MICROPOINT INC
10KSB, 1999-03-16
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                SECURITIES AND EXCHANGE COMMISSION

                      Washington, D.C. 20549
                      ______________________

                           FORM 10-KSB

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

                    For the fiscal year ended
                        December 31, 1998

                      Commission file number
                             0-24368

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

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

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

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

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

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes xx  No

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

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

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

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

<PAGE>




Micropoint, Inc.

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


                              PART I

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

PART II

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

PART III

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

<PAGE>

                              PART I

Item 1. Description of Business.

Company Background

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

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

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

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

The Sensor Business

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

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

The Bend Sensor(R) Technology

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

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

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

Production Contracts and Specific Applications

     Toy Applications

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

     Air Bag Applications

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

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

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

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

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

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

     Automobile Horn Applications

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

     Other Applications

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

                                5
<PAGE>

Business Strategy

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

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

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

Research and Development

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

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

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

Marketing, Distribution, Sales and Customers

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

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

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

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

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

Manufacturing and Suppliers

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

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

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

                                7
<PAGE>

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

Competition

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

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

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

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

Intellectual Property

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

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

                                8
<PAGE>

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

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

Business of Tamco

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

Employees

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

Item 2. Description of Property.

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

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

                                9
<PAGE>

Item 3. Legal Proceedings.

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

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

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

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

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

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

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

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

                                10
<PAGE>

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

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

Stockholders Proposals

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


           [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                11

<PAGE>

                             PART II

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

Share Price History 

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

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

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

Dividend Policy

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

Holders of Record

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

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

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

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

                                12
<PAGE>

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

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

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

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

Overview

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

Financial Position

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

Years Ended December 31, 1998 and 1997

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

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

                                13
<PAGE>

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

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

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

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

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

                                14
<PAGE>

Liquidity and Capital Resources

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

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

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

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

Inflation

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

Year 2000

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

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

                                15
<PAGE>

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

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

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

Forward-Looking Statements

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

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

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

                                16
<PAGE>

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

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

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

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

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

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

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

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

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

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

                                18
<PAGE>

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

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

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

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

Item 7. Financial Statements.
     
     See attached financial statements.

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

     Not applicable.


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                                19
<PAGE>

                             PART III

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

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

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

Thomas E. Danielson   37   Vice-President                             1995

Jeffrey A. Coleman    37   Director                                   1998

Don M. Jackson, Jr.   63   Director                                   1998
_______________


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

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

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

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

                                20
<PAGE>

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

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

Section 16(a) Beneficial Ownership Reporting Compliance

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

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

Item 10. Executive Compensation.

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

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

<TABLE>


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

</TABLE>
                                        
_______________

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

                                21
<PAGE>

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

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

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

</TABLE>
______________

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

Compensation of Directors

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

Employment Agreements

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

                                22
<PAGE>

Indemnification for Securities Act Liabilities

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

Stock Options 

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

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

Compensation Committee Interlocks and Insider Participation

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

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

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

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

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

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

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

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

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

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

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

* Less than 1%.
_______________

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

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

Item 12. Certain Relationships and Related Transactions.

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

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

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

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

     Listed on page 27 hereof.

Reports on Form 8-K

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



           [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                25
<PAGE>

                            SIGNATURES

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

                               Micropoint, Inc.(Registrant)


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


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



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


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

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

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

                                26
<PAGE>




                          EXHIBIT INDEX

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

27.1    Financial Data Schedule

<PAGE>


               MICROPOINT, INC.  AND  SUBSIDIARIES





        REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
                               AND
                CONSOLIDATED FINANCIAL STATEMENTS






                        December 31, 1998


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











                MICROPOINT, INC. AND SUBSIDIARIES


                        TABLE OF CONTENTS 
                                                                      Page

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

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

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

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

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

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

<PAGE>

HANSEN, BARNETT & MAXWELL
A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS

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


        REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


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

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

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

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

HANSEN, BARNETT & MAXWELL

/s/ Hansen, Barnett & Maxwell

February 5, 1999
Salt Lake City, Utah


<PAGE>


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

                              ASSETS

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

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

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

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

                                2
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                                                                                (Continued)

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

</TABLE>
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                     5
</TABLE>

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

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

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

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

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

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

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

NOTE 1  NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

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

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

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


                                7
<PAGE>


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


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

Property and Equipment   Property and equipment are stated at cost.  Additions
and major improvements are capitalized while maintenance and repairs are
charged to operations.  Upon retirement, sale or disposition, the cost and
accumulated depreciation of the items sold are eliminated from the accounts,
and any resulting gain or loss is recognized in operation.  Depreciation is
computed using the straight-line and the double-declining-balance methods and
is recognized over the estimated useful lives of the property and equipment,
which are five to seven years.

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

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

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

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

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

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

                                8
<PAGE>

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

NOTE 2   ACQUISITIONS

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

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

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

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

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

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

NOTE 3   PROPERTY AND EQUIPMENT

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

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

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

NOTE 4   OTHER ASSETS

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

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

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

NOTE 5   LICENSE AGREEMENT

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

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

NOTE 6   CASH FLOW INFORMATION

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

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

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

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

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

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

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

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

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


                                11
<PAGE>

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

NOTE 7   NOTES PAYABLE

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

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

NOTE 8   EMPLOYMENT AND COMPENSATION AGREEMENTS

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

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

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

                                12
<PAGE>

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

NOTE 9   STOCKHOLDERS' EQUITY

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

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

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

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

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

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

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

NOTE 10   STOCK OPTIONS

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

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

                                13
<PAGE>

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

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

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

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

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

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

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

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

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


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

<TABLE>
<CAPTION>

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


NOTE 11   STOCK PURCHASE WARRANTS

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

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

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

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

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

<TABLE>
<CAPTION>

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

                                15
<PAGE>

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

NOTE 12   DETAIL OF SALES

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

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

            Total Products                    1,767,476          178,699


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

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

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

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

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

NOTE 14 -- LONG-TERM CONTRACTS

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

NOTE 15   COMMITMENTS AND CONTINGENCIES

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

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

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

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

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

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

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

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

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

                                18
<PAGE>



                           Exhibit 10.4

                             PURCHASE
                       AND SUPPLY AGREEMENT


     THIS AGREEMENT is made this  28th day of  May, 1998, between Delco
Corporation, a Delaware Corporation and a business unit of Delphi Automotive
systems having an office at One Corporate Center, PO Box 9005, Kokomo, IN 
46904-9005 ("Delco"), and Flexpoint, Inc., a Utah Corporation having a place
of business at 6906 South 300 West, Midvale, Utah 84047 ("Flexpoint"). 

     WHEREAS, Flexpoint, as the result of an extensive development program,
has acquired special knowledge to date, know-how and expertise concerning
flexible potentiometer technology and the application thereof; and

     WHEREAS,  Flexpoint Technology  is recognized to be highly unique and
proprietary to Flexpoint; and

     WHEREAS, Flexpoint manufactures and sells  Sensor Mats and other products
for use in automotive and other applications; and 

     WHEREAS, Flexpoint, at the request of General Motors ("GM"), seeks
assistance from Delco to integrate Sensor Mats into a Weight Based Suppression
System ("WBSS"), all in accordance with and in full compliance with GM design
and specifications and pursuant to the directions of Flexpoint as approved by
GM, including but not limited to all that is necessary to: 

     a.  Manufacture a Circuit to operatively interface with and mechanically
connect to the Sensor Mat to be provided by Flexpoint; and

     b.  Assemble the Circuit to and/or with the Sensor Mat provided to Delco
by Flexpoint; and 

     c.  Supply the completed WBSS assembly to respective seat manufacturers
as directed by GM; and 

     d.  Support Flexpoint to accomplish QS9000 certification and implement
world class manufacturing practices.

     WHEREAS, Delco desires to purchase Sensor Mats from Flexpoint for
integration into a WBSS; and

     WHEREAS, Delco and Flexpoint wish to cooperate in the manufacture,
assembly and integration of the WBSS as defined herein for supply to GM; and

     NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties, intending to be legally bound, hereby agree as
follows:

1.     DEFINITIONS
       -----------

     1.01     "Circuit" means an assembly of electrical components for
receiving the detection signals from the SENSOR MAT and for generating
operation signals for transmission to the Sensor and Diagnostic Module
("SDM").
                                2
<PAGE>

     1.02     "GM PLATFORMS" shall mean the GM platforms for model years as
identified in Exhibit "A" hereto.

     1.03     "**" shall mean the agreement between ** and Flexpoint regarding
the time period during which the FLEXPOINT TECHNOLOGY will be exclusively
supplied to **  by Flexpoint.

     1.04      "Confidential Information" includes, but is not limited to, the
FLEXPOINT TECHNOLOGY and its, as well as other trade secrets, know how,
positive learning experience, negative learning experience, technical data
including test data, test specifications, test performance, test criteria,
circuit component values, manufacturers of various components, computer
programs in whatever form and in whatever medium, computer program
architecture and logic, business data and information including business
plans, financing plans, expectations, marketing efforts, customer generated
test data and information, cost data, manufacturing procedures and equipment,
processing data and information, supplier data, pricing information including,
but not limited to, mark up and margins, and any information no matter if
generated by Flexpoint, by Delco, by GM, or by a third party at the request of
any one or more of Flexpoint, Delco or GM, separately or in some combination
thereof, which information is not generally known in the trade or to the
parties hereof and which information will provide some economic and/or
competitive advantage to the party who possesses the information in comparison
to a party that does not possess the information. 

     1.05     "Flexpoint Patents" shall mean all Patents, including without
limitation United States Patent No. 5,157,372 and 5,583,476 and all
counterparts thereof, which are owned and/or controlled by Flexpoint or its
successors or assigns thereof, and which relate to flexible position sensors
utilizing flexible potentiometer technology.

     1.06     "Flexpoint Technology" refers to that collection of information
owned or controlled by Flexpoint now or hereafter, both written and unwritten,
and including both negative and positive learning experience, developed by and
in the possession of Flexpoint prior to entering into this Agreement relating
to its patents and patent applications and/or to or useful in the design,
manufacture, operation, use and sale of systems for the detection of pressure
applied at one or more points over, to or on a deflectable substrate, such as
a seat of a vehicle (e.g., automobile, truck, van, bus, airplane), which
FLEXPOINT TECHNOLOGY includes, but is not limited to, the design, manufacture,
operation of, functioning of and use of a detector, certain electrical
sensors, interfacing circuitry, certain software including underlying logic or
software and associated computer devices which, separately and/or all
together, are for incorporation into and to form a system useful for
selectively operating a protective air bag and an air bag system,  including a
protective air bag and air bag system of an automobile.  The FLEXPOINT
TECHNOLOGY includes, but is not limited to, the WBSS which also includes the
CIRCUIT,  algorithms and the SENSOR MAT.

     1.07     "Materials" includes anything in physical form including
structural materials, equipment, devices, chemical materials and the like.

     1.08     "SENSOR MAT" refers to a detector configured for positioning on
or within the automobile seat which SENSOR MAT includes a sensor for measuring
deflection applied at different points over, to or on the surface of the
automobile seat and generating a detection signal reflective of the magnitude
of deflection occurring at different points over, to or on the surface.

     1.09     "WBSS" refers to a weight based suppression system incorporating
or using FLEXPOINT TECHNOLOGY, which system is adapted for use in automobiles
and which system includes a specific detector, certain electrical sensors,
interfacing circuitry, certain software including underlying logic and the
architecture thereof, and associated computer devices which, separately and/or
all together, are for incorporation into and for 
___________
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request
for confidential treatment.
                                3
<PAGE>

the formation of a system useful for selectively operating a protective air
bag and an air bag system adapted for use in automobiles.

     1.10     "Work" means all activity and services as reasonable and
necessary and in accordance with and in full compliance with the design and
specifications and pursuant to the directions of Flexpoint as approved by GM
in order to:
     
          a.  Manufacture the CIRCUIT to operatively interface with and
mechanically connect to the SENSOR MAT to be provided by Flexpoint; and

          b.  Assemble the CIRCUIT to and/or with the SENSOR MAT provided to
Delco by Flexpoint; and 

          c.  Supply the completed WBSS assembly to respective seat
manufacturers as directed by GM; and

          d.  Co-design the CIRCUIT.
     
2.     SUPPORT 
       -------

     2.01     During the term of this Agreement, Flexpoint shall cooperate and
provide Delco with reasonable engineering support for the design and assembly
of the WBSS as needed by Delco, all in accordance with that certain
Engineering Spending Curve spreadsheet which is attached as Exhibit "B"
hereto.  Such support shall be at Delco's expense and shall be provided to
Delco's engineering and assembly facilities worldwide.

     2.02     During the term of this Agreement, Delco shall cooperate and
provide Flexpoint with reasonable engineering support and to assist Flexpoint
to accomplish QS9000 certification and implement world class manufacturing
practices.

3.     SUPPLY AGREEMENT
       ----------------

     3.01     Subject to the terms and conditions of this Agreement, Flexpoint
shall fill  Delco's orders for Flexpoint's Product, FOB Flexpoint's plant.

     3.02      The price of the SENSOR MAT shall be based upon a minimum **
purchase order for the identified automobile platforms as set forth in Exhibit
"A" hereto. The Parties expect that future price negotiations will include
discussion of **.  Flexpoint agrees to a ** cost reduction mandate which would
result in ** selling price reduction as follows:
** 

Price increases shall be limited to justified increases in Flexpoint's labor
or material costs, which shall be demonstrated by evidence satisfactory to
Delco and which shall be offset by productivity gains.

     3.03      If Flexpoint is unable to ship SENSOR MATS properly and
reasonably ordered by Delco hereunder, Flexpoint will promptly remedy the
situation (which may involve **. If the failure is not substantially remedied
within ** and it will not be substantially implemented in significantly less
time than Delco could have commercial production reestablished, then Flexpoint
will assist Delco in any way possible including the ** such SENSOR MATS to
meet the portion of Delco's requirements of the SENSOR MATS that Flexpoint
cannot supply hereunder, subject to a royalty equal to ** of the purchase
price for such SENSOR MAT and subject to the terms of this Agreement.
___________
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request
for confidential treatment.
                                4
<PAGE>

     3.04     To minimize the likelihood of a supply deficiency, Flexpoint
will identify an additional manufacturer or a possible additional or
alternative Flexpoint manufacturing site for the manufacture of the SENSOR
MATS, if Flexpoint's initial manufacturing site is unable to meet Delco's
requirements under this Agreement.  If Flexpoint has itself previously
established an alternative source of supply for the SENSOR MATS and such
alternative source is qualified and approved by GM and Delco's standards to
make the SENSOR MATS, Delco shall purchase the SENSOR MATS from such
alternative source before seeking any other source for the SENSOR MATS. 
Further, when Flexpoint has cured its inability to supply SENSOR MATS to
Delco, Delco shall begin again to purchase SENSOR MATS from Flexpoint.

     3.05     Delco's purchase from Flexpoint shall be under the terms and
conditions of  Delco's purchase orders unless otherwise agreed in writing.  A
copy of Delco's purchase order is attached in Exhibit "E" hereto.

     3.06     ** will be measured according to reasonable and normal standards
for companies with unique technology similarly sized and situated as
Flexpoint. **. The Parties acknowledge that Flexpoint shall be considered to
be ** as to price as long as it is in conformance with the price terms of
Exhibit "D" attached to this Agreement.  If Delco determines that Flexpoint is
not **, Delco will give Flexpoint written notice of the specific matters with
respect to which Flexpoint is not **.  Flexpoint will then have at least **
from the date of the plan with milestones within which to **.  Delco will
provide reasonable support to assist Flexpoint in ** by achieving the
milestones set forth in the mutually agreed upon plan.  If Flexpoint is unable
to ** identified by Delco in its notice to Flexpoint within the cure period
specified above Flexpoint **.  Subject to a royalty equal to ** of the
purchase price for such SENSOR MAT and subject to the terms of the Agreement. 
Further, when Flexpoint has **, Delco shall begin again to purchase SENSOR
MATS from Flexpoint.

4.     CONFIDENTIALITY
       ---------------

     4.01     "Proprietary Information" for the purpose of this Agreement
shall mean any information disclosed between the Parties in connection with
the Work to be performed under this Agreement that is marked "Proprietary" (or
comparable legend) when disclosed in tangible form, or if disclosed in
intangible form, is indicated as being Proprietary at the time of disclosure,
and subsequently reduced to a writing marked Proprietary that is provided to
the receiving Party within ** of the disclosure. The receiving Party shall not
disseminate the other Party's Proprietary Information received hereunder to
any third party for a period of ** after the initial date of receipt, and
shall use the same degree of care in protecting such Proprietary Information
that it employs with information of its own that it does not wish to be
disseminated.

     4.02     Proprietary Information does not include information that:
     
          (a)     is or becomes publicly known through no wrongful act by the
receiving Party; or
     
          (b)     is already known to the receiving Party at the time of
disclosure; or
     
          (c)     is rightfully received by the receiving Party without breach
of any confidentiality obligations; or
     
          (d)     is independently developed by the receiving Party; or

          (e)     is furnished to a third party by the disclosing Party
without similar restrictions on the third party's rights; or

     ___________
     The "**" marks the location of information that has been omitted and
filed separately with the Securities and Exchange Commission pursuant to a
request for confidential treatment.
                                5
<PAGE>

          (f)     is explicitly approved for release by written authorization
by the disclosing Party; or
     
          (g)     is required to be disclosed by operation of law or
administrative order.
          
     4.03      Information Transfer.  The Parties acknowledge that certain
confidential and proprietary information necessary for the development and
production of the SENSOR MAT will be disclosed to Delco and GM.  Delco agrees
that the information disclosure shall be limited to the information outlined
in the Requirements for Sensor Systems Design Information Disclosure, columns
GM and Tier I Delco only and that the information outlined only in the
Flexpoint column shall not be disclosed as attached in Exhibit "C" hereto.
     
5.     MISCELLANEOUS
       -------------

     5.01     In the event any one or more of the provisions of this Agreement
is held to be unenforceable under the law of any country, state or
organization, (a) such unenforceability shall not effect any other provision
of this Agreement; (b) this Agreement shall be construed as if said
unenforceable provisions had not been contained therein; and (c) the parties
shall negotiate in good faith to replace the unenforceable provisions by such
enforceable provisions as has the effect nearest to that of the provisions
being replaced.

     5.02     Neither party shall be liable for any failure to perform or for
any delay in performance of its obligations hereunder which is caused by
circumstances beyond its reasonable control, including without limitation acts
of God or a public enemy, fires, storms, floods, epidemics, quarantine
restrictions, riots, insurrections, explosions, accidents, war, labor
disputes, transportation embargos, acts or failures to act of or by any
government of the other party, or any other cause beyond the control of the
parties.  Each party shall promptly notify the other in writing within fifteen
(15) days of the existence of any excusable non-performance or any delays and
the anticipated duration thereof.

     5.03     No delay on the part of either party in exercising any of its
respective rights hereunder or the failure to exercise the same nor the
acquiescence in or waiver of a breach of any term, provision or condition of
this Agreement shall be construed to operate as a waiver of any such rights or
acquiescence thereto, except for the specific instance of delay, waiver or
acquiescence.

     5.04     This Agreement and the rights and obligations hereunder may not
be assigned by either party without the prior written consent of the other
party.

     5.05     In the event any dispute or claim arising out of this Agreement
is initiated by Delco, the interpretation and construction of this Agreement,
and all matters relating thereto, shall be governed by the laws of the State
of Utah without regard to Utah's Conflict of Law laws. Any judicial proceeding
brought to enforce this Agreement, or any matter related thereto, shall be
brought in the appropriate courts for Salt Lake County, State of Utah or the
appropriate United States District Court for Salt Lake County, Utah. In the
event any dispute or claim arising out of this Agreement is initiated by
Flexpoint, the interpretation and construction of this Agreement, and all
matters relating thereto, shall be governed by the laws of the State of
Indiana without regard to Indiana's Conflict of Law laws. Any judicial
proceeding brought to enforce this Agreement, or any matter related thereto,
shall be brought in the appropriate courts for Howard County, State of Indiana
or the appropriate United States District Court for Howard County, Indiana. By
execution of this Agreement, each party accepts and agrees to the exclusive
jurisdiction of the aforesaid courts and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement.

                                6
<PAGE>

     5.06     Delco and Flexpoint agree not to export or re-export or cause to
be exported or re-exported any technical information pertaining to FLEXPOINT
TECHNOLOGY to any country which, under the laws of the United States of
America, Delco or Flexpoint is required to obtain a validated export license
for exporting such technology or unless a validated export license is obtained
from the Office of Export Administration, United States Department of
Commerce.

     5.07     This Agreement shall not constitute a partnership agreement and
Delco is not the agent of Flexpoint and Flexpoint is not the agent of Delco. 
Neither party shall have the actual or apparent right, or express or implied
authority, to assume, create or incur any liability or obligation on behalf of
the other.

     5.08     All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if signed by the
respective persons giving them or by their attorneys and delivered by hand, or
deposited in the mail, certified, return receipt requested, properly addressed
and postage prepaid, as follows:

If to Flexpoint:                        If To Delco:

Flexpoint, Inc.                         Delphi/Delco Electronics Systems
Doug Odom                               One Corporate Center
6906 South 300 West                     PO Box 9005
Midvale, Utah  84047                    Kokimo, IN  46904-9005

With a Copy to:

Bruce H. Shapiro, P.C.                   Delphi/Delco Electronics Systems
Bruce H. Shapiro                         James Spencer
3760 South Highland Drive #500           One Corporate Center
Salt Lake City, Utah  84106              PO Box 9005
                                         Kokimo, IN  46904-9005
     5.09     This Agreement, including the exhibits hereto, constitute the
entire agreement between the parties with respect to the transactions
contemplated herein and supersedes all previous written or oral negotiations,
commitments and writings and cannot be altered or otherwise amended except
pursuant to an instrument in writing signed by each of the parties hereto.  In
the event of a conflict between the terms of the body of this Agreement and
the terms of the Exhibits hereto, the terms of the body of this Agreement
shall prevail.

6.     NON COMPETITION
       ---------------

During the period this Agreement remains in force and for a period of **
thereafter, ** with Flexpoint anywhere in the world or in such smaller
territory as may be determined by a court or tribunal of competent
jurisdiction, by **  any component of a WBSS or useful to make a WBSS, or any
system that uses or employs any of the CONFIDENTIAL INFORMATION including the
FLEXPOINT TECHNOLOGY. 

     During the term of the ** for the WBSS, nothing contained in this Section
6 will prohibit Delco from supplying its ** to its current customer base for
the platforms identified in Exhibit "E". Upon the system level approval by **
of the WBSS, Delco shall phase-out and cease marketing and development of its
**, with the exception that Delco shall be allowed to continue to supply its
** to its current customer base for the platforms identified in Exhibit "E".
After system level approval by ** of the WBSS and upon termination of the **,
Delco will then aggressively pursue development and promotion of the WBSS and
**.

___________
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request
for confidential treatment.
                                7
<PAGE>

7.     DISPUTE RESOLUTION
       ------------------

     7.01     In the event of a dispute between the parties arising out of or
related to this Agreement, the parties agree to use the following procedure
prior to either party pursuing other available remedies:

     a.     A meeting  shall be held promptly between the parties, attended by
representatives having decision-making authority regarding the dispute, to
attempt in good faith to negotiate a resolution of the dispute.

     b.     If, within thirty (30) days after such meeting, the parties have
not succeeded in negotiating a resolution of the dispute, they will jointly
appoint a mutually acceptable neutral person not affiliated with either of the
parties (the "Neutral"), seeking assistance in such regard from the American
Arbitration Association, Center for Public Resources, or other mutually
agreed-upon organization if they have been unable to agree upon such
appointment within forty (40) days from the initial meeting.  The fees of, and
authorized costs incurred by, the Neutral shall be shared equally by the
parties.

     c.     In consultation with the Neutral, the parties will select or
devise an alternative dispute resolution procedure ("ADR") by which they will
attempt to resolve the dispute, and a time and place for the ADR to be held,
with the Neutral making the decision as to the procedure, and/or place and
time, if the parties have been unable to agree on any of such matters within
twenty (20) days after initial consultation with the Neutral.  In any case,
the ADR shall be held no later than sixty (60) days after selection of the
Neutral.

     d.     The parties agree to participate in good faith in the ADR to its
conclusion.  If the parties are not successful in resolving the dispute
through the ADR, then either party may pursue other available remedies upon
seven (7) days written notice to the other party specifying its intended
course of action.
     
8.     PROPRIETARY RIGHTS
       ------------------

     8.01     All  inventions, technical information and proprietary rights
conceived or reduced to practice by any one or more employees, agents,
vendors, consultants or representatives of Flexpoint prior to and during the
term of this Agreement will remain the property of Flexpoint.  The inventions,
technical information and proprietary rights conceived or reduced to practice
by any one or more employees, agents, vendors, consultants or representatives
of Flexpoint in conjunction with an employee, agent, vendor, consultant or
representative of Delco which were  developed based upon FLEXPOINT TECHNOLOGY
or Flexpoint's CONFIDENTIAL INFORMATION  which includes, but is not limited to
Bend Sensor  Technology, Seat Map Algorithm, Pattern Recognition, DU
Calculation, Bend Sensor   Ink Technology, Bend Sensor  Product: Control
Plans, D/PFMEAs, DFM/DFA and Auto-ranging Reference Resistor Technology shall
be the exclusive property of Flexpoint provided however, that Delco shall **
of Flexpoint related to FLEXPOINT TECHNOLOGY it being understood that Delco
shall not thereby implication or otherwise acquire any right under or to any
other patent or patents of Flexpoint. 

     8.02     All Flexpoint-made inventions, technical information and
proprietary rights which are conceived pursuant to this Agreement ("Flexpoint
Foreground Technology") will remain the property of Flexpoint.   Further
business opportunities for additional platforms shall be agreed upon in
writing by both parties and shall be added to Exhibit "A".
_______

The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request
for confidential treatment.
                                8
<PAGE>

     8.03     All Delco-made inventions, technical information and proprietary
rights  conceived or reduced to practice prior to this Agreement shall remain
the property of Delco, unless made using FLEXPOINT TECHNOLOGY and/or FLEXPOINT
CONFIDENTIAL INFORMATION.
     
     8.04     All new Delco-made inventions, technical information and
proprietary rights which are conceived pursuant to this Agreement ("Delco
Foreground Technology") and are not based upon Flexpoint's CONFIDENTIAL
INFORMATION, will remain the property of Delco.  However, Delco grants
Flexpoint a ** under Delco Foreground Technology.

     8.05     Delco shall promptly disclose to Flexpoint all Delco-made
inventions and technical information which are conceived or developed pursuant
to this Agreement.

     8.06     All jointly made inventions, technical information and
proprietary rights which are conceived pursuant to this Agreement and are not
based upon Flexpoint's CONFIDENTIAL INFORMATION, will remain the joint
property of Delco and Flexpoint.
     
9.     TERM AND TERMINATION
       --------------------

     9.01     The term of this Agreement commences on the date first written
above  and terminates either on the last day of production for the ** of the
** PLATFORMS or upon the termination date of the **, whichever date occurs
first.  This Agreement  may be renewed  for one or more successive one-year
terms upon the mutual written agreement of both Parties. 

     9.02     In the event of material breach of this Agreement, Flexpoint or
Delco, as the case may be, may notify the defaulting party of the breach and
give notice in writing of the non-defaulting party's intention to terminate
this Agreement.  If the non-defaulting party is not, within ** from and after
receipt of written notice of default, provided with a plan of corrective
action and/or if substantial efforts to cure the default in accordance with
the plan are not made. If such breach is not substantially corrected as
provided above, the nondefaulting party may terminate this Agreement by
sending written notice of such termination to the other party, whereupon this
Agreement shall terminate.  In the event the non-defaulting party elects to
terminate this Agreement, the notice of termination must be sent to the
defaulting party within ** after the expiration of the **  period mentioned
above.

     9.03     In the event either party (a) ceases to function as a going
concern, (b) makes an assignment for the benefit of creditors, (c) becomes the
subject of any proceeding under any applicable bankruptcy, receivership,
insolvency or similar laws instituted by or against such party, which
proceeding is not dismissed as to such party within forty-five (45) days after
it has been instituted, or (d) liquidates, dissolves, sells substantially all
of its assets, merges or consolidates, and Flexpoint or Delco, as appropriate,
is not the surviving corporation, the other party shall have the right to
terminate this Agreement by giving the other party written notice, whereupon
this Agreement shall immediately terminate. 

     9.04     Any termination of this Agreement shall not relieve either party
of its obligations as to any surviving obligations of the Parties including
but not limited to Sections 4, 5.06, 6, 8, 11 and 12 hereof or of any
obligations previously incurred pursuant to this Agreement, including without
limitation payment for products shipped, warranty for products previously
manufactured by Flexpoint and sold hereunder, and rights pursuant to Royalties
described herein.

___________
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request
for confidential treatment.
                                9
<PAGE>

10.   PROMOTION/TRADEMARK
      -------------------

     10.1 TRADEMARK/SERVICE MARK  Delco acknowledges that a number of
trademarks and service marks are in existence or have been identified that
should come into use in association with the WBSS and various components
thereof.

     10.2   Delco specifically acknowledges that the marks Bend Sensor  and 
Flexpoint are unique and indicative of the goods of Flexpoint.  The quality of
the goods of Flexpoint with which the marks Bend Sensor  and Flexpoint are
associated is being controlled directly by Flexpoint.  However, the goods with
which the marks Bend Sensor  and Flexpoint are associated are being
incorporated with other materials and goods to form an assembly which
includes, by way of example and not limitation, the WBSS.  

     10.2    Because the quality of the assembly may reflect on the quality of
the goods of Flexpoint, Delco agrees to manufacture the WBSS assembly in
accordance with specifications, the portion of which relate to Flexpoint's
products will be provided to and approved by Flexpoint or its designee in
advance, and such approval shall not be unreasonably withheld.  

     10.3   Delco agrees that all materials (hereinafter "PROMOTIONAL ITEMS")
intended for communication or dissemination to third parties including by way
of example and not limitation, advertising materials, brochures, pamphlets,
web pages/sites, promotional materials (e.g., key chains, pocket knives ) or
the like, exclusive of contracts, correspondence, invoices and similar
business communications, shall,  unless otherwise directed by Flexpoint,
reference and identify the goods of Flexpoint as components of the assembly
and shall use the applicable trademarks of Flexpoint while identifying clearly
that Flexpoint is the source of goods and that when the trademarks of
Flexpoint are used to identify that  the trademarks are those of Flexpoint.  

     10.4   Delco shall timely submit all PROMOTIONAL ITEMS to Flexpoint for
approval by Flexpoint with regard to proper use of trademarks and for
compliance with paragraph 10.1.3., and such approval shall not be unreasonably
withheld.  Flexpoint shall promptly respond with corrections, modifications or
approval.  If Flexpoint does not respond within 48 hours of receipt, Flexpoint
may be deemed to have no objections to that PROMOTIONAL ITEM. 

     10.5    If Delco adopts new and different trademarks in association with
the assembly or any component thereof not a good of Flexpoint, Flexpoint shall
have the right to use such trademark in any of its PROMOTIONAL ITEMS subject
to approval by Delco and provided further that if Delco shall cease to be a
source of the WBSS System Assembly, then and in that event Flexpoint shall
have the right to adopt and use any such trademarks and to obtain from Delco
right of Delco in any such trademarks.

11.     WARRANTY
        -------- 

     11.01     All SENSOR MATS sold by Flexpoint to Delco are warranted to
conform to the specifications set forth in Exhibit D, which is attached hereto
and herein incorporated by reference and to be free from defects in material
and workmanship.

     11.02     As used in this Agreement, the term "Defective Product" shall
mean any SENSOR MAT which fails to meet the warranty contained in Section 11.1
within the warranty period described in Section 11.3.

     11.03     The warranty period for the SENSOR MAT shall be ** beginning
from the date of first registration by the end-user of the vehicle
incorporating such SENSOR MAT.
___________
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request
for confidential treatment.
                                10
<PAGE>

     12.     PRODUCT LIABILITY

     12.01     As used in this Section 12, the term "Losses", when
capitalized, shall mean any reasonable settlement, judgment, and reasonable
legal expense arising from any death of or injury to any person, or damage to
any property. 

     12.02     Delco shall indemnify and hold Flexpoint and all of its
officers, directors, employees, agents and representatives, separately and
together, harmless for any and all claims, demands, loss, repairs, recalls,
defects, causes of action, obligations, damages and liabilities of any kind or
nature whatsoever, whether known or unknown, suspected or claimed arising
directly or indirectly out of the WORK performed by Delco or any component of
the WBSS supplied by Delco.  If Flexpoint does not produce the product
supplied to Delco in conformance with the contract specifications or follow
established manufacturing procedures, Flexpoint shall indemnify and hold Delco
and all of its officers, directors, employees, agents and representatives,
separately and together, harmless for any and all claims, demands, loss,
repairs, recalls, defects, causes of action, obligations, damages and
liabilities of any kind or nature whatsoever, whether known or unknown,
suspected or claimed arising from a Defective Product. If it cannot be readily
determined whether or the extent to which the Losses were proximately caused
by Defective Products or Delco's WORK, either Party hereto may submit the
matter to the dispute resolution procedure pursuant to Section 7 of this
Agreement to determine the amounts attributable to the Defective Products or
to each Party, as the case may be.

     12.03     Should any claim be made against either Flexpoint or Delco
alleging death or injury to any person, or damage to any property, proximately
caused by Defective Products, regardless of whether such claim is based upon
strict liability, negligence, warranty, or otherwise, Flexpoint and Delco will
provide to the other Party prompt notice of such claim and every formal claim
document received by either of them relating to such claim. 

     12.04     With respect to any claim described in Section 12.3, Flexpoint
and Delco will immediately investigate the incident and will attempt to
determine if the alleged damage was proximately caused by Defective Products.
If after such investigation it appears that the alleged damage was caused by
Defective Products, Flexpoint may choose to carry out the defense of such
claim. The defense of all other claims shall be the responsibility of Delco.
Flexpoint and Delco agree to communicate and cooperate with each other and, if
necessary, any appropriate insurance carrier, to the extent possible in the
defense of the claim. Flexpoint and Delco will make available to each other
the services of knowledgeable personnel and information necessary to the
defense of the claim. During the pendency of any lawsuit involving such a
claim, Flexpoint and Delco will not take any adverse action, including third-
party claims, against each other. 

13.     TIER I SELECTION
        ----------------

     In the event that Delco is not selected by GM as the Tier I supplier for
the WBSS, then this Agreement and all of the Sections contained herein shall
be deemed null and void and this Agreement shall be of no further force and
effect. 

     IN WITNESS WHEREOF, the parties have caused this Purchase and Supply
Agreement to be executed by their authorized representatives as of the date
first above written. 

Delco                              Flexpoint, Inc.


By /s/ Dan W. Pitcock              By /s/ Douglas M. Odom          
   --------------------               -------------------
Its Commodity Manager              Its President
    -----------------                  -------------
    Electrical-Active
    ----------------- 
                                11
<PAGE>
                           EXHIBIT "A"

                                **


___________
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request
for confidential treatment.

<PAGE>
                           EXHIBIT "B"

                                **

___________
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request
for confidential treatment.

<PAGE>
                           EXHIBIT "C"

                                **


___________
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request
for confidential treatment.

<PAGE>

                           EXHIBIT "D"

                    SENSOR MAT SPECIFICATIONS
                       [TO BE AGREED UPON]


<PAGE>


                           EXHIBIT "E"
                       TERMS AND CONDITIONS
               PURCHASE ORDER TERMS AND CONDITIONS

1.  ACCEPTANCE:  Seller has read and understands this order and agrees that
Seller's written acceptance or commencement of any work or service under this
order shall constitute Seller's acceptance of these terms and conditions only. 
All terms and conditions proposed by Seller which are different from or in
addition to this order are unacceptable to Buyer, are expressly rejected by
Buyer, and shall not become a part of this order.  Any modifications to this
order shall be made in accordance with Paragraph 31.

2.    SHIPPING, BILLING AND FLSA CERTIFICATION:  Seller agrees:  a) to
properly pack, mark and ship goods in accordance with the requirements of
Buyer and involved carriers in a manner to secure lowest transportation cost; 
b) to route shipments in accordance with instructions from Buyer's Traffic
Department;  c) to make no charge for handling, packaging, storage,
transportation or drayage of goods unless otherwise stated in this order;  d)
to provide with each shipment packing slips with Buyer's order number marked
thereon;  e) to properly mark each package with this order number, the
factory, plant and dock number, and where multiple packages comprise a single
shipment, to consecutively number each package; and  f) to promptly forward
the original bill of lading or other shipping receipt for each shipment in
accordance with Buyer's instructions.  Seller will include on bills of lading
or other shipping receipts correct classification identification of the goods
shipped in accordance with Buyer's instructions and carrier's requirements. 
The marks on each package and identification of the goods on packing slips,
bills of lading and invoices shall be sufficient to enable Buyer to easily
identify the goods purchase.  Seller further agrees:  a) to promptly render,
after delivery of goods or performance services, correct and complete invoices
to Buyer's; and  b) to accept payment by check or, at Buyer's discretion,
other cash equivalent (including electronic transfer of funds EFT).  Seller's
invoice must include a certification that all goods were produced in
compliance with the applicable requirements of sections 6, 7, and 12 of the
Fair Labor Standards Act, as amended, and of regulations and orders of the
United States Department of Labor issued in connection, therewith.  The
payment date is set forth on the face side of this order, or if not stated,
shall be on the 25th day of the month following Buyer's receipt of a proper
invoice (except as may otherwise be agreed upon by Buyer and Seller in
connection with a program providing for electronic funds transfer).  Time for
payment shall not begin until correct and complete invoices are received, and
Seller's cash discount privileges to Buyer shall be extended until such time
as payment is due.  Buyer may withhold payment pending receipt of evidence, in
such form and detail as buyer may direct, of the absence of any liens,
encumbrances and claims on the goods or services under this order.

3.  DELIVERY SCHEDULES:  Deliveries shall be made both in quantities and at
times specified in Buyer's schedules.  Buyer shall not be required to make
payment for goods delivered to Buyer which are in excess of quantities
specified in Buyer's delivery schedules.  Buyer may change the rate of
scheduled shipments or direct temporary suspension of scheduled shipments,
neither of which shall entitle Seller to a modification of the price for goods
or services covered by this order.  For orders of goods where quantities
and/or delivery schedules are not specified, Seller shall deliver goods in
such quantities and time as Buyer may direct in subsequent releases.

4.   PREMIUM SHIPMENTS:  If Seller's acts or omissions result in Seller's
failure to meet Buyer's delivery requirements and Buyer requires a more
expeditious method of transportation for the goods than the transportation
method originally specified by Buyer, Seller shall, at Buyer's option, (I)
promptly reimburse Buyer the difference in cost between the more expeditious
method and the original method, (ii) allow Buyer to reduce its payment of
Seller's invoices by such difference, or (iii) ship the goods as expeditiously
as possible at Seller's expense and invoice Buyer for the amount which Buyer
would have paid for normal shipment.

5.   CHANGES:  Buyer reserves the right at any time to direct changes, or
cause Seller to make changes, to drawings and specifications of the goods or
to otherwise change the scope of the work covered by this order, including
work with respect to such matters as inspection, testing or quality control,
and Seller agrees to promptly make such changes; any difference in price or
time for performance resulting from such changes shall be equitable adjusted
by Buyer after receipt of documentation in such form and detail as Buyer may
direct.  Any changes to this order shall be made in accordance with Paragraph
31.

6.   INSPECTION:  Seller agrees that Buyer shall have the right to enter
Seller's facility at reasonable times to inspect the facility, goods,
materials and any property of Buyer covered by this order.  Buyer's inspection
of

<PAGE>

the goods, whether during manufacture, prior to delivery or within a
reasonable time after delivery, shall not constitute acceptance of any work-
in-process or finished goods.           

7.    NONCONFORMING GOODS:  To the extent Buyer rejects goods as
nonconforming, the quantities under this order will automatically be reduced
unless buyer otherwise notifies Seller.  Seller will not replace quantities so
reduced without a new order or schedule from Buyer.  Nonconforming goods will
be held by Buyer for disposition in accordance with Seller's instructions at
Seller's risk.  Seller's failure to provide written instructions within ten
(10) days, or such sorter period as may be commercially reasonable under the
circumstances, after notice of nonconformity shall entitle buyer, at Buyer's
option, to charge Seller for storage and handling, or to dispose of the goods,
without liability to Seller.  Payment for nonconforming goods shall not
constitute an acceptance thereof, limit or impair Buyer's right to assert any
legal or equitable remedy, or relieve Seller's responsibility for latent
defects.

8.    FORCE MAJEURE:  Any delay or failure of either party to perform its
obligations hereunder shall be excused if, and to the extent that it is caused
by an event or occurrence beyond the reasonable control of the party and
without its fault or negligence, such as, by way of example and not by way of
limitations, acts of God, actions by any governmental authority (whether valid
or invalid), fires, floods, windstorms, explosions, riots, natural disasters,
wars, sabotage, labor problems (including lockouts, strikes and slowdowns),
inability to obtain power, material, labor, equipment or transportation, or
court injunction or order; provided that written notice of such delay
(including the anticipated duration of the delay) shall be given by the
affected party to the other party within ten (10) days.  During the period of
such delay or failure to perform by Seller, Buyer, at its option, may purchase
goods  from other sources in quantities and at times requested by Buyer, and
at the price set forth in this order.  If requested by the Buyer Seller shall,
within ten (10) days of such request, provide adequate assurances that the
delay shall not exceed thirty (30) days.  If the delay lasts more than thirty
(30) days or Seller does not provide adequate assurance that the delay will
cease within thirty (30) days, buyer may immediately cancel the order without
liability.

9.   WARRANTY:  Seller expressly warrants that all goods or services covered
by this order will conform to the specifications, drawings, samples, or
descriptions furnished to or by Buyer, and will be merchantable, of good
material and workmanship and free from defect.  In addition, Seller
acknowledges that Seller knows Buyer's intended use and expressly warrants
that all goods covered by this order which have been selected, designed,
manufactured, or assembled by Seller based upon Buyer's stated use, will be
fit and sufficient for the particular purposes intended by Buyer.

10.  INGREDIENTS DISCLOSURE AND SPECIAL WARNINGS AND INSTRUCTIONS:  If
requested by Buyer, Seller shall promptly furnish to Buyer in such form and
detail as Buyer may direct:  (a) a list of all ingredients in the goods
purchased hereunder; (b) the amount of one or more ingredients; and  
information concerning any changes in or additions to such ingredients.  Prior
to and with the shipment of the goods purchased hereunder, Seller agrees to
furnish to Buyer sufficient warning and notice in writing ( including
appropriate labels on goods, containers and packing) of any hazardous material
which is an ingredient or a part of any of the goods, together with such
special handling instructions as may be necessary to advise carriers, Buyer,
and their respective employees of how to exercise that measure of care and
precaution which will best prevent bodily injury or property damage in the
handling, transportation, processing, use, or disposal of the goods,
containers and packing shipped to Buyer.

11.  INSOLVENCY:  buyer may immediately cancel this order without liability to
Seller in the event of the happening of any of the following or any other
comparable event:  (a) insolvency of the Seller; (b) filing of a voluntary
petition in bankruptcy by Seller; (c ) filing of any involuntary petition in
bankruptcy against Seller; (d) appointment of a receiver or trustee for
Seller; (e) or execution of an assignment for the benefit of creditors by
Seller, provided that such petition, appointment, or assignment is not vacated
or nullified within fifteen (15) days of such event.     

12. CANCELLATION FOR BREACH:  Buyer reserves the right to cancel all or any
part of this order, without liability to Seller, if Seller: (a) repudiates or
breaches any of the terms of this order, including Seller's warranties; (b)
fails to perform services or deliver goods as specified by Buyer; or (c )
fails to make progress so as to endanger timely and proper completion of
services or delivery of goods; and does not correct such failure or breach
within ten (10) days ( or such shorter period of time if commercially
reasonable under the circumstances) after receipt of written notice from Buyer
specifying such failure or breach.

<PAGE>

13.  TERMINATION:  In addition to any other rights of Buyer to cancel or
terminate this order, Buyer may at its option immediately terminate all or any
part of this order, at any time and for any reasons, by giving written notice
to Seller.  Upon such termination, Buyer shall pay to Seller the following
amounts without duplication:  (a) the order price for all goods or services
which have been completed in accordance with this order and not previously
paid for; and (b) the actual costs of work-in-process and raw materials
incurred by Seller in furnishing the goods or services under this order to the
extent such costs are reasonable in amount and are properly allocable or
apportionable under generally accepted accounting principles to the terminated
portion of this order; less, however the reasonable value or cost (whichever
is higher) of any goods or materials used or sold by Seller with Buyer's
written consent, and the cost of any damaged or destroyed goods or material. 
Buyer will make no payments for finished goods, work-in-process or raw
materials fabricated or procured  by Seller in amounts in excess of those
authorized in delivery releases nor for any undelivered goods which are in
Seller's standard stock or which are readily marketable.  Payments made under
this Paragraph shall not exceed the aggregate price payable buy Buyer for
finished goods which would be produced by Seller under delivery or release
schedules outstanding at the date of termination.  Except as provided in this
Paragraph, Buyer shall not be liable for and shall not be required to make
payments to Seller, directly or on account of claims by Seller's
subcontractors, for loss of anticipated profit, unabsorbed overhead, interest
on claims, product development and engineering costs, facilities and equipment
rearrangement costs or rental, unamortized depreciation costs, and general and
administrative burden charges from termination of this order.  Within sixty
(60) days from the effective date of termination, Seller shall submit a
comprehensive termination claim to Buyer, with sufficient supporting data to
permit Buyer's audit, and shall thereafter promptly furnish such supplemental
and supporting information as buyer shall request.  Buyer or its agents, shall
have the right to audit and examine all books, records, facilities, work,
material, inventories, and other items relating to any termination  claim of
Seller.

14. INTELLECTUAL PROPERTY:  Seller agrees: (a) to defend, hold harmless and
indemnify Buyer, its successors and customers against all claims, demands,
losses, suits, damages, liability and expenses (including reasonable attorney
fees) arising out of any suit, claim or action for actual or alleged direct or
contributory infringement of, or inducement to infringe, any United States or
foreign patent, trademark, copyright or mask work right by reason of the
manufacture, use or sale of the goods or services ordered, including
infringement arising out of compliance with specifications furnished by Buyer,
or for actual or alleged misuse or misappropriation of a trade secret
resulting directly or indirectly from Seller's actions; (b) to waive any claim
against Buyer under the Uniform Commercial Code or otherwise, including any
hold harmless or similar claim, in any way related to a claim asserted against
Seller or Buyer for patent, trademark, copyright or mask work right
infringement or the like, including claims arising out of compliance with
specifications furnished by Buyer; and (c ) to grant to Buyer a  worldwide,
nonexclusive, royalty-free, irrevocable license to repair and have repaired,
to reconstruct and have reconstructed the goods ordered hereunder.  Seller
assigns to Buyer all right, title and interest in and to all trademarks,
copyrights and mask work rights in any material created for Buyer under this
order.

15.  TECHNICAL INFORMATION DISCLOSED TO BUYER:  Seller agrees not to assert
any claim (other than a claim for patent infringement) with respect to any
technical information which Seller shall have disclosed or may hereafter
disclose to Buyer in connection with the goods or services covered by this
order.

16.  INDEMNIFICATION:  If Seller performs any work on Buyer's premises or
utilizes the property of Buyer, whether on or off Buyer's premises, Seller
shall indemnify and hold Buyer harmless from and against any liability,
claims, demands or expenses (including reasonable attorney fees) for damages
to the property of or injuries (including death) to Buyer, its employees or
any other person arising from or in connection with Seller's performance of
work or use of Buyer's property, except for such liability, claim or demand
arising out of the sole negligence of Buyer.     

17.  INSURANCE:  Seller shall maintain insurance coverage in amounts not less
than the following: (a) Worker's Compensation - Statutory Limits for the state
or states in which this order is to be performed ( or evidence of authority to
self-insure); (b) Employer's Liability - $250,000; (c ) Comprehensive General
Liability (including Products/Completed Operations and Blanket Contractual
Liability) - $1,000,000 per person, $1,000,000 per occurrence Personal Injury,
and $1,000,000 per occurrence Property Damage, or $1,000,000 per occurrence
Personal Injury and Property Damage combined single limit; and (d) Automobile
Liability (including owned, non-owned and hired vehicles) - $1,000,000 per
person, $1,000,000 per occurrence Personal Injury and $1,000,000 per
occurrence Property Damage, or $1,000,000 per occurrence Personal Injury and
Property Damage combined single limit.  At Buyer's request, Seller shall
furnish to Buyer certificates of insurance

<PAGE>

setting forth the amount(s) of coverage, policy number(s) and date(s) of
expiration for insurance maintained by Seller, and if further requested by
Buyer, such certificates will provide that Buyer shall receive thirty (30)
days prior written notification from the insurer of any termination or
reduction in the amount or scope of coverage's.  Seller's purchase of
appropriate insurance coverage or the furnishing of certificates of insurance
shall not release Seller of its obligations or liabilities under this order. 
In the event of Seller's breach of this provision, Buyer shall have the right
to cancel the undelivered portion of any goods or services covered by this
order and shall not be required to make further payments except for conforming
goods delivered or services rendered prior to cancellation.

18.  TOOLS:  Unless otherwise agreed to by Buyer, Seller at its own expense
shall furnish, keep in good condition, and replace when necessary all tools,
jigs, dies, gauges, fixtures, molds and patterns ("Tools") necessary for the
production of the goods.  The cost of changes to the Tools necessary to make
design and specification change authorized by Buyer shall be paid for by
Buyer.  Seller shall insure the Tools with full fire and extended coverage
insurance for the replacement value thereof.  Seller grants Buyer an
irrevocable option to take possession of and title to the Tools that are
special for the production of the goods upon payment to Seller of the book
value thereof less any amounts which Buyer has previously paid to Seller for
the cost of such Tools; provided, however, that this option shall not apply if
such Tools are used to produce goods that are the standard stock Seller or if
a substantial quantity of like goods are being sold by Seller to others.

19.  BAILED PROPERTY:  All supplies, materials, tools, jigs, dies, gauges,
fixtures, molds, patterns, equipment and other items furnished by Buyer,
either directly or indirectly, to Seller to perform this order, or for which
Seller has been reimbursed by Buyer, shall be and remain the property of the
Buyer.  Seller shall bear the risk of loss of and damage to Buyer's property. 
Buyer's property shall at all times be properly housed and maintained by
Seller; shall not be used by Seller for any purpose other than the performance
of this order; shall be deemed to be personalty; shall be conspicuously marked
"Property of General Motors Corporation" by Seller; shall not be commingled
with the property of Seller or with that of a third person; and shall not be
moved from Seller's premises without Buyer's prior written approval.  Upon the
request of Buyer, such property shall be immediately released to Buyer or
delivered to Buyer by Seller, either (i) F.O.B. transport equipment at
Seller'' plant, properly packed and marked in accordance with the requirements
of the carrier selected by Buyer to transport such property, or (ii) to any
location designated by Buyer, in which event Buyer shall pay to Seller the
reasonable cost of delivering such property to such location.  Buyer shall
have the right to enter onto Seller's premises at all reasonable times to
inspect such property and Seller's records with respect thereto.

20.  REMEDIES:  The rights and remedies reserved to Buyer in this order shall
be cumulative, and additional to all other or further remedies provided in law
or equity. 

21.  DUTY DRAWBACK RIGHTS:  This order includes all related customs duty and
import drawback rights, in any, (including rights developed by substitution
and rights which may be acquired from Seller's suppliers) which Seller can
transfer to Buyer.  Seller agrees to inform Buyer of the existence of any such
rights and upon request to supply such documents as may be required to obtain
such drawback.

22.  SETOFF:  In addition to any right of setoff provided by law, all amounts
due Seller shall be considered net of indebtedness of Seller to General Motors
Corporation and its subsidiaries; and General Motors Corporation may deduct
any amounts due or to become due from Seller to General Motors Corporation and
its subsidiaries from any sums due or to become due from General Motors
Corporation to Seller.

23.  ADVERTISING:  Seller shall not, without first obtaining the written
consent of  Buyer, in any manner advertise or publish the fact that Seller has
contracted to furnish Buyer the goods or services herein ordered, or use any
trademarks or tradenames of Buyer in Seller's advertising or promotional
materials.  In the event of Seller's breach of this provision, Buyer shall
have the right to cancel the undelivered portion of any goods or services
covered by this order and shall not be required to make further payments
except for conforming goods delivery or services rendered prior to
cancellation.

24.  GOVERNMENT COMPLIANCE:  Seller agrees to comply with all federal, state
and local laws, Executive Order, rules, regulations and ordinances which may
be applicable to Seller's performance of its obligations under this order.

25. EQUAL OPPORTUNITY AND AFFIRMATIVE ACTION:  This order incorporates by
reference:  (a) all provisions of 41 C.F.R. 60-1.4, as amended, pertaining to
the equal opportunity clause in government contracts; (b) all provisions of 41
C.F.R. 60-250, as amended, pertaining to affirmative action for disabled
veterans of the 

<PAGE>

Vietnam Era; and   all provisions of 41 C.F.R. 60-741, as amended, pertaining
to affirmative action for handicapped workers.  Seller certifies that it is in
compliance with all applicable provisions of 41 C.F.R. 60-1, including but not
limited to:  (a) developing and presently having in full force and effect a
written affirmative action compliance program for each of its establishments
as required by 41 C.F.R. 60-1.40, as amended; (b) filing EEO-1 Reports as
required by 41 C.F.R. 60-1.7, as amended; and (c ) neither maintaining
segregated facilities nor permitting its employees to perform services at
segregated facilities as prohibited by 41 C.F.R. 60-1.8, as amended.  Buyer
requests that Seller adopt and implement a policy to extend employment
opportunities to qualified applicants and employees on an equal basis
regardless of an individual's age, race, color, sex, religion or national
origin.

26.  NO IMPLIED WAIVER:  The failure of either party at any time to require
performance by the other party of any provision of this order shall in no way
affect the right to require such performance at any time thereafter, nor shall
the waiver of either party of a breach of any provision of this order
constitute a waiver of any succeeding breach of the same or any other
provision.

27.  NON-ASSIGNMENT:  Seller may not assign or delegate its obligations under
this order without Buyer's prior written consent.

28.  RELATIONSHIP OF PARTIES:  Seller and Buyer are independent contracting
parties and nothing in this order shall make either party the agent or legal
representative of the other for any purpose whatsoever, nor does it grant
either party any authority to assume or to create any obligation on behalf of
or in the name of the other.

29.  GOVERNING LAW:  This order is to be construed according to the laws of
the state from which this order is issues as shown by the address of Buyer on
the face side of this order.

30.  SEVERABILITY:  If any term of this order is invalid or unenforceable
under any statute, regulation, ordinance, executive order or other rule of
law, such term shall be deemed reformed or deleted, but only to the extent
necessary to comply with such statute, regulation, ordinance, order of rule,
and the remaining provisions of this order shall remain in full force and
effect.

31. ENTIRE AGREEMENT:  This order, together with the attachments, exhibits, or
supplements, specifically referenced in this order, constitutes the entire
agreement between Seller and Buyer with respect to the matter contained herein
and supersedes all prior oral or written representations and agreements.  This
order may only be modified by a purchase order amendment/alternation issued
Buyer.

<PAGE>
     
                           EXHIBIT "F"

                                **


___________
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant


                           Exhibit 10.5

                      INDUSTRIAL SPACE LEASE




                          by and between




           THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
                           as Landlord,




                               and



       MICROPOINT, INC., a Delaware corporation, as Tenant




                                           
                                 
                  635 North Billy Mitchell Road
                       Salt Lake City, Utah


<PAGE>

                        TABLE OF CONTENTS


SCHEDULE ...............................................................1

      1.     DEMISE AND TERM ...........................................2

2.    RENT..............................................................2
      A.     Definitions................................................3
      B.     Components of Rent.........................................4
      C.     Payment of Rent............................................5

3.    USE...............................................................6

4.    HAZARDOUS SUBSTANCES..............................................6

5.    CONDITION OF PREMISES.............................................6

6.    UTILITIES.........................................................7

7.    MAINTENANCE AND REPAIR............................................7

      A.     Tenant Obligations.........................................7
      B.     Landlord Obligations.......................................7

8.    RULES AND REGULATIONS.............................................8


9.    CERTAIN RIGHTS RESERVED TO LANDLORD...............................8

10.   ALTERATIONS.......................................................8
      A.     Requirements...............................................8
      B.     Liens......................................................9

11.   INSURANCE........................................................10
      A.    Tenant's Insurance.........................................10
      B.    Landlord's Insurance.......................................10
      C.    Risk of Loss...............................................11

12.   TENANT'S AND LANDLORD'S RESPONSIBILITIES.........................11
      A.    Tenant's Responsibilities..................................11
      B.    Landlord's Responsibilities................................11

<PAGE> ii

13.   FIRE OR OTHER CASUALTY...........................................11
      A.    Destruction of the Building................................11
      B.    Destruction of the Premises................................12

14.   CONDEMNATION.....................................................13

15.   ASSIGNMENT AND SUBLETTING........................................14
      A.    Landlord's Consent.........................................14
      B.    Standards for Consent......................................14
      C.    Recapture..................................................15

16.   SURRENDER........................................................15

17.   DEFAULTS AND REMEDIES............................................15
      A.    Default....................................................15
      B.    Right of Re-Entry..........................................16
      C.    Termination of Right to Possession.........................16
      D.    Termination of Lease.......................................16
      E.    Other Remedies.............................................16
      F.    Bankruptcy.................................................17
      G.    Waiver of Trial by Jury....................................17
      H.    Venue......................................................17

18.   HOLDING OVER.....................................................17

19.   SECURITY DEPOSIT.................................................17

20.   SUBSTITUTION OF OTHER PREMISES...................................18

21.   ESTOPPEL CERTIFICATE.............................................18

22.   SUBORDINATION....................................................18

23.   QUIET ENJOYMENT..................................................19

24.   BROKER...........................................................19

25.   NOTICES..........................................................19

26.   MISCELLANEOUS....................................................20
      A.    Successors and Assigns.....................................20
      B.    Entire Agreement...........................................20
      C.    Time of Essence............................................20


<PAGE> iii

      D.    Execution and Delivery.....................................20
      E.    Severability...............................................20
      F.    Governing Law..............................................21
      G.    Attorneys' Fees............................................21
      H.    Delay in Possession........................................21
      I.    Joint and Several Liability................................21
      J.    Force Majeure..............................................21
      K.    Captions...................................................21
      L.    No Waiver..................................................21
      M.    Limitation of Liability; Effect of Sale....................21

27.   EXTENSION OPTION.................................................21

28.   RIGHT OF FIRST OFFER.............................................22

29.   FIRE EQUIPMENT ROOM..............................................23

EXHIBITS

      A.    Floor Plan
      B.    Workletter
      C.    Rules and Regulations
      D.    Form of Letter of Credit
      E.    Parking Plan

<PAGE>   iv
                      INDUSTRIAL SPACE LEASE
                      ----------------------

     THIS INDUSTRIAL SPACE LEASE ("Lease") is made as of the 18th day of
November, 1998, between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New
Jersey corporation ("Landlord"), and MICROPOINT, INC., a Delaware corporation
("Tenant"), for space in the building commonly known as 635 North Billy
Mitchell Road, Salt Lake City, Utah (such building, together with the land
upon which it is situated and common areas, including sidewalks, parking areas
and landscaped areas, being herein referred to as the "Building"). The
following schedule (the "Schedule") sets forth certain basic terms of this
Lease:

                             SCHEDULE

1.    Premises - Suite Number:

2.    Commencement Date:                When Landlord's work shown
                                        on Exhibit B is complete and
                                        possession of the Premises is
                                        delivered to Tenant.

3.    Rent Commencement Date:  The earlier to occur of (i) January 15, 1999;
and (ii) the date that Tenant occupies the Premises for business.  

4.    Expiration Date:  Sixty (60) full calendar months from the Rent
Commencement Date (hereinafter sometimes known as the "Initial Term"), subject
to renewal of the Term as provided in this Lease.  

5.    Square Footage of the Premises:     61,250 square feet

      Square Footage of the Building:     182,500
<PAGE>
7.    Base Rent:

                                 Annual                 Monthly
          Period                Base Rent              Base Rent
      ______________________________________________________________ 
      From Commencement Date       $0                    $0
      to the day before the Rent
      Commencement Date
      ______________________________________________________________
      From the Rent              $249,900.00          $20,825.00
      Commencement Date       
      through the last day 
      of the Initial Term


8.    Tenant's Proportionate Share:    33.56%


9.    Base Year:     1999

10.   Security Deposit:  $20,825.00 and a letter of credit (in the form
attached hereto as Exhibit D which is made a part hereof) in the amount of
$50,000.00 which shall diminish by $10,000.00 per year of the Term, provided
Tenant is not in default of this Lease.

11.   Broker(s):         Colliers CRG
                         Industrial Brokers

12.   Exhibits:

         A.    Floor Plan
         B.    Workletter
         C.    Rules and Regulations
         D.    Form of Letter of Credit


1.    DEMISE AND TERM.  Landlord leases to Tenant and Tenant leases from
Landlord the premises (the "Premises") described in Item 1 of the Schedule and
shown on the plan attached hereto as Exhibit A, subject to the covenants and
conditions set forth in this Lease, for a term (the "Term") commencing on the
date (the "Commencement Date") described in Item 2 of the Schedule and
expiring on the date (the "Expiration Date") described in Item 4 of the
Schedule, unless terminated earlier as otherwise provided in this Lease.

                                2
<PAGE>

2.    RENT.

      A.   Definitions.  For purposes of this Lease, the following terms shall
have the following meanings:

            (i)    "Base Year" shall mean the year set forth in Item 9 of the
Schedule.

            (ii)  "Expenses" shall mean all expenses, costs and disbursements
(other than Taxes) paid or incurred by Landlord in connection with the
ownership, management, maintenance, operation, replacement and repair of the
Building, including exterior common areas, including (without limitation) the
cost of electricity, steam, water, gas, fuel, heating, lighting, air
conditioning, window cleaning, janitorial service, snow removal, parking area
restripping and repairing, maintain the building directory and other signage,
insurance, including (without limitation) fire, extended coverage, liability,
workmen's compensation, rent loss, elevator (if any) or any other insurance
carried by Landlord and applicable to the Building, management fees, painting,
uniforms, supplies, sundries, sales or use taxes on supplies or services, cost
of wages and salaries of all persons engaged in the operation, administration,
maintenance and repair of the Building, and fringe benefits, including
(without limitation) social security taxes, unemployment insurance taxes, cost
for providing coverage for disability benefits, cost of any pension,
hospitalization, welfare or retirement plans, or any other similar or like
expenses incurred under the provisions of any collective bargaining agreement,
or any other cost or expense which Landlord pays or incurs to provide benefits
for employees so engaged in the operation, administration, maintenance and
repair of the Building, the charges of any independent contractor who, under
contract with Landlord or its representative, does any of the work of
operating, maintaining or repairing of the Building, legal and accounting
expenses, and any business park or other area association dues and assessments
including, without limitation, the Salt Lake International Center Building
Park Association dues and assessments.  Expenses shall not include:  (a) costs
of tenant alterations; (b) costs of capital improvements as defined under
generally accepted accounting principles, or any rental payment for any item
which if purchased would constitute a capital expenditure (for example, the
cost of replacement of HVAC, mechanical, security, electrical, plumbing
systems or of any substantial component or part of such systems beyond the
scope of routine maintenance and repair; resurfacing of the parking area or of
the driveways (as distinguished from patching or repair) on the land
underlying the Building more often than once every seven (7) years  (except
for costs of any capital improvements (1) made or installed or service
agreement or lease entered into for the purpose of reducing Expenses or
improving the operating efficiency of any system within the Building
(provided, however, that such costs shall not exceed the reduction in expenses
attributable to such capital improvements, service agreement or lease and
shall be included if amortized over the useful life of the item on a

                                3
<PAGE>

straight line basis) or (2) made or installed pursuant to governmental
requirement or insurance requirement, which costs shall be amortized by
Landlord in accordance with sound accounting and management principles ); (c)
interest and principal payments on mortgages (except interest on the cost of
any capital improvements for which amortization may be included in the
definition of Expenses) or any rental payments on any ground leases (except
for rental payments which constitute reimbursement for Taxes and Expenses);
(d) advertising and promotional expenses and leasing commissions; (e) any cost
or expenditure for which Landlord is reimbursed, whether by insurance proceeds
or otherwise, except through Adjustment Rent (hereinafter defined); (f) the
cost of any kind of service furnished to any other tenant in the Building
which Landlord does not generally make available to all tenants in the
Building, whether at such Tenant's or Landlord's expense; (g) legal expenses
of negotiating leases; (h) salaries and fringe benefits of employees above the
grade of building manager;  (i) depreciation expenses, except as above
provided; (j) salaries or benefits for Landlord's executives and employees
except to the extent any such person is engaged in the direct operation,
administration, maintenance or repair of the Building; (k) cost of repairs or
replacements incurred by reason of fire or other casualty or condemnation; (l)
bad debt loss or reserves for either of them; (m) any expense which will be
reimbursed by Tenant under this Lease to the extent that such expense is in
duplication of the reimbursed expense; (n) financing or hypothecation or
selling or syndication costs, including points, commitment fees, broker's
fees, legal fees, and mortgage interest and amortization payments; (o) any
late fees, penalties, interest charges or similar fees incurred by Landlord;
(p) any cost representing an amount paid to a person, firm, corporation, or
other entity related to Landlord which is in excess of the amount which would
have been paid in the absence of such relationship; (q) any cost incurred by
Landlord to remedy any defects in the design of or materials used in, or the
defective installations of the structural steel framing or slab of the
Building; or (r) costs of disputes between Landlord and its employees,
Building managers or other tenants.  Expenses shall be determined on a cash or
accrual basis, as Landlord may elect, based on generally accepted accounting
principles, consistently applied.

            (iii)    "Rent" shall mean Base Rent and Adjustment Rent and any
other sums or charges due by Tenant hereunder.

             (iv)    "Taxes" shall mean all taxes, assessments and fees levied
upon the Building, the property of Landlord located therein or the rents
collected therefrom, by any governmental entity based upon the ownership,
leasing, renting or operation of the Building, including all costs and
expenses of protesting any such taxes, assessments or fees.  Taxes shall not
include any net income, capital stock, succession, transfer, franchise, gift,
estate or inheritance taxes; provided, however, if at any time during the
Term, a tax or excise on income is levied or assessed by any governmental
entity, in lieu of or as a substitute for, in whole or in part, real estate

                                4
<PAGE>

taxes or other ad valorem taxes, such tax shall constitute and be included in
Taxes.  For the purpose of determining Taxes for any given year, the amount to
be included for such year shall be Taxes which are assessed or become a lien
during such year rather than Taxes which are due for payment or paid during
such year.  

            (v)    "Tenant's Proportionate Share" shall mean the percentage
set forth in Item 8 of the Schedule which has been determined by dividing the
Square Footage of the Premises by the Square Footage of the Building.

            (vi)   "Prime Rate" shall mean the highest of the Prime Rates as
reported in the Money Rate Section of the Wall Street Journal.  If the Wall
Street Journal no longer publishes the Prime Rate as an index, Landlord may
substitute a comparable index including the Prime Rate or reference rate of a
reputable financial institution.  

      B.   Components of Rent.  Tenant agrees to pay the following amounts to
Landlord at the office of the Building or at such other place as Landlord
designates:

            (i)    Base rent ("Base Rent") to be paid in monthly installments
in the amount set forth in Item 7 of the Schedule in advance on or before the
first day of each month of the Term, without demand, except that Tenant shall
pay the first month's Base Rent upon execution of this Lease.

            (ii)   Adjustment rent ("Adjustment Rent") in an amount equal to
Tenant's Proportionate Share of Expenses and Taxes.  Prior to each calendar
year, or as soon as reasonably possible, Landlord shall estimate and notify
Tenant of the amount of Adjustment Rent due for such year, and Tenant shall
pay Landlord one-twelfth of such estimate on the first day of each month
during such year.  Such estimate may be revised by Landlord whenever it
obtains information relevant to making such estimate more accurate.  After the
end of each calendar year, Landlord shall deliver to Tenant a report setting
forth the actual Expenses and Taxes for such calendar year and a statement of
the amount of Adjustment Rent that Tenant has paid and is payable for such
year.  Within thirty (30) days after receipt of such report or reports, Tenant
shall pay to Landlord the amount of Adjustment Rent due for such calendar year
minus any payments of Adjustment Rent made by Tenant for such year, it being
acknowledged by Tenant that in the event Landlord separately reports actual
Expenses and actual Taxes for a calendar year, Landlord may reasonably
allocate Adjustment Rent paid by Tenant for such calendar year between
Expenses and Taxes for such calendar year.  If Tenant's estimated payments of
Adjustment Rent exceed the amount due Landlord for such calendar year,
Landlord shall apply such excess as a credit against Tenant's other
obligations under this Lease or promptly refund such excess to Tenant if the
Term has already expired, provided Tenant is not then in default hereunder, in
either case without interest to Tenant.  

                                5
<PAGE>

      C.    Payment of Rent.  The following provisions shall govern the
payment of Rent:  (i) if this Lease commences or ends on a day other than the
first day or last day of a calendar year, respectively, the Rent for the year
in which this Lease so begins or ends shall be prorated and the monthly
installments shall be adjusted accordingly; (ii) all Rent shall be paid to
Landlord without offset or deduction, and the covenant to pay Rent shall be
independent of every other covenant in this Lease; (iii) INTENTIONALLY
OMITTED; (iv) any sum due from Tenant to Landlord which is not paid when due
shall bear interest from the date due until the date paid at the annual rate
of five percentage (5%) points above the Prime Rate then in effect, but in no
event higher than the maximum rate permitted by law (the "Default Rate"); and,
in addition, Tenant shall pay Landlord a late charge for any Rent payment
which is paid more than five (5) days after its due date equal to five percent
(5%) of such payment; (v) if changes are made to this Lease or the Building
changing the number of square feet contained in the Premises or in the
Building, Landlord shall make an appropriate adjustment to Tenant's
Proportionate Share; (vi) Tenant, or an independent certified accounting firm
retained by Tenant on an hourly fee basis (and not on a contingency fee
basis), shall have the right to inspect Landlord's accounting records relative
to Expenses and Taxes during normal business hours at any time within thirty
(30) days following the furnishing to Tenant of the annual statement of
Adjustment Rent; and, unless Tenant shall take written exception to any item
in any such statement within such thirty (30) day period, such statement shall
be considered as final and accepted by Tenant; (vii) in the event of the
termination or expiration of this Lease prior to the determination of any
Adjustment Rent, Tenant's agreement to pay any such sums and Landlord's
obligation to refund any such sums (provided Tenant is not in default
hereunder) shall survive the termination or expiration of this Lease; (viii)
no adjustment to the Rent by virtue of the operation of the rent adjustment
provisions in this Lease shall result in the payment by Tenant in any year of
less than the Base Rent shown on the Schedule; (ix) Landlord may at any time
change the fiscal year of the Building; (x) each amount owed to Landlord under
this Lease for which the date of payment is not expressly fixed shall be due
on the same date as the Rent listed on the statement showing such amount is
due; and (xi) if Landlord fails to give Tenant an estimate of Adjustment Rent 
prior to the beginning of any calendar year, Tenant shall continue to pay
Adjustment Rent, as the case may be, at the rate for the previous calendar
year until Landlord delivers such estimate, at which time Tenant shall pay
retroactively the increased amount for all previous months of such calendar
year.

    3. USE.  Tenant will use the Premises solely for general officing,
warehousing, distribution, research and development, and manufacturing all in
accordance with laws, ordinances, rules and any regulations which are
applicable to the Premises or the Building,  including, but not limited to
laws related to land use, and for no other purposes.  Tenant will not cause or
permit any waste or damage to the Premises, the Building or the land upon
which the Building is located and

                                6
<PAGE>

will not occupy or use the Premises for any business or purpose which is
unlawful, hazardous, unsanitary, noxious or offensive or which unreasonably
interferes with the business operations of other tenants in the Building.   If
the nature of Tenant's use or occupancy of the Premises causes any increase in
Landlord's insurance premiums over and above those chargeable for the least
hazardous type of occupancy legally permitted in the Premises, then Tenant
will pay the resulting increase within ten (10)days after its receipt of a
statement from Landlord setting forth the amount thereof.
  
      If at any time, and from time to time during the Lease Term, Tenant
desires to cease operating its business in the Premises, then the Tenant shall
notify the Landlord, in writing, at least ninety (90) days prior to the
effective date of any cessation of operations.  Landlord shall have the right,
at its sole option, to terminate the Lease upon written notice to Tenant at
any time after Tenant ceases to operate in the Premises. 

     In the event that Landlord exercises its option to terminate this Lease
as provided above, then this Lease shall terminate on the date stated in
Landlord's notice to terminate, which date shall be not greater than the
thirtieth (30th) day following the date on which Landlord sends such notice to
Tenant.  Upon such date, Tenant shall surrender possession of the Demised
Premises to Landlord and neither party shall thereafter have any further
obligation to the other by virtue of this Lease, subject, however, to the
payment by Tenant to Landlord of all sums then due and owing or having accrued
to Landlord hereunder and the survival of any indemnifications under this
Lease.

     Tenant shall not be deemed to have ceased operating its business and any
immediately prior period of cessation shall be deemed tolled if and to the
extent that the Demised Premises is closed due to damage by fire or other
casualty, a taking by eminent domain has made it impracticable to continue
doing business therein or a force majeure event (not caused by Tenant). 

    If at any time during the Term Tenant ceases to operate its business in
the Premises it shall continue to maintain the Premises as required herein,
including, but not limited to, continuing to heat the Premises at times when
it would be continuously reasonable to do so.  If at any time Tenant does not
maintain the Premises as required herein, Landlord shall be permitted to
maintain the Premises after five (5) days written notice to Tenant and
Tenant's failure to cure within such five (5) day period.  Notwithstanding the
foregoing, in no event shall Landlord be required to give notice in an
emergency situation. 

    4.    HAZARDOUS SUBSTANCES.   Tenant will not itself, nor permit others
to, use, store, generate, treat or dispose of any Hazardous Substance (as
hereinafter defined) on or about the Premises, except for immaterial amounts
that are exempt from or do not give rise to any violation of applicable law. 
Tenant agrees to indemnify and hold Landlord harmless from any liability or
expense (including, without limitation, the fees of Landlord's attorneys and
consultants and the cost of any required remediation or clean-up) incurred by
or claimed against Landlord as a result of Tenant's breach of the covenant
contained in this paragraph.  The foregoing covenant will survive the
expiration or termination of this Lease.  The term "Hazardous Substance" means
any "hazardous substance", "toxic substance" (as those terms are defined in
the Comprehensive Environmental

                                7
<PAGE>

Response, Compensation and Liability Act), "hazardous waste" (as that term is
defined in the Resource Conservation Recovery Act), polychlorinated biphenyls,
asbestos, radioactive material or any other pollutant, contaminant or
hazardous, dangerous or toxic material or substance which is regulated by any
federal, state or local law, regulation, ordinance or requirement.

    5.    CONDITION OF PREMISES.  Tenant's taking possession of the Premises
shall be conclusive evidence that the Premises were in good order and
satisfactory condition when Tenant took possession, subject to completion of
Tenant's Punchlist (as hereinafter defined).  No agreement of Landlord to
alter, remodel, decorate, clean or improve the Premises or the Building (or to
provide Tenant with any credit or allowance for the same), and no
representation regarding the condition of the Premises or the Building, have
been made by or on behalf of Landlord or relied upon by Tenant, except as
stated in the Workletter attached hereto as Exhibit B or elsewhere in this
Section 5.  Tenant shall have the right within five (5) days after notice to
Tenant to inspect the work performed by Landlord pursuant to the Workletter
with Landlord's representative.  If during such inspection Tenant shall find
that the work performed by Landlord pursuant to the Workletter is not in
keeping with the terms thereof, Tenant shall provide Landlord with written
notification of the defects in such work ("Tenant's Punchlist") within such
five (5) day period.  Landlord shall diligently correct the items on Tenant's
Punchlist within ten (10) business days of the date that Landlord receives
Tenant's Punchlist.

     Tenant may, prior to the date that Landlord's work is substantially
complete for Tenant's initial occupancy, and without being deemed to have
accepted the Premises with Landlord's work substantially completed, place and
install its personal property, furniture, furnishings, signs, equipment and
trade fixtures ("Tenant Property") in any part of the Premises at Tenant's
risk and expense, provided that (i) any of the placement of Tenant Property
does not interfere or delay Landlord in completing its work in anticipation of
Tenant's work in the Premises, in Landlord's sole opinion; (ii) Tenant
acknowledges that the indemnities in this Lease accrue to the benefit of
Landlord and the other parties named herein upon the date of Tenant's entry
into the Premises; and (iii) Tenant agrees to provide evidence of all
insurance required hereunder on or before its entry into the Premises as a
condition of Tenant's entry into the Premises.  

     Landlord agrees to contribute an allowance of up to Two Hundred Ninety
One Thousand Six Hundred and 00/100 Dollars ($291,600.00) (the "Allowance")
for the reimbursement of the costs incurred by Tenant to perform work to the
Premises ("Tenant's Landlord Work").    Landlord shall pay the Allowance in
three (3) equal installments of Ninety Seventy Thousand Two Hundred and 00/100
Dollars ($97,200.00) each to Tenant's general contractor within twenty (20)
days of Tenant's prior written request for such payment to the general
contractor and Tenant's delivery of the following to Landlord for each
installment as shown below:

            (i)    A sworn statement from Tenant and Tenant's general
contractor listing the names, addresses and amounts paid to all contractors,
subcontractors, vendors and/or suppliers of labor and/or materials for
Tenant's Landlord Work (collectively, "Tenant's Contractors");

                                8
<PAGE>

            (ii)    As a condition of the first two (2) installments of the
Allowance original executed and notarized partial  and unconditional waivers
of lien from each of Tenant's Contractors, and for the final installment of
the Allowance, original executed and notarized full waivers of lien for each
of Tenant's Contractors; and

           (iii)   As a condition of the first two (2) installments of the
Allowance, copies of all building permits and other licenses and permits
required to be obtained by Tenant in order to complete the Tenant's Landlord
Work, and for the final installment of the Allowance, copy of the final
certificate of occupancy and copies of all other licenses and permits required
to be obtained by Tenant in order to permit Tenant to occupy and operate its
business in the Premises.

         It is further agreed by Tenant that any request for an installment of
the Allowance shall be made only at such time as the total value of the Tenant
Landlord Work completed through the date of Tenant's request equals or exceeds
the installment of the Allowance requested plus all previous installments of
the Allowance received, if any.  In the event that the cost of Tenant's
Landlord Work against which the Allowance may be applied should for any reason
be less than the full amount of the Allowance, Tenant shall not be entitled to
a refund, rebate, offset or any other credit in the amount of such difference,
against Base Rent, or otherwise, for the Leased Premises.

    6.   UTILITIES.  Tenant will pay all costs associated with the provision
of all utility services to the Premises, including, without limitation,
telephone, gas, electricity, water and sewer service.  To the extent possible,
all utility services will be separately metered to the Premises  and placed in
Tenant's name.  If it is not possible to place a utility service on a separate
meter in Tenant's name, then all costs associated with the provision of such
utility service to the Premises will, at Landlord's option, either: (a) be
billed directly by Landlord to Tenant and paid by Tenant within 10 days after
its receipt of such billing; or (b) included as part of Expenses and paid by
Tenant in accordance with the provisions of Section 2 above.  Landlord will
not be liable to Tenant, nor will Tenant be relieved of any obligation
hereunder if any utility service to the Premises is interrupted for any
reason.

    7.    MAINTENANCE AND REPAIR.  

      A.    Tenant Obligations.  Tenant will at its sole expense maintain the
Premises in a first-class condition and repair.  Tenant's maintenance
obligation will extend to and include the repair and replacement, if
necessary, of all non-structural elements and mechanical systems located
within the Premises.  Tenant will provide and maintain, at Tenant's sole cost
and expense, maintenance contracts on a quarterly basis for all air
conditioning, heating and ventilating systems ("HVAC") serving the Premises. 
Such HVAC maintenance will be provided by companies and pursuant to contracts
and programs satisfactory to Landlord.  Copies of all maintenance and service
contracts will be delivered to Landlord on or before the Commencement Date. 
Alternatively, Landlord may elect to 

                                9
<PAGE>

obtain a HVAC maintenance contract for the entire Building, in which event
Tenant will pay its Proportionate Share of the cost thereof pursuant to
Section 2 above.  Any repairs or replacements made to the Premises by Tenant
pursuant to this Section 7 will be made in a workmanlike manner with materials
at least equal in quality and grade to those originally contained within the
Premises.  Tenant will also contract for its own janitorial and trash removal
services and will promptly pay all costs associated with such services.  

      B.   Landlord Obligations.  Landlord will maintain the structure, roof
and exterior walls of the Building and all common areas, including parking
areas and sidewalks and walkways, serving the Building in a first-class
condition and order of repair.  All costs incurred by Landlord in connection
with the maintenance and repair of such roof, exterior walls or common areas
will be considered Expenses and Tenant will pay its Proportionate Share
thereof pursuant to Section 2 above.  Additionally, Tenant will be responsible
for the payment of all costs associated with Landlord's maintenance if the
need therefore arises due to the fault or negligence of Tenant or its agents,
employees, licensees or invitees.  Except as otherwise expressly provided in
this Section 7., Landlord will not at any time be required to make any
improvements, repairs, replacements or alterations to the Premises.  If
Landlord  fails to perform any covenant under this paragraph and such failure
causes imminent threat of harm to persons or property of Tenant, Tenant shall
have the right, after five (5) days written notice to Landlord setting forth
the exact nature of Landlord's failure to perform under this paragraph and
Landlord's failure to perform the covenant which is the subject of Tenant 's
notice, to perform the covenant which is the subject of the notice.  Landlord
will reimburse Tenant for the third-party cost to perform such covenant upon
thirty (30) days written notice from Tenant, which notice shall be accompanied
by receipts showing full payment for the work performed on behalf of Tenant. 
Notwithstanding the foregoing, in no event shall Tenant be permitted to
exercise its right hereunder in regard to the common areas if the item or
maintenance is not immediately adjacent to the Premises nor shall Tenant be
permitted to exercise its right in regard to any maintenance to be performed
by Landlord if it is in default of this Lease.  

    8.    RULES AND REGULATIONS.  Tenant shall observe and comply, and shall
cause its subtenants, assignees, invitees, employees, contractors and agents
to observe and comply, with the Rules and Regulations listed on Exhibit C
attached hereto and with such reasonable modifications and additions thereto
as Landlord may make from time to time.  Landlord shall not be liable for
failure of any person to obey the Rules and Regulations.  Landlord shall not
be obligated to enforce the Rules and Regulations against any person, and the
failure of Landlord to enforce any such Rules and Regulations shall not
constitute a waiver thereof or relieve Tenant from compliance therewith,
provided, however, that Landlord shall not discriminate against Tenant in the
enforcement of such Rules and Regulations.  In addition, Tenant shall observe
and comply, and shall cause its subtenant, assignees, invitees, employees,
contractors and agents to observe and comply, with any rules and rules and
regulation os any business park or other area association, including, without
limitation, any rules and regulations of the Sale Lake International Center
Business Park Association.

                                10
<PAGE>


    9.    CERTAIN RIGHTS RESERVED TO LANDLORD.  Landlord reserves the
following rights, each of which Landlord may exercise without notice to Tenant
and without liability to Tenant, and the exercise of any such rights shall not
be deemed to constitute an eviction or disturbance of Tenant's use or
possession of the Premises and shall not give rise to any claim for set-off or
abatement of Rent or any other claim:  (a) to change the name or street
address of the Building or the suite number of the Premises; (b) to install,
affix and maintain any and all signs on the exterior or interior of the
Building; (c) to make repairs, decorations, alterations, additions or
improvements, whether structural or otherwise, in and about the Building,
including, without limitation, reconfiguring parking areas, driveways,
walkways and other exterior common areas, and for such purposes to enter upon
the Premises, temporarily close doors, corridors and other areas of the
Building and interrupt or temporarily suspend services or use of common areas,
and Tenant agrees to pay Landlord for overtime and similar expenses incurred
if such work is done other than during ordinary business hours at Tenant's
request; (d) to retain at all times, and to use in appropriate instances, keys
to all doors within and into the Premises; (e) to grant to any person or to
reserve unto itself the exclusive right to conduct any business or render any
service in the Building; (f) to show or inspect the Premises at reasonable
times and, if vacated or abandoned, to prepare the Premises for reoccupancy;
(g) to install, use and maintain in and through the Premises pipes, conduits,
wires and ducts serving the Building, provided that such installation, use and
maintenance does not unreasonably interfere with Tenant's use of the Premises;
(h) to take any other action which Landlord deems reasonable in connection
with the operation, maintenance, marketing or preservation of the Building;
and (i) to approve the weight, size and location of safes or other heavy
equipment or articles, which articles may be moved in, about or out of the
Building or Premises only at such times and in such manner as Landlord shall
direct, at Tenant's sole risk and responsibility.  Notwithstanding anything
herein contained in exercising its rights under this paragraph, Landlord
agrees that it will use reasonable efforts to not unreasonably interfere with
Tenant's business.

    10.    ALTERATIONS.

      A.    Requirements.  Tenant shall not make any replacement, alteration,
improvement or addition to or removal from the Premises (collectively an
"alteration") without the prior written consent of Landlord, which consent
shall not be unreasonably withheld.  Tenant agrees that in performing any work
in or on the Premises it shall employ the services of Landlord's architect. 
In the event Tenant proposes to make any alteration, Tenant shall, prior to
commencing such alteration, submit to Landlord for prior written approval: 
(i) detailed plans and specifications; (ii) the names, addresses and copies of
contracts for all contractors; (iii) all necessary permits evidencing
compliance with all applicable governmental rules, regulations and
requirements; (iv) certificates of insurance in form and amounts required by
Landlord, naming Landlord, its managing agent and any other parties designated
by Landlord as additional insureds; and (v) all other documents and
information as Landlord may reasonably request in connection with such
alteration.  Landlord 's prior written approval of Tenant's contractors
hereunder shall not be unreasonably withheld.  Tenant agrees to pay Landlord's
reasonable charges for review of all such items and supervision of the
alteration.  Neither approval of the plans and specifications

                                11
<PAGE>

nor supervision of the alteration by Landlord shall constitute a
representation or warranty by Landlord as to the accuracy, adequacy,
sufficiency or propriety of such plans and specifications or the quality of
workmanship or the compliance of such alteration with applicable law.  Tenant
shall pay the entire cost of the alteration and, if requested by Landlord,
shall deposit with Landlord, prior to the commencement of the alteration,
security for the payment and completion of the alteration in form and amount
required by Landlord.  Each alteration shall be performed in a good and
workmanlike manner, in accordance with the plans and specifications approved
by Landlord, and shall meet or exceed the standards for construction and
quality of materials established by Landlord for the Building.  In addition,
each alteration shall be performed in compliance with all applicable
governmental and insurance company laws, regulations and requirements.  Each
alteration shall be performed by Landlord or under Landlord's supervision, and
in harmony with Landlord's employees, contractors and other tenants.  Each
alteration, whether temporary or permanent in character, made by Landlord or
Tenant in or upon the Premises (excepting only Tenant's furniture, equipment
and trade fixtures)shall become Landlord's property and shall remain upon the
Premises at the expiration or termination of this Lease without compensation
to Tenant; provided, however, that Landlord shall have the right to require
Tenant to remove such alteration at Tenant's sole cost and expense in
accordance with the provisions of Section 17 of this Lease, which required
removal shall be specified by Landlord when Landlord consents to Tenant's
requested alterations.

      B.    Liens.  Upon completion of any alteration, Tenant shall promptly
furnish Landlord with sworn owner's and contractors' statements and full and
final waivers of lien covering all labor and materials included in such
alteration.  Tenant shall not permit any mechanic's lien to be filed against
the Building, or any part thereof, arising out of any alteration performed, or
alleged to have been performed, by or on behalf of Tenant.  If any such lien
is filed, Tenant shall within ten (10) days thereafter have such lien released
of record or deliver to Landlord a bond in form, amount, and issued by a
surety satisfactory to Landlord, indemnifying Landlord against all costs and
liabilities resulting from such lien and the foreclosure or attempted
foreclosure thereof.  If Tenant fails to have such lien so released or to
deliver such bond to Landlord, Landlord, without investigating the validity of
such lien, may pay or discharge the same, and Tenant shall reimburse Landlord
upon demand for the amount so paid by Landlord, including Landlord's expenses
and attorneys' fees.

    11.  INSURANCE.  In consideration of the leasing of the Premises at the
rent stated herein, Landlord and Tenant agree to provide insurance and
allocate the risks of loss as follows:

      A.    Tenant's Insurance.  Tenant, at its sole cost and expense but for
the mutual benefit of Landlord (when used in this Section 11.A. the term
"Landlord" shall include Landlord's partners, beneficiaries, officers, agents,
servants and employees and the term "Tenant" shall include Tenant's partners,
beneficiaries, officers, agents, servants and employees), agrees to purchase
and keep in force and effect during the term hereof, insurance which is
available at commercially reasonable rates and otherwise carried by tenants in
the 

                                12
<PAGE>

area, under policies issued by insurers of recognized responsibility licensed
to do business in the State of Utah with a Best's rating of A/VIII or better
on all alterations, additions, and improvements owned by Tenant, and on all 
personal property located in the Premises, protecting Landlord and Tenant from
damage or other loss caused by fire or other casualty, including but not
limited to vandalism and malicious mischief, perils covered by extended
coverage, theft, sprinkler leakage, water damage (however caused), explosion
malfunction or failure of heating and cooling or other apparatus, and other
similar risks in amounts not less than the full insurable replacement value of
such property.  Such property insurance shall provide that it is specific and
non-contributory and shall contain a replacement cost endorsement.  Such
insurance shall also contain a clause pursuant to which the insurance carriers
waive all rights of subrogation against the Landlord with respect to losses
payable under such policies.

         Tenant also agrees to maintain commercial general liability insurance
covering Tenant as the insured party, and naming Landlord as an additional
insured, against claims for personal injury and death and property damage
occurring in or about the Premises, with limits of not less than One Million
Dollars ($1,000,000.00) per occurrence and Five Million Dollars
($5,000,000.00) general aggregate.

         Tenant shall, prior to commencement of the term, furnish to Landlord
certificates evidencing such coverage, which certificates shall state that
such insurance coverage may not be changed or canceled without at least thirty
(30)days prior written notice to Landlord and Tenant.  In the event Tenant
shall fail to procure such insurance, Landlord may at its option after giving
Tenant no less than ten (10) days prior written notice of its election to do
so procure the same for the account of Tenant and the cost thereof shall be
paid to Landlord as additional rent upon receipt by Tenant of bills therefor.

      B.    Landlord's Insurance.  Landlord agrees to purchase and keep in
force and effect commercial general liability insurance in an amount not less
than Three Million Dollars ($3,000,000.00) and insurance on the replacement
cost of the Building and Building improvements (not including, however, any
tenant improvements, alterations or additions) against fire or other casualty,
including but not limited to vandalism and malicious mischief, perils covered
by extended coverage, theft, sprinkler leakage, water damage (however caused),
explosion, malfunction or failure of heating and cooling or other apparatus,
and other similar risks in a commercially reasonable amount.  The costs of
such insurance will be considered Expenses and Tenant will pay its
Proportionate Share thereof pursuant to Section 2 above.  

      C.    Risk of Loss.  By this Section 11, Landlord and Tenant intend that
the risk of loss or damage as described above be borne by responsible
insurance carriers to the extent above provided, and Landlord and Tenant
hereby agree to look solely to, and to seek recovery only from, their
respective insurance carriers in the event of a loss of a type described above
to the extent that such coverage is agreed to be provided hereunder.  For this

                                13
<PAGE>

purpose, any applicable deductible amount shall be treated as though it were
recoverable under such policies.  Landlord and Tenant agree that applicable
portions of all monies collected from such insurance shall be used toward the
full compliance with the obligations of Landlord and Tenant under this Lease
in connection with damage resulting from fire or other casualty.

    12.   TENANT'S AND LANDLORD'S RESPONSIBILITIES.

      A.     Tenant's Responsibilities.  To the extent permitted by law,
Tenant shall assume the risk of responsibility for, have the obligation to
insure against, and indemnify Landlord and hold it harmless from, any and all
liability for any loss of or damage or injury to any person (including death
resulting therefrom) or property occurring in or on the Premises, regardless
of cause, except for any loss or damage caused by the negligence or willful
misconduct of Landlord, and its employees and agents, and Tenant hereby
releases Landlord from any and all liability for same.  Tenant's obligation to
indemnify Landlord hereunder shall include the duty to defend against any
claims asserted by reason of such loss, damage or injury and to pay any
judgments, settlements, costs, fees and expenses, including attorneys' fees,
incurred in connection therewith. 

      B.     Landlord's Responsibilities.  To the extent permitted by law,
Landlord shall assume the risk of responsibility for, have the obligation to
insure against, and indemnify Tenant and hold it harmless from, any and all
liability for any loss of or damage or injury to any person (including death
resulting therefrom) or property occurring in, on or about the common areas of
the Building, excluding the Premises and the premises of other tenants of the
Building, regardless of cause, except for any loss or damage caused by the
negligence or willful misconduct of Tenant, and its employees and agents, and
Landlord hereby releases Tenant from any and all liability for same. 
Landlord's obligation to indemnify Tenant hereunder shall include the duty to
defend against any claims asserted by reason of such loss, damage or injury
and to pay any judgments, settlements, costs, fees and expenses, including
attorneys' fees, incurred in connection therewith.

    13.    FIRE OR OTHER CASUALTY.

      A.    Destruction of the Building.  If the Building should be
substantially destroyed (which, as used herein, means destruction or damage to
at least 75% of the Building) by fire or other casualty, either party hereto
may, at its option, terminate this Lease by giving written notice thereof to
the other party within thirty (30) days after such casualty.  In such event,
the Rent shall be apportioned to and shall cease as of the date of such
casualty.  In the event neither party exercises this option, then the Premises
shall be reconstructed and restored, at Landlord's expense, to substantially
the same condition as they were prior to the casualty.

                                14
<PAGE>


      B.     Destruction of the Premises.  If the Premises are damaged, in
whole or in part, by fire or other casualty, but the Building is not
substantially destroyed as provided above, then the parties hereto shall have
the following options:

            (i)    If, in Landlord's reasonable judgment, the Premises cannot
be reconstructed or restored within one hundred twenty (120) days after such
casualty to substantially the same condition as they were in prior to such
casualty, Landlord may terminate this Lease by written notice given to Tenant
within thirty (30) days after the casualty.  If, in Landlord's reasonable
judgement, the Premises cannot be reconstructed or restored within one hundred
twenty (120) days after such casualty to substantially the same condition as
they were in prior to such casualty, but nonetheless Landlord does not so
elect to terminate this Lease, then Landlord shall notify Tenant, within
thirty (30) days after the casualty, of the amount of time necessary, as
reasonably estimated by Landlord, to reconstruct or restore the Premises. 
After receipt of such notice from Landlord, Tenant may elect to terminate this
Lease.  This election shall be made by Tenant by giving written notice to
Landlord within fifteen (15) days after the date of Landlord's notice.  If
neither party terminates this Lease pursuant to the foregoing, Landlord shall
proceed to reconstruct and restore the Premises to substantially the same
condition as they were in on the date that Landlord delivered possession of
the Premises to Tenant with Landlord's work on Exhibit B complete
("Substantial Reconstruction").  In such event this Lease shall continue in
full force and effect to the balance of the term, upon the same terms,
conditions and covenants as are contained herein; provided, however, that the
Rent shall be abated in the proportion which the approximate area of the
damaged portion bears to the Square Footage of the Premises, from the date of
the casualty until the earlier of the date that Tenant occupies the Premises
for business or forty five (45) days after Substantial Reconstruction.  

            Notwithstanding the above, if the casualty occurs during the last
twelve (12) months of the term of this Lease, either party hereto shall have
the right to terminate this Lease as of the date of the casualty, which right
shall be exercised by written notice to be given by either party to the other
party within thirty (30)days therefrom.  If this right is exercised, Rent
shall be apportioned to and shall cease as of the date of the casualty.  After
a casualty occurs during the last twelve (12) months of the term of the Lease,
Tenant may not exercise any renewal options without first obtaining Landlord's
written consent.

            Additionally, notwithstanding anything contained herein to the
contrary, Landlord shall have no duty to repair or restore the Premises or
Building if the damage is due to an uninsurable casualty, or if insurance
proceeds are insufficient to pay for such repair or restoration, or if the
holder of any mortgage, deed of trust or similar instrument applies proceeds
of insurance to reduce its loan balance and the 

                                15
<PAGE>

remaining proceeds, if any, available to Landlord are not sufficient to pay
for such repair or restoration.

            (ii)    If, in Landlord's reasonable judgment, the Premises are
able to be restored within one hundred twenty (120)days after such casualty to
substantially the same condition as they were prior to such casualty, Landlord
shall so notify Tenant within thirty (30)days after the casualty, and Landlord
shall then proceed to reconstruct and restore the damaged portion of the
Premises, at Landlord's expense, to a state of Substantial Reconstruction,
Rent shall be abated in the proportion which the approximate area of the
damaged portion bears to the Square Footage of the Premises from the date of
the casualty until the earlier of the date that Tenant occupies the Premises
for business or forty five (45) days after Substantial Reconstruction, and
this Lease shall continue in full force and effect for the balance of the
term, upon the same terms, conditions and covenants as are contained herein.  

            (iii)     In the event Landlord undertakes reconstruction or
restoration of the Premises pursuant to subparagraph (i) or (ii) above,
Landlord shall use reasonable diligence in completing such reconstruction
repairs, but in the event Landlord fails to substantially complete the same
within one hundred eighty (180) days after the date of the casualty (except
however, if under subparagraph (i) above Landlord notified Tenant that it
would take longer than one hundred twenty (120) days to reconstruct or restore
the Premises, but Tenant nonetheless elected not to terminate the Lease but
required Landlord to reconstruct or restore the Premises, then the foregoing
one hundred and eighty (180) day period shall be extended to the time period
set forth in Landlord's notice plus sixty (60) days), except as a result of
any of the occurrences set forth in Section 27.J. below, Tenant may, at its
option, terminate this Lease upon giving Landlord written notice to that
effect, whereupon both parties shall be released from all further obligations
and liability hereunder.

    14.    CONDEMNATION.  If the Premises or the Building is rendered
untenantable by reason of a condemnation (or by a deed given in lieu thereof),
then either party may terminate this Lease by giving written notice of
termination to the other party within thirty (30)days after such condemnation,
in which event this Lease shall terminate effective as of the date of such
condemnation.  If this Lease so terminates, Rent shall be paid through and
apportioned as of the date on which Tenant is legally obligated to vacate the
Premises.  If such condemnation does not render the Premises or the Building
untenantable, this Lease shall continue in effect and Landlord shall promptly
restore the portion not condemned to the extent reasonably possible to the
condition in which they were delivered to Tenant.  In such event, however,
Landlord shall not be required to expend an amount in excess of the proceeds
received by Landlord from the condemning authority.  Landlord reserves all
rights to compensation for any condemnation.  Tenant hereby assigns to
Landlord any right Tenant may have to such compensation, and Tenant shall make
no claim against 
                                16
<PAGE>

Landlord or the condemning authority for compensation for termination of
Tenant's leasehold interest under this Lease or interference with Tenant's
business.

    15.    ASSIGNMENT AND SUBLETTING.

      A.     Landlord's Consent.  Tenant shall not, without the prior written
consent of Landlord:  (i)assign, convey, mortgage or otherwise transfer this
Lease or any interest hereunder, or sublease the Premises, or any part
thereof, whether voluntarily or by operation of law; or (ii)permit the use of
the Premises by any person other than Tenant and its employees.  Any such
transfer, sublease or use described in the preceding sentence (a "Transfer")
occurring without the prior written consent of Landlord shall be void and of
no effect.  Landlord's consent to any Transfer shall not constitute a waiver
of Landlord's right to withhold its consent to any future Transfer. 
Landlord's consent to any Transfer or acceptance of rent from any party other
than Tenant shall not release Tenant or any guarantor from any covenant or
obligation under this Lease.  Landlord may require as a condition to its
consent to any assignment of this Lease that the assignee execute an
instrument in which such assignee assumes the obligations of Tenant hereunder. 
For the purposes of this paragraph, the transfer (whether direct or indirect)
of all or a majority of the capital stock in a corporate Tenant (other than
the shares of the capital stock of a corporate Tenant whose stock is publicly
traded) or the merger, consolidation or reorganization of such Tenant and the
transfer of all or any general partnership interest in any partnership Tenant
shall be considered a Transfer.

      B.     Standards for Consent.  If Tenant desires the consent of Landlord
to a Transfer, Tenant shall submit to Landlord, at least forty-five (45)days
prior to the proposed effective date of the Transfer, a written notice which
includes such information as Landlord may require about the proposed Transfer
and the transferee, together with a non-refundable processing fee in the
amount of five hundred dollars ($500.00).  If Landlord does not terminate this
Lease, in whole or in part, pursuant to Section 16.C, Landlord shall not
unreasonably withhold its consent to any assignment or sublease, which consent
or lack thereof shall be provided within thirty (30)days after receipt of
Tenant's notice.  Landlord shall not be deemed to have unreasonably withheld
its consent if, in the judgment of Landlord:  (i)the transferee is of a
character or engaged in a business which is not in keeping with the standards
or criteria used by Landlord in leasing the Building; (ii)the financial
condition of the transferee is such that it may not be able to perform its
obligations in connection with this Lease; (iii)the transferee is a tenant of
or negotiating for space in the Building; (iv)the transferee is a governmental
unit; (v)Tenant is in Default under this Lease; (vi)in the judgment of
Landlord, such a Transfer would violate any term, condition, covenant or
agreement of the Landlord involving the Building or any other tenant's lease
within it; or (vii) any other basis which Landlord reasonably deems
appropriate.  If Landlord wrongfully withholds its consent to any Transfer,
Tenant's sole and exclusive remedy therefor shall be to seek specific
performance of Landlord's obligation to consent to such Transfer.

                                17
<PAGE>
      C.     Recapture.  Landlord shall have the right to terminate this Lease
as to that portion of the Premises covered by a Transfer.  Landlord may
exercise such right to terminate by giving notice to Tenant at any time within
thirty (30)days after the date on which Tenant has furnished to Landlord all
of the items required under Section 16.B.  If Landlord exercises such right to
terminate, Landlord shall be entitled to recover possession of, and Tenant
shall surrender such portion of, the Premises (with appropriate demising
partitions erected at the expense of Tenant)on the later of (i)the effective
date of the proposed Transfer, or (ii)sixty (60)days after the date of
Landlord's notice of termination.  In the event Landlord exercises such right
to terminate, Landlord shall have the right to enter into a lease with the
proposed transferee without incurring any liability to Tenant on account
thereof.  If Landlord consents to any Transfer, Tenant shall pay to Landlord
all rent and other consideration received by Tenant in excess of the Rent paid
by Tenant hereunder for the portion of the Premises so transferred.  Such rent
shall be paid as and when received by Tenant.  In addition to the processing
fee described in Section 16.B, Tenant shall pay to Landlord any reasonable
attorneys' or other fees and expenses incurred by Landlord in connection with
any proposed Transfer, whether or not Landlord consents to such Transfer.

    16.    SURRENDER.  Upon termination of the Term or Tenant's right to
possession of the Premises, Tenant shall return the Premises to Landlord in
good order and condition, ordinary wear and damage by fire or other casualty
excepted.  If Landlord requires Tenant to remove any alterations pursuant to
Section 10, then such removal shall be done in a good and workmanlike manner,
and upon such removal Tenant shall restore the Premises to its condition prior
to the installation of such alterations.  If Tenant does not remove such
alterations after request to do so by Landlord, Landlord may remove the same
and restore the Premises, and Tenant shall pay the cost of such removal and
restoration to Landlord upon demand.  Tenant shall also remove its furniture,
equipment, trade fixtures and all other items of personal property from the
Premises prior to termination of the Term or Tenant's right to possession of
the Premises.  If Tenant does not remove such items, Tenant shall be
conclusively presumed to have conveyed the same to Landlord without further
payment or credit by Landlord to Tenant, or at Landlord's sole option such
items shall be deemed abandoned, in which event Landlord may cause such items
to be removed and disposed of at Tenant's expense, which shall be 115% of
Landlord's actual cost of removal, without notice to Tenant and without
obligation to compensate Tenant.

    17.    DEFAULTS AND REMEDIES.

      A.    Default. The occurrence of any of the following shall constitute a
default (a "Default") by Tenant under this Lease:  (i)Tenant fails to pay any
Rent when due and such failure is not cured within five (5)days after notice
from Landlord (which notice may be in the form of a Landlord statutory five
(5)day notice); (ii)Tenant fails to perform any other provision of this Lease
and Tenant has not commenced to cure such failure within ten (10) business
days and/or is not diligently pursuing a cure so that any cure is completed
within sixty (60)days (or immediately if the failure involves a hazardous
condition)after notice from Landlord; (iii)the leasehold interest of Tenant is
levied upon or attached under process

                                18
<PAGE>

of law; (iv) Tenant abandons or vacates the Premises without notice to
Landlord as required in this Lease; or (v) any voluntary or involuntary
proceedings are filed by or against Tenant or any guarantor of this Lease
under any bankruptcy, insolvency or similar laws and, in the case of any
involuntary proceedings, are not dismissed within thirty (30)days after
filing.

      B.     Right of Re-Entry.  Upon the occurrence of a Default, Landlord
may elect to terminate this Lease or, without terminating this Lease,
terminate Tenant's right to possession of the Premises.  Upon any such
termination, Tenant shall immediately surrender and vacate the Premises and
deliver possession thereof to Landlord.  Tenant grants to Landlord the right
to enter and repossess the Premises and to expel Tenant and any others who may
be occupying the Premises and to remove any and all property therefrom,
without being deemed in any manner guilty of trespass and without
relinquishing Landlord's rights to Rent or any other right given to Landlord
hereunder or by operation of law.

      C.     Termination of Right to Possession.  If Landlord terminates
Tenant's right to possession of the Premises without terminating this Lease,
Landlord may relet the Premises or any part thereof.  In such case, Landlord
shall use reasonable efforts to relet the Premises on such terms as Landlord
shall reasonably deem appropriate; provided, however, Landlord may first lease
Landlord's other available space and shall not be required to accept any
tenant offered by Tenant or to observe any instructions given by Tenant about
such reletting.  [In addition, in an effort to mitigate its damages, Landlord
may, but is not obligated to, sell the Building or portions thereof.]  Tenant
shall reimburse Landlord for the costs and expenses of reletting the Premises
[or selling the Building] including, but not limited to, all brokerage,
advertising, legal, redecorating, repairs and other expenses incurred to
secure a new tenant for the Premises [or purchaser of the Building or portions
thereof].  In addition, if the consideration collected by Landlord upon any
such reletting [or sale], after payment of the expenses of reletting the
Premises [or sale of the Building] which have not been reimbursed by Tenant,
is insufficient to pay monthly the full amount of the Rent, Tenant shall pay
to Landlord the amount of each monthly deficiency as it becomes due.  If such
consideration is greater than the amount necessary to pay the full amount of
the Rent, the full amount of such excess shall be retained by Landlord and
shall in no event be payable to Tenant.

      D.     Termination of Lease.  If Landlord terminates this Lease,
Landlord may recover from Tenant and Tenant shall pay to Landlord, on demand,
as and for liquidated and final damages, an accelerated lump sum amount equal
to the amount by which Landlord's estimate of the aggregate amount of Rent
owing from the date of such termination through the Expiration Date plus
Landlord's estimate of the aggregate expenses of reletting the Premises,
exceeds Landlord's estimate of the fair rental value of the Premises for the
same period (after deducting from such fair rental value the time needed to
relet the Premises and the amount of concessions which would normally be given
to a new tenant) both discounted to present value at the rate of five percent
(5%) per annum.

                                19
<PAGE>

      E.     Other Remedies.  Landlord may, but shall not be obligated to,
perform any obligation of Tenant under this Lease, and, if Landlord so elects,
all costs and expenses paid by Landlord in performing such obligation,
together with interest at the Default Rate, shall be reimbursed by Tenant to
Landlord on demand.  Any and all remedies set forth in this Lease:  (i) shall
be in addition to any and all other remedies Landlord may have at law or in
equity; (ii) shall be cumulative; and (iii) may be pursued successively or
concurrently as Landlord may elect.  The exercise of any remedy by Landlord
shall not be deemed an election of remedies or preclude Landlord from
exercising any other remedies in the future.

      F.     Bankruptcy.  If Tenant becomes bankrupt, the bankruptcy trustee
shall not have the right to assume or assign this Lease unless the trustee
complies with all requirements of the United States Bankruptcy Code, and
Landlord expressly reserves all of its rights, claims and remedies thereunder.

      G.     Waiver of Trial by Jury.  Landlord and Tenant waive trial by jury
in the event of any action, proceeding or counterclaim brought by either
Landlord or Tenant against the other in connection with this Lease.

      H.     Venue.  If either Landlord or Tenant desires to bring an action
against the other in connection with this Lease, such action shall be brought
in the federal courts located in Salt Lake City, Utah or state courts located
in Salt Lake County, Utah.  Landlord and Tenant consent to the jurisdiction of
such courts and waive any right to have such action transferred from such
courts on the grounds of improper venue or inconvenient forum.

    18.    HOLDING OVER.  If Tenant retains possession of the Premises after
the expiration or termination of the Term or Tenant's right to possession of
the Premises, Tenant shall pay Rent during such holding over at double the
rate in effect immediately preceding such holding over computed on a monthly
basis for each month or partial month that Tenant remains in possession. 
Tenant shall also pay, indemnify and defend Landlord from and against all
claims and damages, consequential as well as direct, sustained by reason of
Tenant's holding over.  In addition, at any time while Tenant remains in
possession, Landlord may elect instead, by written notice to Tenant and not
otherwise, to have such retention of possession constitute a renewal of this
Lease for one (1) year for the fair market rental value of the Premises as
reasonably determined by Landlord but in no event less than the Rent payable
immediately prior to such holding over.  The provisions of this section do not
waive Landlord's right of re-entry or right to regain possession by actions at
law or in equity or any other rights hereunder, and any receipt of payment by
Landlord shall not be deemed a consent by Landlord to Tenant's remaining in
possession or be construed as creating or renewing any lease or right of
tenancy between Landlord and Tenant.

    19.    SECURITY DEPOSIT.  Upon execution of this Lease, Tenant shall
deposit the security deposit set forth in Item 10 of the Schedule (the
"Security Deposit") with Landlord as security for the performance of Tenant's
obligations under this Lease.  Upon the occurrence of a Default, Landlord may
use all or any part of the Security Deposit for the payment of any Rent or for

                                20
<PAGE>

the payment of any amount which Landlord may pay or become obligated to pay by
reason of such Default, or to compensate Landlord for any loss or damage which
Landlord may suffer by reason of such Default.  If any portion of the Security
Deposit is used, Tenant shall within five (5) days after written demand
therefor deposit cash with Landlord in an amount sufficient to restore the
Security Deposit to its original amount or to replenish the Letter of Credit
to the amount required by Exhibit D, if Landlord has drawn upon the Letter of
Credit.  Landlord shall not be required to keep the Security Deposit separate
from its general funds, and Tenant shall not be entitled to interest on the
Security Deposit.  In no event shall the Security Deposit be considered an
advanced payment of Rent, and in no event shall Tenant be entitled to use the
Security Deposit for the payment of Rent.  If no default by Tenant exists
hereunder, the Security Deposit or any balance thereof and the Letter of
Credit shall be returned to Tenant within thirty (30) days after the
expiration of the Term, as the same may be extended  and vacation of the
Premises by Tenant.  Landlord shall have the right to transfer the Security
Deposit and Letter of Credit to any purchaser of the Building.  Upon such
transfer, Tenant shall look solely to such purchaser for return of the
Security Deposit and Letter of Credit, and Landlord shall be relieved of any
liability with respect to the Security Deposit and Letter of Credit.

    20.    SUBSTITUTION OF OTHER PREMISES.  At any time hereafter, Landlord
may upon thirty (30) days' prior notice to Tenant substitute for the Premises
other premises in the Building (the "New Premises"), provided that the New
Premises shall be reasonably usable for Tenant's business hereunder and that
Tenant shall not be required to move its manufacturing process to the New
Premises during any period of time it is manufacturing an order which cannot
be interrupted, as determined in Tenant's commercially reasonable judgment, 
and, if Tenant is already in occupancy of the Premises, then in addition
Landlord shall pay all reasonable expenses incurred by Tenant in connection
with such relocation, including but not limited to costs of moving, door
lettering, telephone relocation, reasonable quantities of new stationery and
for improving the New Premises so that they are substantially similar to the
Premises.

    21.   ESTOPPEL CERTIFICATE.  Tenant agrees that, from time to time upon
not less than ten (10) days' prior request by Landlord, Tenant shall execute
and deliver to Landlord a written certificate certifying (if the same is in
fact true or stating otherwise if the following statements are not true):  (i)
that this Lease is unmodified and in full force and effect (or if there have
been modifications, a description of such modifications and that this Lease as
modified is in full force and effect); (ii) the dates to which Rent has been
paid; (iii) that Tenant is in possession of the Premises, if that is the case;
(iv) that Landlord is not in default under this Lease, or, if Tenant believes
Landlord is in default, the nature thereof in detail; (v) that Tenant has no
off-sets or defenses to the performance of its obligations under this Lease
(or if Tenant believes there are any off-sets or defenses, a full and complete
explanation thereof); (vi) that the Premises have been completed in accordance
with the terms and provisions hereof or the Workletter, that Tenant has
accepted the Premises and the condition thereof and of all improvements
thereto and has no claims against Landlord or any other party with respect
thereto; and (vii) such additional matters as may be requested by Landlord, it
being agreed that such certificate may be relied upon by any prospective
purchaser, mortgagee, or other person having or acquiring an interest in the
Building.  If Tenant fails

                                21
<PAGE>

to execute and deliver any such certificate within ten (10) days after
request, Tenant shall be deemed to be in default of this Lease.

    22.    SUBORDINATION.  This Lease is and shall be expressly subject and
subordinate at all times to (i) any ground or underlying lease of the
Building, now or hereafter existing, and all amendments, renewals and
modifications to any such lease, and (ii) the lien of any mortgage or trust
deed now or hereafter encumbering fee title to the Building or the leasehold
estate under any such lease, or both, unless such ground lease or ground
lessor, or mortgage or mortgagee, expressly provides or elects that the Lease
shall be superior to such lease or mortgage.  If any such mortgage or trust
deed is foreclosed, or if any such lease is terminated, upon request of the
mortgagee, holder or lessor, as the case may be, Tenant will attorn to the
purchaser at the foreclosure sale or to the lessor under such lease, as the
case may be.  The foregoing provisions are declared to be self-operative and
no further instruments shall be required to effect such subordination or
attornment, or both; provided, however, that Tenant agrees upon request by any
such mortgagee, holder, lessor or purchaser at foreclosure, to execute and
deliver such subordination or attornment instruments, or both, as may be
required by such person to confirm such subordination or attornment, or both,
or any other documents required to evidence superiority of the ground lease or
mortgage, should ground lessor or mortgage elect such superiority.  If Tenant
fails to execute and deliver any such instrument or document within ten (10)
days after request, Tenant shall be deemed to have irrevocably appointed
Landlord and Landlord's beneficiaries as Tenant's attorneys-in-fact to execute
and deliver such instrument or document in Tenant's name.

    23.    QUIET ENJOYMENT.  As long as no Default exists, Tenant shall
peacefully and quietly have and enjoy the Premises for the Term, free from
interference by Landlord or any successors, subject, however, to the
provisions of this Lease.  The loss or reduction of Tenant's light, air or
view will not be deemed a disturbance of Tenant's occupancy of the Premises
nor will it affect Tenant's obligations under this Lease or create any
liability of Landlord to Tenant.  Additionally, no disturbance of Tenant's
occupancy of the Premises by other occupants or tenants of the Building,
including any noise or odors, will affect Tenant's obligations under this
Lease or create any liability of Landlord to Tenant.  

    24.    BROKER.  Tenant represents to Landlord that Tenant has dealt only
with the broker(s) set forth in Item 11 of the Schedule (collectively, the
"Broker") in connection with this Lease and that, insofar as Tenant knows, no
other broker negotiated this Lease or is entitled to any commission in
connection herewith.  Tenant agrees to indemnify, defend and hold Landlord and
Landlord's beneficiaries and agents harmless from and against any claims for a
fee or commission made by any broker, other than the Broker, claiming to have
acted by or on behalf of Tenant in connection with this Lease.  Landlord
agrees to pay the Broker a commission in accordance with a separate agreement
between Landlord and the Broker.

    25.    NOTICES.  All notices and demands to be given by one party to the
other party under this Lease shall be given in writing, mailed or delivered to
Landlord or Tenant, as the case may be, at the following address:  

                                22

<PAGE>

    If to Landlord:     Prudential Real Estate Investors
                        8 Campus Drive
                        4th Floor - Arbor Circle South
                        Parsippany, NJ  07054-4493
                        Attn:  Mr. Chip Walters

    With a copy to:     Grubb & Ellis Management Services
                        225 West Wacker Drive
                        Suite 2300
                        Chicago, Illinois  60606
                        Attn:  Mr. Richard Prokup

    If to Tenant:       Micropoint, Inc.
                        C/O President
                        6906 South 300 West
                        Midvale, Utah 84047

    With a copy to:     Bruce H. Shapiro, P.C.
                        3760 South Highland Drive, #500
                        Salt Lake City, Utah 84106
                        Attn: Bruce H. Shapiro, Esq.

or at such other address as either party may hereafter designate.  Notices
shall be delivered by hand or by United States certified or registered mail,
postage prepaid, return receipt requested, or by a nationally recognized
overnight air courier service.  Notices shall be considered to have been given
upon the earlier to occur of actual receipt or two (2) business days after
posting in the United States mail.

    26.    MISCELLANEOUS.

      A.     Successors and Assigns.  Subject to Section 16 of this Lease,
each provision of this Lease shall extend to, bind and inure to the benefit of
Landlord and Tenant and their respective legal representatives, successors and
assigns, and all references herein to Landlord and Tenant shall be deemed to
include all such parties.

      B.     Entire Agreement.  This Lease, and the riders and exhibits, if
any, attached hereto which are hereby made a part of this Lease, represent the
complete agreement between Landlord and Tenant, and Landlord has made no
representations or warranties except as expressly set forth in this Lease.  No
modification or amendment of or waiver under this

                                23
<PAGE>

Lease shall be binding upon Landlord or Tenant unless in writing signed by
Landlord and Tenant.

      C.     Time of Essence.  Time is of the essence of this Lease and each
and all of its provisions.

      D.     Execution and Delivery.  Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of space
or an option for lease, and it is not effective until execution and delivery
by both Landlord and Tenant.  Execution and delivery of this Lease by Tenant
to Landlord shall constitute an irrevocable offer by Tenant to lease the
Premises on the terms and conditions set forth herein, which offer may not be
revoked for fifteen (15) days after such delivery.

      E.     Severability.  The invalidity or unenforceability of any
provision of this Lease shall not affect or impair any other provisions.

      F.     Governing Law.  This Lease shall be governed by and construed in
accordance with the laws of the State of Utah.

      G.     Attorneys' Fees.  Tenant shall pay to Landlord all costs and
expenses, including reasonable attorneys' fees, incurred by Landlord in
enforcing this Lease or incurred by Landlord as a result of any litigation to
which Landlord becomes a party as a result of this Lease.

      H.     Delay in Possession.  In no event shall Landlord be liable to
Tenant if Landlord is unable to deliver possession of the Premises to Tenant
on the Commencement Date for causes outside Landlord's reasonable control.  If
Landlord is unable to deliver possession of the Premises to Tenant by the
Commencement Date, the Commencement Date shall be deferred until Landlord can
deliver possession to Tenant.

      I.     Joint and Several Liability.  If Tenant is comprised of more than
one party, each such party shall be jointly and severally liable for Tenant's
obligations under this Lease.

      J.     Force Majeure.  Landlord shall not be in default hereunder and
Tenant shall not be excused from performing any of its obligations hereunder
if Landlord is prevented from performing any of its obligations hereunder due
to any accident, breakage, strike, shortage of materials, acts of God or other
causes beyond Landlord's reasonable control.

Tenant shall not be in default hereunder and Landlord shall not be excused
from performing any of its obligations hereunder if Tenant is prevented from
performing any of its obligations hereunder due to any accident, breakage,
strike, shortage of materials, acts of God or other causes beyond Tenant's
reasonable control.  Notwithstanding the foregoing, in no event shall

                                24
<PAGE>

Tenant be excused from the payment of any Rent or other sums due at the time
and place required by this Lease by invoking the provisions of this paragraph. 

      K.     Captions.  The headings and titles in this Lease are for
convenience only and shall have no effect upon the construction or
interpretation of this Lease.

      L.     No Waiver.  No receipt of money by Landlord from Tenant after
termination of this Lease or after the service of any notice or after the
commencing of any suit or after final judgment for possession of the Premises
shall renew, reinstate, continue or extend the Term or affect any such notice
or suit.  No waiver of any default of Tenant shall be implied from any
omission by Landlord to take any action on account of such default if such
default persists or be repeated, and no express waiver shall affect any
default other than the default specified in the express waiver and then only
for the time and to the extent therein stated.

      M.     Limitation of Liability; Effect of Sale.  Any liability of
Landlord under this Lease shall be limited solely to its interest in the
Building, and in no event shall any personal liability be asserted against
Landlord in connection with this Lease nor shall any recourse be had to any
other property or assets of Landlord.  Landlord and any successor will be
relieved of its obligations accruing after any sale of the Building or
Premises and Tenant will look solely to the successor for performance of those
obligations.  

    27.    EXTENSION OPTION.  Provided that this Lease is then in full force
and effect, that Tenant is not then in default under this Lease, and that
Tenant is then occupying all of the Premises, Landlord hereby grants to Tenant
an option to extend the Term of this Lease, on the same terms and conditions
set forth in this Lease, except as set forth below with respect to Base Rent,
for one (1) additional three (3) year term (the "Option Period") commencing as
of the last day after the expiration of the Initial Term and ending the last
day of the thirty-sixth (36th) month thereafter.   Base Rent for the Option
Period shall be the Fair Market Rental Rate (as hereinafter defined). 
Tenant's right to exercise the option to extend shall be conditioned upon
Landlord's receipt, no later than one-hundred eighty (180) days prior to the
expiration of the Initial Term, of Tenant's then current certified financial
statements showing a creditworthiness at least equal to the creditworthiness
demonstrated to Landlord by Tenant prior to execution of this Lease; provided,
however, Landlord may, in its sole discretion, elect to waive such condition. 
The option to extend shall be exercised, if at all, by written notice ("Option
Notice") given by Tenant to Landlord no later than twelve (12) full calendar
months prior to the expiration of the Initial Term, time being of the essence. 
Once the Option Notice is given, Tenant's exercise of such option shall be
irrevocable.  If the option hereby granted is not so exercised, Tenant shall
have no further right to extend the Term of the Lease.  


For purposes of this Lease, the term "Fair Market Rental Rate" shall mean a
rate comprised of (a) one hundred percent (100%) of the prevailing base rental
rate per square foot of rentable area available in the Pertinent Market (as
hereinafter defined), as determined by Landlord in Landlord's reasonable
business judgement, and (b) one hundred percent (100%) of any escalation of
any such base rental rate (based upon a fixed step and/or index) prevailing in
the Pertinent Market, as

                                25
<PAGE>

determined by Landlord in good faith, taking into account (i) comparable
leases (on the basis of factors such as, but not limited to, size and location
of space, commencement date and term of lease), if any, recently executed for
improved space in the Building or (ii) if no such leases for comparable space
have been executed in the Building, then leases for comparable (on the basis
of factors such as, but not limited to, size and location of space,
commencement date and term of lease) improved space in first-class industrial
buildings in Salt Lake City, Utah, area which are comparable to the Building
in reputation, quality, age, size, location and level and quality of services
provided and which have reached economic stabilization and are not offering,
for any other reason, below-market rents (the foregoing factors not being
exclusive in identifying comparable buildings) (the Building, together with
such comparable buildings, if applicable, being herein referred to as the
"Pertinent Market").  In determining the Fair Market Rental Rate, Landlord
shall also take into consideration (x) the definition of rentable area or net
rentable area with respect to which such rental rates are computed; (y) the
value of rental abatements, allowances for demolition, construction of tenant
improvements and space planning and other similar concessions generally
available in the Pertinent Market at such time to tenants leasing comparable
space; and (z)other comparable pertinent factors.

    28.    RIGHT OF FIRST OFFER.  Subject to the provisions hereinafter set
forth and subject and subordinate to the rights of any other tenant of the
Building, Landlord hereby grants to Tenant the right to lease, on the terms
and conditions hereinafter set forth, 30,000 square feet of  space adjacent to
the Premises (as shall be determined by Landlord) (the "First Offer Space"),
if such space becomes available for leasing during the Term of this Lease and,
at a subsequent time (to be determined by Landlord) during the Term, an
additional 30,000 square feet of  space adjacent to the Premises (as shall be
determined by Landlord) (the "Second Offer Space"), if such space becomes
available for leasing during the Term of this Lease.  If, during the Term of
the Lease, Landlord elects to market the First Offer Space or the Second Offer
Space  to third parties, Landlord shall give Tenant written notice that the
First Offer Space or the Second Offer Space is available for leasing.  If,
within ten (10) business days after the delivery of such notice, Tenant shall
give Landlord written notice that Tenant elects to negotiate a lease of the
First Offer Space or the Second Offer Space, as the case may be, Landlord
shall not offer such space for rent to a third party for ten (10) days after
Tenant gives Landlord notice of its desire to negotiate a lease for the First
Offer Space or the Second Offer Space.  Tenant may only lease the entire, but
not less than the entire, First Offer Space or Second Offer Space.  During
said ten (10) day period, Landlord and Tenant shall negotiate a lease for the
First Offer Space or the Second Offer Space, as the case may be, in good
faith.  If Tenant gives Landlord notice that it does not elect to negotiate a
lease for such First Offer Space or Second Offer Space or if, within ten (10)
days following Landlord's receipt of notice that Tenant desires to negotiate a
lease for the First Offer Space or the Second Offer Space, as the case may be,
the parties shall fail to agree on the terms of a lease therefor, this right
of first offer shall terminate and be of no force and effect and Landlord may
lease such space to a third party on such terms and conditions as Landlord may
desire.  The Base Rent for the First Offer Space and the Second Offer Space
shall be at the then Fair Market Rental Rate for each respective space.

    29.    UTILITY AND FIRE EQUIPMENT ROOMS.  Landlord and Tenant acknowledge
that adjacent to the Premises are two rooms shown on Exhibit "A" as the
"Utility Room" and the

                                26
<PAGE>

"Fire Equipment Room".  Landlord agrees that it shall review with Landlord's
architect Tenant's request to expand the Premises by removing or decreasing
the square footage of the Utility Room and including such square footage in
the square footage of the Premises.  In no event, notwithstanding anything
contained in this Lease to the contrary, shall Landlord be required to approve
Tenant's plans to demolish or decrease the square footage of the Utility Room
or make any alteration thereto if Landlord determines that it shall be
detrimental to the operation or existence of the Building or otherwise cause
any adverse affect to the Building.  Landlord and Tenant acknowledge that in
regard to such Utility Room:

            (i)  Except in an emergency or when circumstances otherwise
reasonably dictate, Landlord shall only access the Utility Room from the
entrance to such Utility Room located in the exterior wall of the Building. 
In the event that Landlord requires access to the Utility Room from the
Premises, Landlord shall give such notice as shall be reasonably possible
under the circumstances prior to entry into the Premises for this purpose; 

            (ii) Tenant shall lock the interior door of the Utility Room which
leads to the interior of the Premises at all times, except if otherwise
required by code or if Landlord or Tenant is performing work in the Utility
Room and require access to the Premises;  

            (iii) Tenant and Landlord agree to use commercially reasonable
efforts to avoid interference with the equipment of the other located in the
Utility Room, or in the case of Tenant, with the equipment of any other tenant
located in the Utility Room; and

            (iv) Tenant shall be permitted to segregate or lock up its
equipment in the Utility Room, at Tenant's sole cost and expense.        

Landlord agrees that the Expenses related to the square footage of the Utility
Room and the Fire Equipment Room shall be prorated among all tenants of the
Building based upon the square footage of each such tenant and that the square
footage of the Utility Room and the Fire Equipment Room existing on the Rent
Commencement Date shall be deleted from the square footage of the Premises for
purpose of calculating the Base Rent and Taxes for the Premises unless the
Premises shall be expanded by adding square footage from either room to the
Premises, in which event the added square footage shall remain as a portion of
the square footage of the Premises. 

     30.   LANDLORD'S RIGHT OF ENTRY.  Tenant shall permit Landlord, its
agents, employees and contractors to enter all parts of the Premises during
the normal business hours upon  prior notice to Tenant  (and in emergencies at
any time without notice) to inspect or exhibit the same, provided that
Landlord agrees to use its reasonable efforts not to unreasonably disturb
Tenant's conduct of business in the Premises. 

                                27
PAGE
<PAGE>
    31.    PARKING.  Landlord agrees to provide sixty (60)  unreserved spaces
and fifteen (15) designated as reserved spaces  for the parking of automobiles
in the area marked "PARKING A" on Exhibit E.  The designated as reserved
spaces shall  be designated as reserved parking for Tenant's officers and
visitors to Tenant's business.  In addition, in the area designated as
"PARKING B", Tenant shall be permitted to park automobiles in such designated
unreserved area, provided such parking does not interfere with ingress or
egress from the Building or the flow of traffic to and from the Building and
otherwise complies with the terms of this paragraph.  There shall be no
additional rent due to Landlord for such spaces.  Tenant shall comply with all
traffic, security, safety, other rules and regulations, covenants, conditions
and restrictions, governmental, otherwise or promulgated from time to time by
Landlord with regard to parking and shall use its unreserved spaces in common
with all other tenants of the Building.  Tenant shall indemnify and hold
harmless Landlord from and against all claims, losses, liabilities, damages,
costs and expenses (including, but not limited to, attorneys' fees and court
costs) arising or alleged to arise out of Tenant's use of any such parking
spaces.  In the event any of the above parking spaces are or become
unavailable at any time or from time to time throughout the Term, whether due
to casualty or any other cause except Landlord's conduct or misconduct, this
Lease shall continue in full force and effect; it being expressly agreed and
understood that Landlord shall have no duty to provide substitute parking
spaces for those spaces rendered unavailable.





                      SIGNATURE PAGE FOLLOWS

                                28
<PAGE>

    IN WITNESS WHEREOF, the parties hereto have executed this Lease in manner
sufficient to bind them as of the day and year first above written.


LANDLORD
- --------

THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA, a New Jersey corporation

By:    GRUBB & ELLIS MANAGEMENT SERVICES, INC.
       a Delaware corporation, its duly authorized agent

 
       By:/s/ Richard P. Prokp
          --------------------
    Name: Richard P. Prokp
                ----------------
          Its: Vice President
               --------------

TENANT
- ------

MICROPOINT, INC.,  a Delaware corporation



By:/s/ Douglas M. Odom
   -------------------
   Name: Douglas M. Odom
         ----------------
   Its: President
        ---------- 
                                29
<PAGE>

                            EXHIBIT A

                            FLOOR PLAN

                               A-1
<PAGE>

                            EXHIBIT B

                            WORKLETTER

Landlord shall provide the following:

1. A 1,200 amp, 480 volt, three phase power service to the electrical panel
for the Premises; and 

2. Dock levelers and shelters to two (2) overhead doors in the dock area of
the Premises as previously agreed to by Landlord and Tenant. 

                               B-1
<PAGE>


                            EXHIBIT C
                                 
                      RULES AND REGULATIONS


1.    No Tenant shall do or permit anything to be done in its premises or
bring or keep anything therein which will in any way increase the rate of fire
insurance on the Building, or on property kept therein, or obstruct or
interfere with the rights of other tenants, or in any way injure or annoy
them, or conflict with the laws relating to fire, or with any regulations of
the fire department, or with any insurance policy upon the Building or any
part thereof, or conflict with any rules or ordinances of the local Board of
Health or any governing bodies.

2.    No awning or other projection shall be attached to the outside walls of
the Building.  No curtains, blinds, shades or screens visible from the
exterior of the Premises shall be attached to or hung in, or used in
connection with any window or door of the Premises without the prior written
consent of Landlord.  Such curtains, blinds, shades, screens or other fixtures
must be of a quality, type, design and color and attached in the manner
approved in advance by Landlord.  Tenant shall neither place unsightly objects
against glass partitions or doors, nor cover any glass window or door with an
interior sign or signs.

3.    Tenant, its servants, employees, customers, invitees, and guests shall
not obstruct sidewalks, entrances, passages, corridors, vestibules or halls in
and about the Building which are used in common with other tenants and their
servants, employees, customers, guests and invitees, and which are not a part
of the Premises of Tenant.

4.    Tenant assumes full responsibility for protecting its space from theft,
robbery and pilferage; which includes keeping doors locked and other means of
entry to the Premises closed and secured after normal business hours.

5.    The water and wash closets, drinking fountains and other plumbing
fixtures shall not be used for any purpose other than those for which they
were constructed, and no sweepings, rubbish, rags, coffee grounds or other
substances shall be thrown therein.  All damages resulting from any misuse of
the fixtures shall be borne by the Tenant who, or whose servants, employees,
agents, visitors or licensees, shall have caused the same.  No person shall
waste water by interfering or tampering with the faucets or otherwise.

6.    Tenant shall keep Premises at a temperature sufficiently high to prevent
freezing of water pipes and fixtures.

                               C-1
<PAGE>

7.    The outside areas immediately adjoining the Premises, including
sidewalks, docks, dock and loading and delivery areas, shall be kept clean by
Tenant and Tenant shall not place or permit any obstructions, trash or
merchandise in such areas.

8.    The use of parking shall be subject to reasonable regulations as
Landlord may promulgate from time to time.  Tenant agrees that it will not use
more than its prescribed number of stalls or dock or loading or delivery areas
at any one time, and will not use or permit the use by its employees of the
parking area for the overnight storage of automobiles, or other vehicles or
equipment.  However, one truck or fully connected truck with trailer may be
parked overnight at each dock.  There will not be any assigned exclusive
parking spaces available to any tenant of the Building except with the prior
written consent of Landlord.  Tenant agrees that upon written notice from
Landlord, it will furnish to Landlord, within five (5) days from receipt of
such notice, the state automobile license numbers assigned to the automobiles
of Tenant and its employees.  Landlord shall not be liable for any vehicle of
Tenant or its employees that Landlord shall have towed when illegally parked. 
Landlord will not be liable for damage to vehicles in the parking areas or for
theft of vehicles, personal property from vehicles or equipment from vehicles. 
All vehicles shall use the driveways in accordance with designated traffic
patterns.

9.    Tenant will refer all contractors, contractors' representatives and
installation technicians rendering any service on or to the Premises for
Tenant to Landlord for Landlord's approval and supervision before performance
of any contractual service.  This provision shall apply to all work performed
in the Building, including but not limited to the installation of telephone
and telegraph equipment, electrical devices and attachments and installations
of any nature affecting floors, walls, woodwork, trim, windows, ceilings,
equipment or any other physical portion of the Building.  Landlord agrees to
deny or grant its approval within five (5) days of Landlord's receipt of a
request for approval from Tenant.  Landlord's approval hereunder shall not be
unreasonably withheld.   Such approval, if given, shall in no way make
Landlord a party to any contract between Tenant and any such contractor, and
Landlord shall have no liability therefor.

10.    Employees of the Building may at all times keep a pass key, and agents
of Landlord shall at all times be allowed reasonable admittance to the
Premises.

11.    No additional external locks shall be placed upon any doors without the
written consent of Landlord.  All keys to the Premises shall be furnished by
Landlord in a reasonable number commensurate with the square footage leased. 
Additional keys shall be furnished at Tenant's cost.  Upon termination of the
Lease, all keys shall be surrendered, and Tenant shall then give Landlord or
its agents explanation of the combination of all locks upon any doors or
vaults.

                               C-2
<PAGE>

12.    No electric heaters are allowed on the Premises without the prior
written consent of Landlord.

13.    Tenant shall place all trash and garbage in containers to be located as
directed by Landlord.  If excess trash accumulates, Tenant shall arrange for
special pickup.

14.    Tenant shall keep the Premises free and clear from rodents, bugs and
vermin, and will, at Tenant's sole cost and expense, use exterminating
services when so requested by Landlord.

15.    Tenant and its servants, employees, agents visitors and licensees shall
observe faithfully and comply strictly with the foregoing rules and
regulations and such other and further appropriate rules and regulations as
Landlord or its agent may from time to time adopt.  Landlord shall give
written notice of any additional rules and regulations.

16.    Landlord reserves the right at any time and from time to time as
reasonably necessary to rescind, alter or waive, in whole or in part, any of
these Rules and Regulations when it is deemed necessary, desirable or proper,
in Landlord's judgment, for its best interest or for the best interest of the
tenants of the Building.

17.    Tenant shall abide by all rules and regulations promulgated by the Salt
Lake International Center and its successors, including but not limited to all
recorded documents such as the Master Declaration of Easements, Covenants,
Conditions and Restrictions.

                               C-3
<PAGE>


                            EXHIBIT D

                     FORM OF LETTER OF CREDIT



                                                       ___________, 19____


The Prudential Insurance Company of America
c/o Prudential Real Estate Investors
8 Campus Drive
4th Floor - Arbor Circle South
Parsippany, NJ  07054-4493
Attn:  Mr. Chip Walters





Re:   IRREVOCABLE LETTER OF CREDIT
      Tenant's Name:
________________________________________________________________________ 
      TIC Loan Number:
________________________________________________________________________
      Property Address:
________________________________________________________________________

Dear _______:

   We hereby authorize you to draw on _________________________ for the
account of _________________________, up to those aggregate amounts shown on
Schedule 1 attached hereto and made a part hereof during the time periods
therein stated, available by your drafts at sight.  Partial drawings shall be
permitted.

   All drafts so drawn must be marked "drawn under Letter of Credit of
______________, No. _______________, dated _____________________, 19____."

   We engage with you and/or your transferees that all drafts drawn and
negotiated under and in compliance and conformity with the terms of this
Letter of Credit will be duly accepted and honored by us upon presentation at
this office on or before the close of business on ________________, 19___ 
(after which time this Letter of Credit will be null and void) and will be
honored on the Banking Day (as hereinafter defined) received if presented at
this office prior to 10:00 a.m.  All drafts presented at this office after
10:00 a.m. will be honored on the next 
                               D-1
<PAGE>

Banking Day.  For the purposes hereof, "Banking Day"' means a day of the year
on which banks in ____________________ 
are not required or authorized, by applicable law, to close.

   This Credit is transferable in its entirety (but not in part) to the
landlord (and its successors and assigns) under that certain Lease dated
___________________, 1998, by and between The Prudential Insurance Company of
America, as landlord, and Applicant, as tenant, for the lease of certain space
located at 635 North Billy Mitchell Road, Salt Lake City, Utah, as the same
may be amended or modified from time to time.

   This Credit shall automatically renew itself (subject to reduction in
amounts as hereinafter set forth) from year to year commencing on the first
anniversary of the date hereof, until the later of (x) the date which sixty
(60) full calendar months after the commencement date of the Lease; or (y) the
last day of the option term of the Lease , if the Lease shall be renewed,
unless and until the undersigned shall have given thirty (30) days' prior
written notice by certified mail, rerum receipt requested, to the Beneficiary
at its address set forth above, of the undersigned's intent not to renew this
Credit at the expiration of such thirty (30) day period.  During said thirty
(30) day notice period, this Credit shall remain in full force and effect and
Beneficiary may draw up to the full amount of the sum when accompanied by a
statement described in the second paragraph of this Credit.  The amount of
this Credit shall decline in accordance with Schedule 1 attached hereto,
provided Applicant is not in default of the Lease.

   We hereby engage with you that draft(s) drawn under and in compliance with
the terms of this Credit will be duly honored on presentation.

    This Credit sets forth in full the terms of our undertaking and such an
undertaking shall not in any way be modified or amplified by reference to any
documents, instruments or agreements referred to herein, or in which this
Credit is referred to or to which this Credit relates and any such reference
shall not be deemed to incorporate herein by reference any such documents,
instruments or agreements.

    Except as otherwise expressly stated hereinabove, this Letter of Credit is
subject to the "Uniform Customs and Practices for Documentary Credit (1994
Revision), International Chamber of Commerce Publication No. 500."

                                         Sincerely yours,

                                         By:_________________________ 
                                          Its:_______________________


                                         By:__________________________ 

                                             Secretary

                               D-2
<PAGE>

                            SCHEDULE 1
                           -----------

         Letter of Credit Issued by                 Bank
     in favor of The Prudential Insurance Company of America
                  dated                   , 1998


TIME PERIOD                                        AMOUNT OF 
                                                     LETTER
                                                    OF CREDIT
Commencement Date of Term through the twelfth 
(12th full calendar month of the Term               $50,000.00

Thirteenth (13th) full calendar month of the 
Term through the twenty-fourth (24th) full 
calendar month of the Term                          $40,000.00

Twenty-fifth (25th) full calendar month of 
the Term through the thirty-sixth (36th) full
calendar month of the Term                          $30,000.00

Thirty-seventh (37th) full calendar month of
the Term through the forty-eighth (48th) full 
calendar month of the Term                          $20,000.00

Forty-ninth (49th) full calendar month of the
Term through the sixtieth (60th) full calendar
month of the Term                                   $10,000.00

If the Lease is renewed, the sixty-first (61st) 
full calendar month of the Term through the
seventy-second (72nd) full calendar month of 
the Term                                            $10,000.00

If the Lease has been renewed, the seventy-third
(73rd) full calendar month of the Term through
the eighty-fourth (84th) full calendar month
of the Term                                         $10,000.00

If the Lease has been renewed, the eight-Fourth
(84th) full calendar month of the Term through
to Expiration Date                                  $10,000.00

                               D-3
<PAGE>



                            EXHIBIT E

                           PARKING PLAN


                  SALT LAKE INTERNATIONAL CENTER
       635 North Billy Mitchell Road. Salt Lake City, Utah

              <Diagram of parking plan appears here>

<TABLE> <S> <C>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATMENTS.
</LEGEND>
       
<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1998
<PERIOD-END>                               DEC-31-1998
<CASH>                                         657,775
<SECURITIES>                                         0
<RECEIVABLES>                                  451,156
<ALLOWANCES>                                    90,721
<INVENTORY>                                     42,691
<CURRENT-ASSETS>                             2,776,287
<PP&E>                                       1,273,326
<DEPRECIATION>                                 387,858
<TOTAL-ASSETS>                               4,051,458
<CURRENT-LIABILITIES>                          458,311
<BONDS>                                              0
                                0
                                          0
<COMMON>                                        17,215
<OTHER-SE>                                   3,575,932
<TOTAL-LIABILITY-AND-EQUITY>                 4,051,458
<SALES>                                      1,202,394
<TOTAL-REVENUES>                             1,915,628
<CGS>                                          819,931
<TOTAL-COSTS>                                3,335,533
<OTHER-EXPENSES>                                17,157
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                            (2,222,323)
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                        (2,222,323)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                               (2,222,323)
<EPS-PRIMARY>                                    (.16)
<EPS-DILUTED>                                    (.16)
        

</TABLE>


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