as its Chief Executive Officer. Under the Employment Agreement,
Flexpoint pays Mr. Odom an annual base salary of $120,000 per year plus such
discretionary bonus as the Flexpoint Board of Directors may deem appropriate.
The Employment Agreement has an initial term of three years and will be
automatically renewed for one or more successive one-year terms (the
"Renewal Terms") unless terminated by either party. The Employment Agreement
also provides Mr. Odom with options to acquire 455,000 shares of common stock
of Micropoint at an exercise price between $.16 and $.77 per share under the
Micropoint Omnibus Stock Option Plan (the "Plan"). Of said options, options
to acquire 65,000 shares of common stock vested on October 31, 1998 and
options to acquire 325,000 shares of common stock have vested. Options to
acquire an additional 130,000 of common stock vest on March 31, 1999, 2000
and 2001 provided Company achieves certain performance criteria to be
determined by the Board. These options became obligations of Micropoint 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 5,237,050 shares of common stock have
been authorized under the Plan. The Plan will permit the Company to grant
"non-qualified stock options" and/or "incentive stock options" to acquire
shares of the Company's common stock. The total number of shares authorized
for the Plan may be allocated between the non-qualified stock options and the
incentive stock options from time to time, subject to certain requirements of
the Internal Revenue Code of 1986, as amended (the "Code").
The Plan is currently being administered by the Board, which will select
optionees and determine the number of shares of common stock subject to each
option. The Plan provides that no option which is to be a qualified option may
be granted at an exercise price less than the fair market value of the
common stock of the Company on the date of grant and in all cases the term of
the stock option shall not exceed ten years. Options to acquire 5,237,050
shares of common stock at exercise prices ranging from $.16 to $.77 are
presently outstanding under the Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officers of the Company serve on the Compensation Committee
(or in a like capacity) for the Company or any other entity.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock of the Company as of June 23, 1998,
for: (i) each person who is known by the Company to beneficially own more
than 5 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 June 23, 1998, the Company had 15,860,279 shares of Common Stock
outstanding.
NAME AND ADDRESS SHARES
OF BENEFICIAL BENEFICIALLY PERCENTAGE OF
OWNER(1) OWNED(2) TOTAL(2) POSITION
---------------- ----------- ------------- ------------
Douglas Odom 390,000(3) 2.4% President, CEO
and Director
Jeffrey A. Coleman 195,000(4) 1.2% Director
Don M. Jackson, Jr. -- -- Director
All officers and 585,000 3.6%
directors as
a group (3 persons)
Bull Ventures, Ltd. 890,444 5.6%
Katerina Court
101 E Hill Place
Nassau, Bahamas
Northridge 1,661,500(5) 10.5%
Investment, LLC
47 E. 7200
South, #221
Midvale, UT 84047
John Sindt 1,366,610(6) 8.4%
47 E. 7200
South, #221
Midvale, UT 84047
Jules A. deGreef 2,202,042(7) 13.8%
47 E. 7200
South, #201
Midvale, UT 84047
______________
(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) Includes vested options to purchase 390,000 shares. Does not include
options to acquire an additional 130,000 of Common Stock vest on March 31,
1999, 2000 and 2001 provided Company achieves certain performance criteria to
be determined by the Board.
(4) Includes 195,000 shares owned by a limited liability company controlled by
Coleman Capital Partners, of which Mr. Coleman is a partner.
(5) These shares are also beneficially owned by Mr. John Sindt and Mr. Jules A.
DeGreef as described in footnotes 6 and 7 below. These shares do not include
shares, warrant or options owned by Messrs. Sindt and DeGreef, as to which
shares Northridge Investment LLC has disclaimed beneficial ownership.
to purchase 455,000 shares held of record by Mr. DeGreef and 895,750 shares
held by Northridge Investment LLC. Does not include any shares held by Bull
Ventures, Ltd., a Bahamas company with which Mr. Sindt is affiliated, and
as to which shares Mr. Sindt has disclaimed beneficial ownership.
(6) Includes warrants to purchase 15,860 shares owned by Mr. Sindt, warrants
to purchase455,000 shares held of record by Mr. DeGreef and 895,750 shares held
by Northridge Investment LLC. Does not include any shares held by Bull Ventures,
Ltd., a Bahamas company with which Mr. Sindt is affiliated, and as to which
shares Mr. Sindt has disclaimed beneficial ownership.
(7) Includes 461,292 shares and options and warrants to purchase 975,000
shares owned by Mr. Sindt and 765,750 shares held by Northridge Investment
LLC. Does not include warrants to acquire 455,000 shares that are held of record
by Mr. DeGreef, but which Messrs. Sindt and DeGreef report to be beneficially
owned by Mr. Sindt and any shares held by Bull Ventures, Ltd., a Bahamas
company with which Mr. DeGreef is affiliated, and as to which shares Mr.
DeGreef has disclaimed beneficial ownership.
The Company is not aware of any arrangements, the operation of which
may, at a subsequent date, result in a change in control of the Company.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Micropoint, Inc.
(Registrant)
By /s/ Douglas M. Odom
Date: September 10, 1998 ----------------------
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 September 10, 1998
Douglas M. Odom and Director (Principal Executive
/s/ Jeffrey Coleman
- ------------------- Director September 10, 1998
Jeffrey Coleman
/s/ Don M. Jackson
- ------------------ Director September 10, 1998
Don M. Jackson
/s/ Thomas N. Strong
- -------------------- Comptroller September 10, 1998
Thomas N. Strong
MICROPOINT, INC.
(A Development Stage Enterprise)
TABLE OF CONTENTS
Report of Independent Certified Public Accountants F-2
Financial Statements:
Balance Sheet - March 31, 1998 F-3
Statements of Operations for the Years Ended
March 31, 1998 and 1997, and for the Cumulative
Period from June 11, 1992 (Date of Inception)
through March 31, 1998 F-4
Statements of Stockholders' Equity (Deficit) for
the Period from June 11, 1992 (Date of Inception)
through March 31, 1996, and for the Years Ended
March 31, 1997 and 1998 F-5
Statements of Cash Flows for the Years Ended
March 31, 1998 and 1997, and for the Cumulative
Period from June 11, 1992 (Date of Inception)
through March 31, 1998 F-6
Notes to Financial Statements F-7
F-1
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, UT 84111-2693
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and the Board of Directors
Micropoint, Inc.
We have audited the accompanying balance sheet of Micropoint, Inc.
(a development stage enterprise) as of March 31, 1998 and the
related statements of operations, stockholders' equity (deficit),
and cash flows for the years ended March 31, 1998 and 1997, and for
the cumulative period from June 11, 1992 (date of inception) through
March 31, 1998. 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 financial position of
Micropoint, Inc. as of March 31, 1998, and the results of its
operations and its cash flows for the years ended March 31, 1998 and
1997, and for the cumulative period from June 11, 1992 (date of
inception) through March 31, 1998, in conformity with generally
accepted accounting principles.
HANSEN, BARNETT & MAXWELL
August 7, 1998
Salt Lake City, Utah
F-2
MICROPOINT, INC.
(A Development Stage Enterprise)
BALANCE SHEET
MARCH 31, 1998
ASSETS
Current Assets
Cash and cash equivalents $ 1,492,906
Investment in securities available-for-sale 433,857
Receivable from escrow agent 64,825
Receivable from Sensitron Inc. 1,000,000
------------
Total Current Assets 2,991,588
------------
Total Assets $ 2,991,588
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accrued income taxes $ 180,429
Deferred income taxes 117,506
------------
Total Current Liabilities 297,935
------------
Stockholders' Equity
Common stock - $0.001 par value; 100,000,000
shares authorized; 6,000,000 shares issued
and outstanding 6,000
Additional paid-in capital 2,688,812
Unrealized loss on securities available-for-sale (8,251)
Earnings accumulated during the development stage 7,092
------------
Total Stockholders' Equity 2,693,653
------------
Total Liabilities and Stockholders' Equity $ 2,991,588
============
The accompanying notes are an integral part of these financial statements.
F-3
MICROPOINT, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
Cumulative from
June 11, 1992
For the Years Ended (Date of Inception)
March 31, Through
-------------------- March 31,
1998 1997 1998
--------- --------- ---------
Interest income $ 13,139 $ -- $ 13,139
Gain on sale of securities 2,210 -- 2,210
--------- --------- ---------
Total Income 15,349 -- 15,349
--------- --------- ---------
General and administrative expense 371 565 3,855
--------- --------- ---------
Income (Loss) Before Income Taxes 14,978 (565) 11,494
Income tax expense 4,402 -- 4,402
--------- --------- ---------
Net Income (Loss) $ 10,576 $ (565) $ 7,092
========= ========= =========
Basic and Diluted Income (Loss)
Per Common Share $ 0.00 $ (0.00) $ 0.00
========= ========= =========
Weighted Average Number of
Common Shares Used in Per
Share Calculation 2,399,216 1,273,800 1,451,076
========= ========= =========
The accompanying notes are an integral part of these financial statements.
F-4
MICROPOINT, INC.
(A Development Stage Enterprise)
STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Unrealized Deficit
Loss on Accumulated Total
Additional Securities During the Stockholders'
Common Stock Paid-In Available- Development Equity
Shares Amount Capital For-Sale Stage (Deficit)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance - June 11, 1992
(Date of Inception) -- $ -- $ -- $ -- $ -- $ --
Issuance for cash, June 1992,
$0.00 per share 1,200,000 1,200 (700) -- -- 500
Contribution to capital, 1993 -- -- 500 -- -- 500
Issuance for cash, September 30,
1993, $0.00 per share 73,800 74 172 -- -- 246
Cumulative net loss from
inception through
March 31, 1996 -- -- -- -- (2,919) (2,919)
---------- ---------- ---------- ---------- ---------- ----------
Balance - March 31, 1996 1,273,800 1,274 (28) -- (2,919) (1,673)
Net loss -- -- -- -- (565) (565)
---------- ---------- ---------- ---------- ---------- ----------
Balance - March 31, 1997 1,273,800 1,274 (28) -- (3,484) (2,238)
Conversion of accounts
payable, October 1, 1997,
$0.00 per share 726,200 726 1,695 -- -- 2,421
Issuance for cash, January
through March 1998, $0.75
per share 2,695,402 2,695 2,011,840 -- -- 2,014,535
Issuance for investment in
securities, net of $298,442
of deferred income taxes,
January through March
1998, $0.52 per share 1,304,598 1,305 675,305 -- -- 676,610
Unrealized loss on securities
available-for-sale, net of taxes -- -- -- (8,251) -- (8,251)
Net income -- -- -- -- 10,576 10,643
---------- ---------- ---------- ---------- ---------- ----------
Balance - March 31, 1998 6,000,000 $ 6,000 $2,688,812 $ (8,251) $ 7,092 $2,693,653
========== ========== ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-5
MICROPOINT, INC.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
Cumulative from
June 11, 1992
For the Years Ended (Date of Inception)
March 31, Through
----------------------- March 31,
1998 1997 1998
----------- ---------- ----------
Cash Flows From Operating Activities
Net Income (Loss) $ 10,576 $ (565) $ 7,092
Adjustments to reconcile net loss
to net cash used by operating activities:
Amortization of other assets 14 56 280
Gain on sale of available-for-sale
securities (2,210) -- (2,210)
Changes in liabilities:
Accounts payable 169 509 2,421
Accrued income taxe 180,429 -- 180,429
Decrease in deferred income taxes (176,026) -- (176,026)
----------- ---------- ----------
Net Cash Provided By Operating Activities 12,952 -- 11,986
----------- ---------- ----------
Cash Flows From Investing Activities
Proceeds from sale of available-
for-sale securities 530,244 -- 530,244
Bridge loan to Sensitron Inc. (1,000,000) -- (1,000,000)
Cash paid for organizational costs -- -- (280)
----------- ---------- ----------
Net Cash Used In Investing Activities (469,756) -- (470,036)
----------- ---------- ----------
Cash Flows From Financing Activities
Proceeds from issuance of common stock 1,949,710 -- 1,950,456
Contribution to capital -- -- 500
----------- ---------- ----------
Net Cash Provided By Financing
Activities 1,949,710 -- 1,950,956
----------- ---------- ----------
Net Change In Cash 1,492,906 -- 1,492,906
Cash - Beginning of Period -- -- --
---------- ----------- ----------
Cash - End of Period $1,492,906 $ -- $1,492,906
========== =========== ==========
Supplemental Schedule of Noncash Investing and Financing Activities
During the year ended March 31, 1998, common stock was issued for cash
which was held in an escrow account in the amount of $64,825, securities
available-for-sale were transferred to the Company in exchange for
1,304,598 shares of common stock in the amount of $676,610, net of
$298,442 of deferred income taxes, unrealized losses on investment in
securities available-for-sale were recognized as a separate component of
stockholders' equity in the amount of $8,251, net of $4,910 of income
taxes, and accounts payable in the amount of $2,421 were converted into
726,200 shares of common stock.
The accompanying notes are an integral part of these financial statements.
F-6
MICROPOINT, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Organization -- Micropoint, Inc. was incorporated under the laws of the
State of Delaware on June 11, 1992, for the purpose of seeking out business
opportunities, including acquisitions. The Company is considered a
development stage enterprise. On January 10, 1998, the shareholders of the
Company approved a 3-for-1 stock split and changed its name from Nanotech
Corporation to Micropoint, Inc. The accompanying financial statements have
been restated for the effects of the stock split for all periods presented.
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 financial statements and
accompanying notes. Actual results could differ from those estimates.
Financial Instruments - The amounts reported as cash, investment in
securities available-for-sale and receivables are considered to be
reasonable approximations of their fair values. The fair value estimates
were based on market information available to management and subsequent
exchanges for cash of which management was aware of at the time of the
preparation of the financial statements. The Company has cash in excess of
federally insured limits at March 31, 1998 of $214,898.
Investment in Securities Available-for-Sale --Investments in marketable
securities are reported at fair value and are designated as available-for-
sale. Unrealized gains and losses are included in stockholders equity, net
of applicable income taxes. Realized gains and losses are accounted for on
the specific identification method.
Basic Income (Loss) Per Share - In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.128,
Earnings Per Share. Statement No. 128 specifies the computation,
presentation, and disclosure requirements for earnings per share and was
adopted as of March 31, 1998. Loss per share for the year ended March 31,
1997 and income per share for the cumulative period from inception through
March 31, 1998 were restated; however, the effect of the change to income
(loss) per share for those periods was not material. Basic income (loss)
per common share is computed by dividing net income (loss) by the number of
common shares outstanding during the period.
New Accounting Standards -- In June 1997, the Financial Accounting
Standards Board issued SFAS No. 130, Reporting Comprehensive Income. This
statement which is effective for fiscal years beginning after December 15,
1997, expands or modifies disclosures and will have no impact on the
Company's financial position, results of operations or cash flows. The
statement will be adopted subsequent to the reorganization discussed in
Note 2.
NOTE 2 -- REORGANIZATION SUBSEQUENT TO YEAR END
On December 30, 1997, Sensitron Inc. ("Sensitron") entered into an
agreement with Micropoint, Inc. ("Micropoint") to reorganize Sensitron into
Micropoint. The agreement required Micropoint to raise capital of
approximately $3,000,000 in a private placement before the completion of
the merger. The agreement was closed in April 1998. Under the terms of
the agreement, a newly-formed wholly-owned subsidiary of Micropoint was
merged into Sensitron. The shareholders of Sensitron exchanged each of
their shares of common stock for 13 shares of Micropoint common stock in
connection with the merger agreement which resulted in Micropoint issuing
9,860,279 shares of its common stock to the Sensitron shareholders. As a
result of the merger, the Sensitron shareholders became the majority
shareholders of the Company in a transaction intended to qualify as a tax-
free reorganization.
The merger has been considered the reorganization of Sensitron and the
acquisition of Micropoint in a purchase business combination. There was no
market for Micropoint's common stock; therefore the fair value of
Micropoint's assets were considered the fair value of the 6,000,000 shares
of common stock outstanding. Accordingly, no goodwill will be recognized in
connection with the acquisition of Micropoint. The reorganization was
completed in April 1998; therefore, the accompanying financial statements
at March 31, 1998 do not reflect the shares of common stock issued to the
Sensitron shareholders or the net assets of Sensitron.
NOTE 3 -- INCOME TAXES
Income tax expense consists of the following for the years ended March 31:
1998 1997
-------- --------
Current - Federal $156,084 $ --
State 24,345 --
Deferred - Federal (152,431) --
State (23,596) --
-------- -------
Total Income Tax Expense $ 4,402 $ --
======== =======
The deferred tax liability as of March 31, 1998 was comprised of temporary
differences from investment in securities available-for-sale in the amount
of $117,506. These securities were transferred to the Company by
shareholders in exchange for common stock in a transaction which is
intended to be tax free to the shareholders. Accordingly, the
shareholders' tax basis in the securities was transferred to Company. The
securities were recorded, however, at their fair value on the date
transferred. The difference in the recorded value and the tax basis gave
rise to a deferred tax liability on the date transferred of $298,442. The
deferred tax liability has partially reversed due to the recognition of
taxable gain from sales of securities during the year ended March 31, 1998.
The following is a reconciliation of the amount of tax that would result
from applying the federal statutory rate to pretax income with the
provision for income taxes for the years ended March 31:
1998 1997
-------- -------
Tax at statutory rate (34%) $ 5,093 $ (192)
Deferred tax asset valuation change (523) 192
State taxes, net of federal benefit 494 --
Effect of lower tax rates (662) --
-------- -------
Total Income Tax Expense $ 4,402 $ --
======== ========
NOTE 4 -- INVESTMENT IN SECURITIES
The Company has investment in securities which are classified as available-
for-sale as follows at March 31, 1998:
Equity securities, at cost $486,726
Unrealized holding losses (13,161)
--------
Estimated Fair Value $473,565
========
During the year ended March 31, 1998, proceeds from sales of securities
were $530,244 with the gross realized gains and losses on those sales were
$3,400 and $1,190, respectively. Unrealized holding losses which have
been included in the separate component of stockholders's equity changed by
$8,251, net of $4,910 of deferred income taxes.
NOTE 5 -- BRIDGE LOAN TO SENSITRON INC.
During March 1998, the Company transferred $1,000,0000 to Sensitron Inc. as
a bridge loan in anticipation of the consummation of the merger agreement
which occurred in April 1998. The bridge loan was non-interest bearing and
was settled on the date of the reorganization.
NOTE 6 -- RELATED PARTY TRANSACTIONS
In January 1998, common stock was issued to a company controlled by an
individual and his family in exchange for available-for-sale securities
valued at $628,200 before related deferred income taxes. The exchange was
intended to be tax free to the shareholders. From February through August
1998, the Company sold those securities in taxable transactions back to the
related party company for cash in the amount of $628,200.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31, 1998, AND STATEMENTS OF OPERATIONS FOR THE YEAR ENDED
MARCH 31, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,492,906
<SECURITIES> 433,857
<RECEIVABLES> 1,064,825
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,991,588
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,991,588
<CURRENT-LIABILITIES> 297,935
<BONDS> 0
0
0
<COMMON> 6,000
<OTHER-SE> 2,752,478
<TOTAL-LIABILITY-AND-EQUITY> 2,991,588
<SALES> 0
<TOTAL-REVENUES> 15,349
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 371
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 14,978
<INCOME-TAX> 4,402
<INCOME-CONTINUING> 10,576
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,576
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
