<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q


[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the quarterly period ended      DECEMBER 31, 2004
         -----------------------------------------------------

         OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

               Commission File Number:                1-12362

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

DELAWARE                                    #33-0539168
--------------------------------------------------------------------------------
(State or other jurisdiction of             (I.R.S. Employer
incorporation or organization)              Identification Number)

1205 South Dupont Street, Ontario, CA                                 91761
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)                             (Zip Code)

         (909) 418-3000
--------------------------------------------------------------------------------
Registrant's Telephone Number, Including Area Code

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

[X] Yes     [ ] No

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12B-2 of the Exchange Act).

[ ]Yes      [X] No

As of February 10, 2005 there were 102,091,121 shares of the registrant's Common
Stock, $0.001 par value per share outstanding.



<PAGE>

<TABLE>
<S>   <C>
                                                                        2004 - LIFEPOINT, INC.
                                                       For The Quarter Ended December 31, 2004


INDEX
-----

PART I -  FINANCIAL INFORMATION

         o   ITEM 1 - FINANCIAL STATEMENTS.................................................. 3

         o   BALANCE SHEETS AT DECEMBER 31, 2004 (UNAUDITED) AND MARCH 31, 2004 ............ 3

         o   STATEMENTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED
               DECEMBER 31, 2004 AND 2003 (UNAUDITED)....................................... 4

         o   STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS AND NINE MONTHS ENDED
               DECEMBER 31, 2004 AND 2003 (UNAUDITED)....................................... 5

         o   NOTES TO FINANCIAL STATEMENTS ................................................. 6

         o   ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
               AND RESULTS OF OPERATIONS.................................................... 20

         o   ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK............. 26

         o   ITEM 4 - CONTROLS AND PROCEDURES .............................................. 26

PART II -  OTHER INFORMATION

         o   ITEM 1 - LEGAL PROCEEDINGS .................................................... 27

         o   ITEM 2- UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS............ 27

         o   ITEM 3 - DEFAULTS UPON SENIOR SECURITIES....................................... 27

         o   ITEM 4- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................... 28

         o   ITEM 5- OTHER INFORMATION...................................................... 28

         o   ITEM 6 -EXHIBITS AND REPORTS ON FORM 8-K ...................................... 28


                                              2
</TABLE>


<PAGE>

<TABLE>
                                                   PART I
                                           FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
                                              LIFEPOINT, INC.
                                               BALANCE SHEETS


                                                                            DECEMBER 31,        MARCH 31,
                                                                                2004              2004
                                                                            -------------     -------------
                                                                             (unaudited)         (audited)
<S>                                                                         <C>               <C>
Current assets:
  Cash and cash equivalents                                                 $  2,190,606      $  3,710,761
  Accounts receivable                                                             52,357            65,650
  Inventory, net of allowance for excess inventory of $1,346,529
    at December 31, 2004 and $1,096,571 at March 31, 2004                      2,443,018         2,309,343
  Prepaid expenses and other current assets                                      292,452           245,918
                                                                            -------------     -------------
          Total current assets                                                 4,978,433         6,331,672

Property and equipment, net                                                    1,369,753         1,881,826

Patents and other assets, net                                                    568,242           595,673
                                                                            -------------     -------------
                                                                            $  6,916,428      $  8,809,171
                                                                            =============     =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                          $    685,425      $    976,581
  Accrued expenses                                                               720,393         1,030,848
  Notes payable -short-term vendors                                              121,442           134,356
  Note payable -bank                                                                  --           160,650
  Capital lease - short-term                                                       5,667                --
                                                                            -------------     -------------
          Total current liabilities                                            1,532,927         2,302,435
  Long-term liabilities                                                           59,497           151,734
                                                                            -------------     -------------
Total liabilities                                                              1,592,424         2,454,169
Commitments and contingencies (Note 6)

Stockholders' equity:
  Preferred stock, Series C 10% Cumulative Convertible, $.001
    par value, 600,000 shares authorized, 0 and 377,434 outstanding at
    December 31, 2004 and  March 31, 2004, respectively                               --               377
  Preferred stock,Series D 6% Cumulative Convertible, $.001
    par value, 15,000 shares authorized, 8,872 and 9,584 outstanding at
    December 31, 2004 and March 31, 2004, respectively                                 9                 9
  Preferred stock, Series E 5% Cumulative Convertible, $.001
    par value, 4,000 shares authorized, 4,000 and 0 outstanding
    at December 31, 2004 and March 31, 2004, respectively                              4                --
  Common Stock, $.001 par value; 350,000,000 shares authorized,
    97,040,860 and 57,037,597 shares issued and outstanding
    at December 31, 2004 and March 31, 2004, respectively                         97,041            57,039
  Additional paid-in capital                                                  89,010,685        78,231,867
  Dividends payable in common stock                                              772,755         1,354,847
  Accumulated deficit                                                        (84,556,490)      (73,289,137)
                                                                            -------------     -------------
           Total stockholders' equity                                          5,324,004         6,355,002
                                                                            -------------     -------------
Total liabilities and stockholders' equity                                  $  6,916,428      $  8,809,171
                                                                            =============     =============

                  The accompanying notes are an integral part of the financial statements.


                                                     3
</TABLE>


<PAGE>

<TABLE>
                                                         LIFEPOINT, INC.
                                                    STATEMENTS OF OPERATIONS


                                                                       (UNAUDITED)                        (UNAUDITED)
                                                                         FOR THE                            FOR THE
                                                                   THREE MONTHS ENDED                  NINE MONTHS ENDED
                                                                      DECEMBER 31                         DECEMBER 31
                                                             -------------------------------------------------------------------
                                                                 2004              2003              2004              2003
                                                             -------------     -------------     -------------     -------------
<S>                                                               <C>               <C>             <C>                 <C>
Revenues                                                     $      5,836      $         --      $     81,904      $    (18,500)

Costs and expenses:
  Cost of goods sold                                              966,466                --         2,559,301                --
  Research and development                                        389,235         1,032,061         1,570,958         2,556,230
  Selling and marketing                                           414,913           173,489         1,110,432           419,967
  General and administrative                                      710,350           587,387         1,599,965         1,628,735

                                                             -------------     -------------     -------------     -------------
    Total costs and expenses from operations                    2,480,964         1,792,937         6,840,656         4,604,932
                                                             -------------     -------------     -------------     -------------
Loss from operations                                           (2,475,128)       (1,792,937)       (6,758,752)       (4,623,432)

Interest income                                                     4,617               590             8,704            16,656
Interest expense                                                 (576,501)               --          (578,432)         (323,140)
Discount on settlement of trade payables                            3,694             3,558           203,743           727,171
                                                             -------------     -------------     -------------     -------------

   Total other income (expense)                                  (568,190)            4,148          (365,985)          420,687
                                                             -------------     -------------     -------------     -------------

Net loss                                                       (3,043,318)       (1,788,789)       (7,124,737)       (4,202,745)
Income Taxes                                                          800                --               800                --
Less preferred dividends                                        3,871,778           524,531         4,141,817         7,745,427
                                                             -------------     -------------     -------------     -------------

Loss applicable to common shareholders                       $ (6,915,896)     $ (2,313,320)     $(11,267,354)     $(11,948,172)
                                                             =============     =============     =============     =============

Loss applicable to common shareholders per common share:
  Weighted average common shares
   outstanding - basic and assuming dilution                   96,319,203        42,122,394        84,297,764        39,135,182
                                                             =============     =============     =============     =============

Basic and diluted net loss per share
    applicable to common shareholders                        $      (0.07)     $      (0.05)     $      (0.13)     $      (0.31)
                                                             =============     =============     =============     =============

                            The accompanying notes are an integral part of the financial statements.


                                                               4
</TABLE>


<PAGE>

<TABLE>
                                              LIFEPOINT, INC.
                                          STATEMENTS OF CASH FLOWS
(UNAUDITED)


                                                                     For the nine months ended December 31,
                                                                     --------------------------------------
                                                                         2004                      2003
                                                                     -------------            -------------
<S>                                                                  <C>                      <C>
OPERATING ACTIVITIES
Net loss                                                             $(11,267,354)            $(11,948,172)
Adjustments to reconcile net loss to net cash used by
  operating activities:
    Depreciation and amortization                                         560,912                  532,545
    Expense of warrant valuation                                        3,709,203                7,745,427
    Valuation expense of warrants re-priced                               575,742                       --
    Dividend expense for accrued dividends                                432,614                       --
    Amortization of debt discount                                              --                  166,000
    Provision of income taxes                                                (800)                      --
    Loan fees on note payable                                                  --                  416,633
    Changes in operating assets and liabilities:
       Accounts receivable                                                 13,293                       --
       Inventories                                                       (133,675)                 (44,315)
       Prepaid expenses and other current assets                          (46,534)                 (79,856)
       Other assets                                                       110,534                  (88,602)
       Accounts payable                                                  (291,156)              (1,336,653)
       Accrued expenses                                                   (70,455)                 779,492
                                                                     -------------            -------------
Net cash used by operating activities                                  (6,407,676)              (3,857,501)
INVESTING ACTIVITIES
Capitalization of patent costs                                           (117,188)                      --
Purchases / (adjustments) of property and equipment                       (14,754)                  (5,976)
                                                                     -------------            -------------
Net cash used by investing activities                                    (131,942)                  (5,976)
FINANCING ACTIVITIES
Sale of preferred stock                                                 3,700,000                7,777,993
Expenses of preferred stock offering                                     (253,213)                (608,326)
Exercise of warrants                                                    1,772,810                  144,991
Proceeds from note payable                                                     --                  690,000
Payments on note payable                                                  (21,818)                 (13,915)
Proceeds from note payable                                                297,758                       --
Purchase in capital lease                                                   9,576                       --
Payments on note payable-bank                                            (160,650)                      --
Payments on capital leases                                               (325,000)                (330,952)
                                                                     -------------            -------------
Net cash provided by financing activities                               5,019,463                7,659,791
                                                                     -------------            -------------
Increase/(decrease) in cash and cash equivalents                       (1,520,155)               3,796,314
Cash and cash equivalents at beginning of period                        3,710,761                   75,588
                                                                     -------------            -------------
Cash and cash equivalents at end of period                           $  2,190,606             $  3,871,902
                                                                     =============            =============
SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION:
Cash paid for interest                                               $      2,690             $    157,150
                                                                     =============            =============
NON-CASH FINANCING ACTIVITIES:
                                                                     =============            =============
    Value of common stock issued as dividends on preferred stock     $    432,614             $  1,006,370
                                                                     =============            =============
      Conversion of accounts payable to long term notes              $         --             $    255,595
                                                                     =============            =============

                  The accompanying notes are an integral part of the financial statements.


                                                     5
</TABLE>


<PAGE>

                                 LIFEPOINT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)


NOTE 1 - BASIS OF PRESENTATION

ORGANIZATION AND BUSINESS

         LifePoint, Inc. ("LifePoint" or the "Company") developed and
manufactures and markets the IMPACT(R) TEST SYSTEM - a rapid diagnostic testing
and screening device for use in the workplace, home health care, ambulances,
pharmacies and law enforcement. LifePoint was incorporated on October 8, 1992
under the laws of the State of Delaware as a wholly-owned subsidiary of
Substance Abuse Technologies, Inc. ("SAT"). On October 29, 1997, SAT sold its
controlling stockholder interest in the Company and, on February 25, 1998, the
Company's name was changed to "LifePoint, Inc."

BASIS OF PRESENTATION

         In the opinion of LifePoint, the accompanying unaudited financial
statements reflect all adjustments (which include only normal recurring
adjustments except as disclosed below) necessary to present fairly the financial
position, results of operations and cash flows for the periods presented.
Results of operations for interim periods are not necessarily indicative of the
results of operations for a full year due to external factors that are beyond
the control of the Company. This Report should be read in conjunction with the
Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2004
(the "Annual Report").

         The Company's financial statements included herein have been prepared
on a going concern basis, which contemplates the realization of assets and the
settlement of liabilities and commitments in the normal course of business for
the foreseeable future.

         The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America,
which contemplate continuation of the Company as a going concern. However,
during the year ended March 31, 2004, the Company incurred a net loss of
$7,012,873, and it had negative cash flows from operations of $6,972,069. In
addition, the Company had an accumulated deficit of $73,289,137 as of March 31,
2004. These factors raise substantial doubt about the Company's ability to
continue as a going concern.

         The Company will try to obtain capital needed for its operations from a
variety of possible sources. First, the Company has generated cash over the last
four quarters by obtaining a significant number of early exercises of the
warrants issued in connection with the Company's private placement of Series D
Convertible Preferred Stock. These have provided approximately $2.0 million in
capital to the Company without any further dilution. In addition, during the
quarter ended December 31, 2004, the Company raised $4 million in Series E
Preferred Stock through a private placement. The Company expects to obtain
additional capital through additional exercises of warrants. Additionally, the
Company expects to be able to establish and use the traditional commercial
capital sources including capital lease lines, working capital lines,
international (a source of revenues) factoring, and leases for customer
purchases of IMPACT Test Systems. These may reduce capital requirements for the
Company. Additionally, the Company expects to achieve sales revenue, which over
the year, may reduce the cash requirements of the Company. Lastly, if other
sources fail, and the Company needs additional capital, the Company will attempt
to raise the capital shortfall through equity or debt financing.


                                       6


<PAGE>

                                 LIFEPOINT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)


USE OF ESTIMATES

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

RECLASSIFICATIONS

         Certain amounts included in the prior quarter's financial statements
have been reclassified to conform with the current quarter's presentation. Such
reclassifications did not have any effect on reported net loss.

CASH AND CASH EQUIVALENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

         LifePoint considers all highly liquid cash investments with an original
maturity of three months or less when purchased to be cash equivalents. The
carrying amount of all cash and cash equivalents approximates fair value because
of the short-term maturity of these instruments.

PROPERTY AND EQUIPMENT

         Property and equipment is stated at cost. Depreciation is computed by
the straight-line method over the estimated useful lives of the related assets
that range from three to seven years. Expenditures for maintenance and repairs
are charged to expense as incurred whereas major betterments and renewals are
capitalized. Property and equipment under capital leases are included with
property and equipment and amortization of these assets are included in
depreciation expense. Depreciation expense for the years ended March 31, 2004,
2003 and 2002 was $688,612, $622,907 and $516,021 respectively. Depreciation
expense for the nine months ended December 31, 2004 was $526,827.

PATENTS

         The cost of patents is being amortized over their expected useful
lives, which is generally 17 years. At December 31, 2004 accumulated
amortization of patents was $107,893. At March 31, 2004, 2003 and 2002,
accumulated amortization of patents was approximately $74,000, $37,000 and
$22,000, respectively. During the nine months ended December 31, 2004, $117,188
in patent costs was incurred. For the years ended March 31, 2004, 2003, and 2002
additional patent costs were approximately $0, $61,000 and $160,000,
respectively.

IMPAIRMENT OF LONG LIVED ASSETS

         In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", if
indicators of impairment exist, the Company assesses the recoverability of the
affected long-lived assets by determining whether the carrying value of such
assets can be recovered through the undiscounted future operating cash flows. If
impairment is indicated, the Company measures the amount of such impairment by
comparing the carrying value of the asset to the present value of the expected
future cash flows associated with the use of the asset. While the Company's
current and historical operating and cash flow losses are indicators of
impairment, the Company believes the future cash flows to be received from the
long-lived assets will exceed the assets' carrying value, and accordingly, the
Company has not recognized any impairment losses through December 31, 2004.


                                       7


<PAGE>

                                 LIFEPOINT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)

RESEARCH AND DEVELOPMENT COSTS

            Research and development costs are expensed as incurred.

INVENTORIES

         Inventories are priced at the lower of cost or market using the
first-in, first-out method. The Company maintains a reserve for estimated
obsolete or excess inventories that is based on the Company's estimate of future
sales. A substantial decrease in expected demand for the Company's products, or
decreases in the Company's selling prices could lead to excess or overvalued
inventories and could require the Company to substantially increase its
allowance for excess inventories.

DIVIDENDS

        During the quarter ended December 31, 2004, the Company accrued a
dividend expense of $162,575 for the equivalent of 812,875 shares of its common
stock related to its Series D and Series E Preferred Stock. During the nine
months ended December 31, 2004, the Company has accrued a dividend expense of
$432,614 on its Series D and Series E Preferred Stock. During the quarter ended
June 30, 2004, the Company's Series C Preferred Stock had a mandatory conversion
on June 20, 2004. Based on this conversion, 3,264,096 shares of common stock
were paid as premium shares to the holders of the Series C Preferred Stock. In
addition, $3,709,203 of dividend expense was recorded based on the valuation of
the 20,000,000 warrant shares, the valuation of the 870,000 placement agent
warrant shares and the beneficial conversion feature related to the Series E
Preferred Stock.

REVENUE RECOGNITION

         The majority of the Company's revenue is from sales of the IMPACT Test
System, which launched at the end of fiscal year 2002. The Company recognizes
revenue in the period in which cash is received for products shipped, title
transferred and acceptance and other criteria are met in accordance with the
Staff Accounting Bulletin No. 104, "Revenue Recognition" ("SAB 104"). SAB 104
provides guidance on the recognition, presentation and disclosure of revenue in
financial statements. While the Company believes it has met the criteria of SAB
104, due to delays in receiving payments on some of the Company's initial
shipments of products, the Company elected, during the quarter ended December
31, 2002 and going forward, to record revenue related to shipments only to the
extent the related cash had been collected, as amended by SAB 104. At December
31, 2004, the Company had $56,400 in product shipments to customers that are
subject to customer evaluations and acceptance. These product shipments are
included in finished goods inventory at cost and as such have not been
recognized in revenue.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

         The Company records an allowance for doubtful accounts for estimated
losses resulting from the inability of its customers to make required payments.
If the financial condition of the Company's customers or distribution partners
were to deteriorate, resulting in an impairment of their ability to make
payments, additional allowances may be required. As of December 31, 2004, the
Company has not recorded an allowance for doubtful accounts as the Company
believes the accounts receivable are fully collectible.

STOCK-BASED COMPENSATION

         The Company measures compensation expense for its employee stock-based
compensation using the intrinsic value method and provides pro forma disclosures
of net loss as if the fair value methods had been applied in measuring
compensation expense. Under the intrinsic value method, compensation cost for
employee stock awards is recognized as the excess, if any, of the deemed fair
value for financial reporting purposes of the Company's common stock on the date
of grant over the amount an employee must pay to acquire the stock.


                                       8


<PAGE>

                                 LIFEPOINT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)

         Pro forma information regarding net income is required by SFAS No. 123,
"Accounting for Stock-Based Compensation", and has been determined as if the
Company had accounted for its employee stock options under the fair value method
of SFAS No. 123. The fair value for these options was estimated at the date of
grant using the "Black-Scholes" option pricing model with the following
weighted-average assumptions for the years ended March 31, 2004, 2003 and 2002:
risk-free interest rates ranging from 3% to 6%; dividend yield of 0%; volatility
ranging from 60% to 150% and a weighted-average expected life of the options of
ten years.

         For purposes of adjusted pro forma disclosures, the estimated fair
value of the options is amortized to expense over the vesting period. The
Company's adjusted pro forma information is as follows:

<TABLE>
                                           Years ended March 31,
                                               2004               2003              2002
                                           -------------     -------------     -------------
<S>                                        <C>               <C>               <C>
Loss applicable to common stockholders     $(15,231,597)     $(18,418,601)     $(13,592,801)
Stock-based employee compensation
   expense determined under fair value
   presentation for all options                (615,635)       (1,777,179)       (1,547,995)
                                           -------------     -------------     -------------

Pro forma net loss                         $(15,847,232)     $(20,195,780)     $(15,140,796)
                                           =============     =============     =============

</TABLE>

         Deferred compensation for options granted to non-employees has been
determined in accordance with SFAS No. 123 and Emerging Issues Task Force
("EITF") No. 96-18, "Accounting for Equity Instruments that are Issued to Other
than Employees for Acquiring, or in Conjunction with Selling, Goods or Services"
as the fair value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measured. Deferred charges for
options granted to non-employees are periodically remeasured as the underlying
options vest.

BASIC AND DILUTED NET LOSS PER SHARE

         Basic and diluted net loss per share is based upon the weighted average
number of common shares outstanding during the periods reported. Common stock
equivalents have not been included in this calculation because their inclusion
would be anti-dilutive. As of December 31, 2004, the Company had outstanding
115,863,570 warrants, 5,885,652 options, 44,360,000 common shares issuable upon
conversion of Series D Convertible Preferred Stock, 20,000,000 common shares
issuable upon conversion of Series E Convertible Preferred Stock, and 4,015,754
dividends payable, collectively these securities would have converted into
190,124,976 shares of common stock.

COMPREHENSIVE INCOME

         The Company has adopted SFAS No. 130, "Reporting Comprehensive Income",
which requires that all components of comprehensive income, including net
income, be reported in the financial statements in the period in which they are
recognized. Comprehensive income is defined as the change in equity during a
period from transactions and other events and circumstances from non-owner
sources. Net income and other comprehensive income, including foreign currency
translation adjustments and unrealized gains and losses on investments, shall be
reported, net of their related tax effect, to arrive at comprehensive income.
Comprehensive loss for the years ended March 31, 2004, 2003 and 2002 did not
differ from net loss.


                                       9


<PAGE>

                                 LIFEPOINT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)

INCOME TAXES

         LifePoint accounts for income taxes under SFAS No. 109, ACCOUNTING FOR
INCOME TAXES. In accordance with SFAS No. 109, deferred tax assets and
liabilities are established for the temporary differences between the financial
reporting basis and the tax basis of the Company's assets and liabilities at
enacted tax rates expected to be in effect when such amounts are realized or
settled. The Company provides a valuation allowance against net deferred tax
assets unless, based upon the available evidence, it is more likely than not
that the deferred tax asset will be realized.

NEW ACCOUNTING PRONOUNCEMENTS

         In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement
133 on Derivative Instruments and Hedging Activities." SFAS No. 149 amends and
clarifies accounting and reporting for derivative instruments and hedging
activities under SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities." SFAS No. 149 is effective for derivative instruments and
hedging activities entered into or modified after June 30, 2003, except for
certain forward purchase and sale securities. For these forward purchase and
sale securities, SFAS No. 149 is effective for both new and existing securities
after June 30, 2003. Management does not expect adoption of SFAS No. 149 to have
a material impact on the Company's statements of earnings, financial position,
or cash flows.

         In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." SFAS
No. 150 establishes standards for how an issuer classifies and measures in its
statement of financial position certain financial instruments with
characteristics of both liabilities and equity. In accordance with the standard,
financial instruments that embody obligations for the issuer are required to be
classified as liabilities. SFAS No. 150 will be effective for financial
instruments entered into or modified after May 31, 2003 and otherwise will be
effective at the beginning of the first interim period beginning after June 15,
2003. This statement did not have any material impact on the financial
statements

         In December 2003, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin (SAB) No. 104, "Revenue Recognition" (SAB 104). SAB
104 updates portions of the interpretive guidance included in Topic 13 of the
codification of the Staff Accounting Bulletins in order to make this
interpretive guidance consistent with current authoritative accounting and
auditing guidance and SEC rules and regulations. The Company believes it is
following the guidance of SAB 104, and the issuance of SAB 104 did not have a
material impact on the Company's financial position or results of operations.

         In November 2004, the FASB issued SFAS No. 151,"Inventory Costs". SFAS
No. 151 amends the accounting for abnormal amounts of idle facility expense,
freight, handling costs, and wasted material (spoilage) under the guidance in
ARB No. 43, Chapter 4, "Inventory Pricing". Paragraph 5 of ARB No. 43, Chapter
4, previously stated that ". . . under some circumstances, items such as idle
facility expense, excessive spoilage, double freight, and re-handling costs may
be so abnormal as to require treatment as current period charges. . . ." This
statement requires that those items be recognized as current-period charges
regardless of whether they meet the criterion of "so abnormal." In addition,
this statement requires that allocation of fixed production overheads to the
costs of conversion be based on the normal capacity of the production
facilities. This statement is effective for inventory costs incurred during
fiscal years beginning after June 15, 2005. Management does not expect adoption
of SFAS No. 151 to have a material impact, if any, on the Company's financial
position or results of operations.

         In December 2004, the FASB issued SFAS No. 152, "Accounting for Real
Estate Time-Sharing Transactions". The FASB issued this statement as a result of
the guidance provided in AICPA Statement of Position (SOP) 04-2, "Accounting for
Real Estate Time-Sharing Transactions". SOP 04-2 applies to all real estate
time-sharing transactions. Among other items, the SOP provides guidance on the
recording of credit losses and the treatment of selling costs, but does not
change the revenue recognition guidance in SFAS No. 66, "Accounting for Sales of
Real Estate", for real estate time-sharing transactions. SFAS No. 152 amends
Statement No. 66 to reference the guidance provided in SOP 04-2. SFAS No. 152


                                       10


<PAGE>

                                 LIFEPOINT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)


also amends SFAS No. 67, "Accounting for Costs and Initial Rental Operations of
Real Estate Projects", to state that SOP 04-2 provides the relevant guidance on
accounting for incidental operations and costs related to the sale of real
estate time-sharing transactions. SFAS No. 152 is effective for years beginning
after June 15, 2005, with restatements of previously issued financial statements
prohibited. Management does not expect adoption of SFAS No. 152 to have a
material impact, if any, on the Company's financial position or results of
operations. In December 2004, the FASB issued SFAS No. 153, "Exchanges of
Non-monetary Assets," an amendment to Opinion No. 29, "Accounting for
Nonmonetary Transactions". SFAS No. 153 eliminates certain differences in the
guidance in Opinion No. 29 as compared to the guidance contained in standards
issued by the International Accounting Standards Board. The amendment to Opinion
No. 29 eliminates the fair value exception for nonmonetary exchanges of similar
productive assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance. Such an exchange has
commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. SFAS No. 153 is effective for
nonmonetary asset exchanges occurring in periods beginning after June 15, 2005.
Earlier application is permitted for nonmonetary asset exchanges occurring in
periods beginning after December 16, 2004. Management does not expect adoption
of SFAS No. 153 to have a material impact, if any, on the Company's financial
position or results of operations.

         In December 2004, the FASB issued SFAS No. 123(R), "Share-Based
Payment". SFAS 123(R) amends SFAS No. 123, "Accounting for Stock-Based
Compensation", and APB Opinion No. 25, "Accounting for Stock Issued to
Employees". SFAS No.123(R) requires that the cost of share-based payment
transactions (including those with employees and non-employees) be recognized in
the financial statements. SFAS No. 123(R) applies to all share-based payment
transactions in which an entity acquires goods or services by issuing (or
offering to issue) its shares, share options, or other equity instruments
(except for those held by an ESOP) or by incurring liabilities (1) in amounts
based (even in part) on the price of the company's shares or other equity
instruments, or (2) that require (or may require) settlement by the issuance of
a company's shares or other equity instruments. This statement is effective (1)
for public companies qualifying as SEC small business issuers, as of the first
interim period or fiscal year beginning after December 15, 2005, or (2) for all
other public companies, as of the first interim period or fiscal year beginning
after June 15, 2005, or (3) for all nonpublic entities, as of the first fiscal
year beginning after December 15, 2005. Management is currently assessing the
impact of this statement on its financial position and results of operations.


2.       INVENTORY

         Inventory is summarized as follows:

                                             December 31,       March 31,
                                                 2004             2004
                                             ------------     ------------
         Raw materials                       $ 2,734,968      $ 2,995,162
         Work in process                         495,072          247,645
         Finished goods                          559,507          163,107
                                             ------------     ------------
                                               3,789,547        3,405,914
         Less:  inventory reserve              1,346,529        1,096,571
                                             ------------     ------------
                                             $ 2,443,018      $ 2,309,343
                                             ============     ============

Finished goods inventory includes finished goods in customers' hands prior to
receipt of payment.


                                       11


<PAGE>

<TABLE>
                                              LIFEPOINT, INC.
                                       NOTES TO FINANCIAL STATEMENTS
                                             DECEMBER 31, 2004
                                                (UNAUDITED)


3.       PROPERTY AND EQUIPMENT

         Property and equipment is summarized as follows:

                                                             Estimated        December 31,      March 31,
                                                             Useful Lives        2004             2004
                                                                              ------------    ------------
<S>                                                          <C>              <C>             <C>
         Furniture and fixtures                              3 - 7 years      $ 2,820,834     $ 3,007,848
         Test equipment                                      5 - 7 years           26,489         451,940
         Leasehold improvements                              3 - 5 years        1,372,966       1,372,966
                                                                             ------------    ------------
                                                                                4,220,289       4,832,754
         Less:  accumulated depreciation and amortization                       2,850,536       2,950,928
                                                                              ------------    ------------
                                                                              $ 1,369,753     $ 1,881,826
                                                                              ============    ============

</TABLE>

         During the three months ending December 31, 2004, $627,219 of assets
were retired. The assets were fully depreciated resulting in no gain or loss.

4.       DEBT

         On November 12, 2002, the Company entered into a convertible loan
agreement with a current investor to provide additional working capital. The
maximum loan commitment was $10.0 million, which was to have been drawn as
needed over the 30-month life of the agreement, subject to limitations. The
$10.0 million maximum commitment was made up of $2.5 million initially available
and a $7.5 million balance that was to have been available following a
successful due diligence review by the lender. The lender notified the Company
on January 29, 2003 that they were exercising their right not to extend the $7.5
million additional funding. The $2.5 million commitment was advanced to the
Company in November 2002 and bore interest at sixteen percent (16%) of which six
percent (6%) was due in cash on a quarterly basis and ten percent (10%) in cash
at maturity. On September 23, 2003, concurrent with the second closing of the
Company's private placement of Series D Preferred Stock, the convertible loan
principal, debt discount, and accrued interest totaling $1,935,750 was converted
into 2,712 shares of Series D Preferred Stock. Prior to the conversion, the
Company issued to the lender a warrant with an exercise price of $3.00 per share
and a term of five years to purchase up to 1.5 million shares of common stock.
The loan was collateralized by the assets of the Company. The estimated fair
value of the warrants of $1,035,000 was recorded as debt discount and was based
on the Black-Scholes valuation model with the following assumptions: dividend
yield of 0%; expected volatility of 60%; risk-free interest rate of 4.5%; and a
term of five years. During the years ended March 31, 2004 and 2003, the Company
recorded $103,500 and $155,250 respectively, to interest expense as amortization
of debt discount. The Company believed that the carrying value of this note
approximated the fair value as the note was at prevailing market interest rates.
In addition to the collateralized interest, the agreement calls for achievement
of certain revenue and expense based milestones by the Company starting at March
31, 2003 and continuing on a quarterly basis thereafter. Failure to achieve
these milestones could have resulted in the issuance of additional five year
warrants to purchase 25,000 shares of common stock also with an exercise price
of $3.00 per share. At March 31, 2004 the Company had issued warrants to
purchase 25,000 shares of common stock as a result of missing certain of the
milestones. The warrants were valued at $8,000 based upon the Black-Scholes
valuation model with the following assumptions: dividend yield of 0.0%; expected
volatility of 121%; risk free interest rate of 3.0% and an expected life of 5
years.

         On December 30, 2002 the Company entered into a Promissory Note with a
vendor for services rendered to the Company amounting to $162,394. No interest
is due under the terms of the note which is payable though the period ending
January 31, 2005. At December 31, 2004, $60,047 is outstanding under the note.
In addition, during the period ending September 30, 2003, the Company reached
agreement with a number of its vendors to extend payment terms on outstanding
accounts payable resulting in notes payable of $118,086 at December 31, 2004.


                                       12


<PAGE>

                                 LIFEPOINT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)


         On February 19, 2003, the Company entered into a Note and Warrant
Purchase Agreement with an investor to provide additional working capital. The
Company borrowed approximately $1,120,000 under the agreement. On September 23,
2003, concurrent with the second closing of the Series D Preferred Stock
financing, the loan principal, debt discount, and accrued interest and fees
totaling $1,385,040 was converted into 1,544 shares of Series D Preferred Stock.
Borrowings under the loan bore interest at 3% per annum. Prior to the
conversion, the Company issued the lender a warrant with an exercise price of
$3.00 per share and a term of five years to purchase 1,120,000 shares of common
stock. The estimated fair value of the warrants of $286,000 was recorded as debt
discount and was based on the Black-Scholes valuation model with the following
assumptions: dividend yield of 0%; expected volatility of 121%; risk-free
interest rate of 3.0%; and a term of five years. During the years ended March
31, 2004 and 2003, the Company recorded $62,500 and $45,758 to interest expense
as amortization of debt discount.

         On December 18, 2003 the Company secured a loan with its lending
institution for $196,350 for general business purposes. The loan accrues
interest at a rate of 3.25% and is subject to monthly payments of $17,850 until
the maturity date of November 15, 2004. This loan was secured by a time deposit
made by the Company for $196,350 that matures on November 15, 2004. The loan was
paid off in full in December 2004.

         On November 15, 2004 the Company finalized a Convertible Note and
Warrant Purchase Agreement (the "Note"), with an investment fund. The Note was
converted into the Company's Series E Preferred Stock as part of the $4 million
Series E private placement. The Note provided $300,000 to the Company that was
used for operating activities, in exchange for the re-price of the investments
funds' 19,000,000 outstanding warrant shares from $0.50 each share to $0.40 each
share and the extension of an additional five years to the expiration date of
these warrant shares. A valuation adjustment of $575,742 was recorded as
interest expense during the quarter ended December 31, 2004.

5.       STOCKHOLDERS' EQUITY

SERIES B PREFERRED STOCK

         On March 29, 2001, the Company sold an aggregate of 75,000 shares of
the Company's Series B 20% Cumulative Convertible Preferred Stock, $.001 par
value (the "Series B Preferred Stock"). Each share was entitled to one vote and
was convertible into 10 shares of the Company's common stock. Dividends were
cumulative and payable annually at a rate of $0.20 per share in year one, $0.24
per share in year two, $0.288 per share in year three and $2.40 per share
thereafter. The dividends were payable in shares of Series B Preferred Stock for
the first three years after the date of original issuance and in shares of
common stock thereafter. The Series B Preferred Stock had preference in
liquidation over all other forms of capital stock of the Company at a rate of
$40 per share plus all accrued and unpaid dividends.

         Each holder of the Series B Preferred Stock was granted a common stock
purchase warrant expiring March 28, 2006 to purchase 75,000 shares of common
stock at a price of $5.60 per share. As of June 29, 2001, all shares of the
Series B Preferred Stock had been exchanged for Series C Preferred Stock and the
common stock purchase warrants were replaced with new common stock purchase
warrants.

SERIES C PREFERRED STOCK

         On June 20, 2001 the company sold, at $35,000 per unit, to eleven
investors an aggregate of 228.007 units of the Company's Series C Convertible
Preferred Stock, $.001 par value (the "Series C Preferred Stock"). Each unit
consisted of 1,000 shares of the newly-designated Series C Preferred Stock and a
common stock purchase warrant expiring June 19, 2006 to purchase 10,000 shares
of the Company's common stock at $3.50 per share. Dividends were cumulative and
payable annually at a rate of 10 % per year through June 30, 2004 and 5% per
year thereafter. The dividends were payable in shares of common stock at the
option of the Company. For the year ended March 31, 2004 the Company paid
dividends of $1,336,479 through the issuance of 3,338,844 shares of common
stock.


                                       13


<PAGE>

                                 LIFEPOINT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)


         In June 2003, as a condition to the initial closing of the Company's
private placement of Series D Preferred Stock, the holders of the Series C
Preferred Stock consented to the issuance of the Series D Preferred Stock and
Warrants and agreed to the following modifications of their rights: (i) the
conversion price of the Series C Preferred Stock was permanently set at $3.00
per share, and all reset and price-based anti-dilution provisions were
eliminated; (ii) each holder of Series C Preferred Stock was offered the
opportunity to purchase Series D Preferred Stock, and for each $1 of Series D
Preferred Stock so purchased, $2 of Series C Preferred Stock retained a one-time
conversion price reset to $0.30 per share, and the same portion of warrants held
by any such holders received a reset on the exercise price of warrants held by
such holder to $0.50 per share, with the number of shares issuable upon exercise
of the warrants remaining the same; (iii) the Series C Preferred Stock would
convert into Common Stock at maturity, unless earlier converted; (iv) all future
dividends on the Series C Preferred Stock would be accrued and paid at
conversion; and (v) the Series C Preferred Stock would become junior to the
shares of Series D Preferred Stock upon liquidation.

         During the quarter ended June 30, 2004, as part of the mandatory
conversion, holders of 377,434 shares of Series C Preferred Stock converted
their shares into 28,914,072 shares of the Company's common stock. Additionally,
based on the mandatory conversion of the Series C Preferred Stock, 3,264,096
premium shares was paid as dividends as per the conversion. As of December 31,
2004, there were no shares of Series C Preferred Stock outstanding after the
conversion.

SERIES D PREFERRED STOCK

         On September 22, 2003, the Company closed a $13 million private
placement of Series D Convertible Preferred Stock ("Series D Preferred Stock")
and warrants to purchase Common Stock ("Warrants"). On July 14, 2003, at the
first closing (the "First Closing") of the private placement, the Company issued
2,218 shares of Series D Preferred Stock convertible into 7,392,594 shares of
Common Stock of the Company and Warrants to purchase 14,785,188 shares of Common
Stock of the Company to various investors (the "Investors"). On September 22,
2003, at the second closing (the "Second Closing") of the private placement, the
Company issued an additional 6,533 shares of Series D Preferred Stock
convertible into 21,774,489 shares of Common Stock of the Company and Warrants
to purchase 43,548,978 shares of Common Stock of the Company to the Investors.
Additionally, at the Second Closing, the holders of the Company's secured
indebtedness converted their secured indebtedness into 4,256 shares of Series D
Preferred Stock convertible into 14,185,248 shares of Common Stock of the
Company and Warrants to purchase 28,370,496 shares of Common Stock of the
Company.

         The Series D Preferred Stock has an aggregate stated value of $1,000
per share and is entitled to a quarterly dividend at a rate of 6% per annum,
generally payable in Common Stock or cash at the Company's option.

          The Series D Preferred Stock is entitled to a liquidation preference
over the Company's Common Stock upon a liquidation, dissolution, or winding up
of the Company. The Series D Preferred Stock is convertible at the option of the
holder into Common Stock at a conversion price of $0.30 per share, subject to
certain anti-dilution adjustments (including full-ratchet adjustment upon any
issuance of equity securities at a price less than the conversion price of the
Series D Preferred Stock, subject to certain exceptions). As a result of the
private placement of Series E Preferred Stock (described below), the conversion
price of the Series D Preferred Stock was reset to $0.20 per share. Following
the second anniversary of the closing, the Company has the right to force
conversion of all of the shares of Series D Preferred Stock provided that a
registration statement covering the underlying shares of Common Stock is in
effect and the 20-day volume weighted average price of the Company's Common
Stock is at least 200% of the conversion price and certain other conditions are
met.


                                       14


<PAGE>

                                 LIFEPOINT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)


         The Company is required to redeem any shares of Series D Preferred
Stock that remain outstanding on the third anniversary of the closing, at its
option, in either (i) cash equal to the face amount of the Series D Preferred
Stock plus the amount of accrued dividends, or (ii) subject to certain
conditions being met, shares of Common Stock equal to the lesser of the then
applicable conversion price or 90% of the 90-day volume weighted average price
of the Common Stock ending on the date prior to such third anniversary. As the
redemption is not required to be paid in cash, the Company has not recorded the
preferred stock as a liability in the accompanying balance sheet.

         Upon any change of control, the holders of the Series D Preferred Stock
may require the Company to redeem their shares for cash at a redemption price
equal to the greater of (i) the fair market value of such Series D Preferred
Stock and (ii) the liquidation preference for the Series D Preferred Stock. For
a three-year period following the closing, each holder of Series D Preferred
Stock has a right to purchase its pro rata portion of any securities the Company
may offer in a privately negotiated transaction, subject to certain exceptions.

         Each share of Series D Preferred Stock is generally entitled to vote
together with the Common Stock on an as-converted basis. In addition, the
Company agreed to allow one of the investors in the Series D Preferred Stock
private placement to appoint a representative to the Company's Board of
Directors, and one of the investors was entitled to appoint a representative to
attend the Company's Board of Directors meetings in a non-voting observer
capacity.

         Additionally, the Company has accrued cumulative dividends in the
amount of $1,024,198 for the year ended March 31, 2004.

         During the quarter ended December 31, 2004, a holder of 150 shares of
the Series D Preferred Stock converted their preferred stock into 750,000 shares
of Common Stock. Related to the conversion, the Company issued 59,664 shares of
Common Stock as dividend shares. The dividend shares amount has been recorded on
the Company's Statement of Operations.

SERIES E PREFERRED STOCK

         On November 19, 2004, the Company closed a $4 million private placement
of Series E Convertible Preferred Stock ("Series E Preferred Stock") and
warrants to purchase Common Stock ("Warrants"). This included the conversion of
a note payable of $300,000 into Series E Preferred Stock. On December 7, 2004,
at the closing (the "Closing") of the private placement, the Company issued
4,000 shares of Series E Preferred Stock convertible into 20,000,000 shares of
Common Stock of the Company and Warrants to purchase 20,000,000 shares of Common
Stock of the Company to various investors (the "Investors"). In addition,
870,000 warrants to purchase Common Stock were issued to the placement agent as
part of the financing.

         The Series E Preferred Stock has an aggregate stated value of $1,000
per share and is entitled to a quarterly dividend at a rate of 5% per annum,
generally payable in Common Stock or cash at the Company's option.

          The Series E Preferred Stock is entitled to a liquidation preference
over the Company's Common Stock upon a liquidation, dissolution, or winding up
of the Company. The Series E Preferred Stock is convertible at the option of the
holder into Common Stock at a conversion price of $0.20 per share, subject to
certain anti-dilution adjustments (including full-ratchet adjustment upon any
issuance of equity securities at a price less than the conversion price of the
Series E Preferred Stock, subject to certain exceptions). Following the second
anniversary of the closing, the Company has the right to force conversion of all
of the shares of Series E Preferred Stock provided that a registration statement
covering the underlying shares of Common Stock is in effect and the 20-day
volume weighted average price of the Company's Common Stock is at least 200% of
the conversion price and certain other conditions are met.


                                       15


<PAGE>

                                 LIFEPOINT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)


         The Company is required to redeem any shares of Series E Preferred
Stock that remain outstanding on the third anniversary of the closing, at its
option, in either (i) cash equal to the face amount of the Series E Preferred
Stock plus the amount of accrued dividends, or (ii) subject to certain
conditions being met, shares of Common Stock equal to the lesser of the then
applicable conversion price or 90% of the 90-day volume weighted average price
of the Common Stock ending on the date prior to such third anniversary. As the
redemption is not required to be paid in cash, the Company has not recorded the
preferred stock as a liability in the accompanying balance sheet.

         Upon any change of control, the holders of the Series E Preferred Stock
may require the Company to redeem their shares for cash at a redemption price
equal to the greater of (i) the fair market value of such Series E Preferred
Stock and (ii) the liquidation preference for the Series E Preferred Stock. For
a three-year period following the closing, each holder of Series E Preferred
Stock has a right to purchase its pro rata portion of any securities the Company
may offer in a privately negotiated transaction, subject to certain exceptions.

         During the quarter ended December 31, 2004, no holders of the Series E
Preferred Stock converted their preferred stock into shares of Common Stock.

COMMON STOCK

         On January 14, 2004, the Company issued 53,890 shares of Common Stock
at $0.43 per share to a vendor for restitution of the outstanding balance of a
debt. On March 5, 2004, the Company issued 50,000 shares of Common Stock at
$0.37 per share to a former Director of the Company for his appointment to the
new position of Director Emeritus. On March 5, 2004, the Company issued 945,387
shares of restricted stock at $0.37 per share to employees and former employees
in recognition of decreased pay and furloughs during 2003, and as an incentive
for continued employment through October 31, 2003.

         During the nine months ended December 31, 2004, holders of the Series D
Preferred Stock Warrants purchased 5,905,693 shares of the Company's Common
Stock. The Company received $1,771,708 for the early exercise of these warrants.

STOCK OPTION/STOCK ISSUANCE PLAN

         On August 14, 1997, the Board of Directors adopted, subject to
stockholder approval, the Company's 1997 Stock Option Plan (the "1997 Option
Plan") providing for the granting of options to purchase up to 1,000,000 shares
of Common Stock to employees (including officers) and persons who also serve as
directors and consultants of the Company. On June 5, 1998, the Board increased
the number of shares subject to the 1997 Option Plan to 2,000,000, again subject
to stockholder approval. Stockholder approval was given on August 13, 1998. The
options may either be incentive stock options as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") to be granted to
employees or nonqualified stock options to be granted to employees, directors or
consultants. On August 25, 2000, the stockholders approved the Company's 2000
Stock Option Plan that would permit the granting of options to purchase an
aggregate of 2,000,000 shares of the Common Stock on terms substantially similar
to those of the 1997 Option Plan. On January 14, 2004, the stockholders approved
the Company's 2003 Stock Option Plan that would permit the granting of options
to purchase an aggregate of 10,000,000 shares of the Common Stock on terms
substantially similar to those of the 1997 Option Plan.


                                       16


<PAGE>

                                 LIFEPOINT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)


         As of December 31, 2004, options to purchase an aggregate of 5,885,652
shares of the Common Stock granted to employees including officers, directors
and consultants were outstanding. As of such date, options to purchase an
aggregate of 851,741 shares of the Common Stock had been exercised and options
to purchase an aggregate of 2,678,201 shares of the Common Stock were then
exercisable. Options granted to date under both Option Plans have generally
become exercisable as to one-quarter of the shares subject thereto on the first
anniversary date of the date of grant and as to 1/36th of the remaining shares
on such calendar day each month thereafter for a period of 36 months. Certain
options will become exercisable upon the achievement of certain goals related to
corporate performance and not that of the optionee. The exercise price per share
for incentive stock options under the Code may not be less than 100% of the fair
market value per share of the Common Stock on the date of grant. For
nonqualified stock options, the exercise price per share may not be less than
85% of such fair market value. No option may have a term in excess of ten years.

WARRANTS

         During the quarter ended December 31, 2004, warrants to purchase
20,660,000 shares of common stock were issued. Of this amount, 20,000,000
warrant shares were issued with the private placement of the Series E
Convertible Preferred Stock and 870,000 warrant shares were issued to the
placement agent. In addition, 210,000 warrant shares were terminated. The total
warrant shares outstanding as of December 31, 2004 was 115,863,570. In addition,
during the quarter ended December 31, 2004, at the time of issuance, the
effective conversion price of the preferred stock was less than the fair market
value of the common stock which resulted in a beneficial conversion feature. The
calculation resulted in a beneficial conversion feature value in excess of the
calculated value of the preferred stock. As such, the Company recorded as
dividend expense a beneficial conversion feature upon issuance equal to its
original value of $3,709,203. In addition, during the quarter ended December 31,
2004, the Company finalized a Convertible Note and Warrant Purchase Agreement
with an investment fund. The Note was converted into the Company's Series E
Preferred Stock as part of the Series E private placement. The Note provided to
the Company $300,000, in exchange for the re-price of the investments funds,
19,000,000 outstanding warrant shares from $0.50 each to $0.40 each and the
extension of an additional five years to the expiration date of these warrant
shares. As such, the Company recorded $575,742 as interest expense in relation
to this transaction.

6.       COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

         LifePoint entered into a lease agreement commencing October 1, 1997,
which was extended by an amendment and was renewed for one year until April 30,
2005 for the research facilities in Rancho Cucamonga, California. In addition to
rent of $72,000 per year, LifePoint will pay real estate taxes and other
occupancy costs.

         On April 26, 2000, the Company entered into a lease agreement for its
administrative offices and manufacturing facility commencing May 1, 2000, which
terminates on July 31, 2005. In addition to rent of $226,000 per year, LifePoint
will pay real estate taxes and other occupancy costs. The Company may elect to
terminate the lease at the end of four years and has the right to two two-year
renewal options. The lease also provided for rent abatement in three of the
first twelve months as a tenant improvement allowance in addition to the $30,000
allowance paid by the lessor


                                       17


<PAGE>

         On August 28, 2000 the Company entered into a lease financing agreement
with Finova Capital Corporation ("Finova") of Scottsdale, Arizona whereby Finova
agreed to provide LifePoint with up to a $3,000,000 lease line for the purchase
of equipment including up to $500,000 of leasehold improvements. At March 31,
2004 and 2003, $1,249,930 had been drawn against the line. Each closing schedule
has been financed for 36 months at a rate equal to the then current three-year
U.S. Treasury Note. At the end of each schedule, LifePoint will have the option
to purchase all (but not less than all) of the equipment at 15% of the original
equipment cost. As of March 31, 2004, the Company owed $485,000 on its lease of
its capital equipment and was in litigation regarding such. The Company has
reached a settlement on the outstanding balances and has negotiated a payment
schedule commencing in July 2004. As of December 31, 2004, the Company has a
balance of $160,000 as an accrued expense and the amount is reflected as a
short-term liability.

         The Company leases certain equipment under non-cancelable lease
arrangements. These capital leases expire on various dates through 2004 and may
be renewed for up to 12 months. Furniture, fixtures and equipment includes
assets acquired under capital leases of $1,263,331, $1,280,633 and $1,249,930 as
of December 31, 2004, March 31, 2004 and March 31, 2003, respectively.
Accumulated depreciation for assets under capital lease was $922,565 at December
31, 2004. In addition, accumulated depreciation was $751,895 and $643,743 at
March 31, 2004 and 2003, respectively. Amortization of assets under capital
lease is included with depreciation expense. See Note 3 - Property and
Equipment.

SIGNIFICANT CONTRACTS

         Since October 1997, the Company has been the exclusive licensee from
the United States Navy (the "USN") to use the USN's flow immunosensor technology
to test for drugs of abuse and anabolic steroids in urine samples. Prior
thereto, LifePoint was a sublicensee for the same technology under a license
granted by the USN to the then parent of the Company. The license agreement (the
"License Agreement") expires February 23, 2010, when the USN patent expires,
including any reissues, continuation or division thereof.

         In April 1999, the Company and the USN completed negotiations for an
expansion of the License Agreement. The new terms expand the field-of-use from
drugs of abuse and anabolic steroids in urine samples to include all possible
diagnostic uses for saliva and urine. The License Agreement may be terminated by
the USN in the event the Company files bankruptcy or is forced into
receivership, willfully misstates or omits material information, or fails to
market the technology. Either party may terminate the agreement upon mutual
consent. The royalty rate payable to the USN is 3% on the technology-related
portion of the disposable cassette sales and 1% on instrument sales. The minimum
royalty payment of $100,000 for calendar years 2003, 2002 and 2001 was paid.
Minimum annual royalty payments are due each year thereafter.

         On June 4, 2001, the Company and CMI, Inc. ("CMI"), a wholly-owned
subsidiary of the employee-owned MPD Inc. based in Owensboro, Kentucky, entered
into a renewable, three-year agreement establishing CMI as the exclusive
distributor of the IMPACT Test System to the law enforcement market in the
United States and Canada. Fees would be calculated and paid in accordance with
the confidential terms of the agreement. There were no conditions for the
Company to meet other than the delivery of product to receive the fees. CMI had
minimum, confidential, sales requirements for the three-year term of the
contract in order to retain the exclusive marketing rights. CMI would sell, and
provide service and training for, the IMPACT Test System to the law enforcement
market, including, driver testing, corrections, probation and parole, narcotics
and drug courts.

         The three-year term of the agreement did not begin until general
marketing of our IMPACT Test System began on February 26, 2002. CMI would
benefit from volume discounts and, therefore, the Company's margins on products
purchased by CMI may decrease over the term of the contract. In addition, CMI
has guaranteed pricing on the instruments, which may result in much lower
margins once the Company transfers the instrument production to an outside
vendor. The agreement with CMI is automatically renewable unless CMI or the
Company gives notice to the other 180 days prior to the end of the initial term.


                                       18


<PAGE>

                                 LIFEPOINT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)


         On November 25, 2003, CMI notified the Company that they were
terminating this distribution agreement. The Company believes that this
notification is not valid under the terms of the agreement and on December 30,
2003, the Company demanded a break-up fee from CMI for their desired early
termination of this agreement. No resolution has been reached regarding the
break-up fee.

7.       LEGAL MATTERS

         The Company is subject to other lawsuits in the ordinary course of
business and is currently subject to lawsuits filed by various vendors for
non-payment of amounts allegedly owed. In the opinion of management, such
claims, if disposed of unfavorably, would not have a material adverse effect on
the accompanying financial statements of the Company.


                                       19


<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

FINANCIAL CONDITION

            As of December 31, 2004, the Company had an accumulated deficit of
$84,556,487. The Company has devoted substantially all of its resources to
research and development and has experienced an ongoing deficiency in working
capital. The Company has recently re-initiated manufacturing and shipment of its
product to customers. There can be no assurance as to when the Company will
achieve profitability, if at all. The Company's revenues and results of
operations have fluctuated and can be expected to continue to fluctuate
significantly from quarter to quarter and from year to year. Various factors
that may affect operating results include: a) the length of time to close
product sales; b) customer budget cycles; c) the implementation of cost
reduction measures; d) the timing of required approvals from government
agencies, such as the Food and Drug Administration; and e) the timing of new
product introductions by the Company and its competitors. As of the date of this
filing, there is substantial doubt about the Company's ability to continue as a
going concern due to its historical negative cash flow and because the Company
does not have sufficient committed capital to meet its projected operating needs
for at lease the next twelve months.

         Prior to September 2003, the Company was a development stage company
and had not produced any revenues. The Company had been dependent on the net
proceeds derived from seven private placements pursuant to Regulation D under
the Securities Act of 1933 to fund its operations.

         On September 22, 2003, the Company closed a $13 million private
placement of Series D Convertible Preferred Stock ("Series D Preferred Stock")
and warrants to purchase Common Stock. For a complete description of the Series
D Preferred Stock, see "Notes to Financial Statements - Note 5 - Stockholders'
Equity - Series D Preferred Stock."

         On November 19, 2004, the Company closed a $4 million private placement
of Series E Convertible Preferred Stock ("Series E Preferred Stock") and
warrants to purchase Common Stock. This included the conversion of a note
payable of $300,000 into Series E Preferred Stock. On December 7, 2004, at the
closing (the "Closing") of the private placement, the Company issued 4,000
shares of Series E Preferred Stock convertible into 20,000,000 shares of Common
Stock of the Company and Warrants to purchase 20,000,000 shares of Common Stock
of the Company to various investors (the "Investors"). In addition, 870,000
warrant shares to purchase Common Stock were issued to the placement agent per
this transaction.

         The Series E Preferred Stock has an aggregate stated value of $1,000
per share and is entitled to a quarterly dividend at a rate of 5% per annum,
generally payable in Common Stock or cash at the Company's option.

          The Series E Preferred Stock is entitled to a liquidation preference
over the Company's Common Stock upon a liquidation, dissolution, or winding up
of the Company. The Series E Preferred Stock is convertible at the option of the
holder into Common Stock at a conversion price of $0.20 per share, subject to
certain anti-dilution adjustments (including full-ratchet adjustment upon any
issuance of equity securities at a price less than the conversion price of the
Series E Preferred Stock, subject to certain exceptions). Following the second
anniversary of the closing, the Company has the right to force conversion of all
of the shares of Series E Preferred Stock provided that a registration statement
covering the underlying shares of Common Stock is in effect and the 20-day
volume weighted average price of the Company's Common Stock is at least 200% of
the conversion price and certain other conditions are met.


                                       20


<PAGE>

         The Company is required to redeem any shares of Series E Preferred
Stock that remain outstanding on the third anniversary of the closing, at its
option, in either (i) cash equal to the face amount of the Series E Preferred
Stock plus the amount of accrued dividends, or (ii) subject to certain
conditions being met, shares of Common Stock equal to the lesser of the then
applicable conversion price or 90% of the 90-day volume weighted average price
of the Common Stock ending on the date prior to such third anniversary. As the
redemption is not required to be paid in cash, the Company has not recorded the
preferred stock as a liability in the accompanying balance sheet.

         Upon any change of control, the holders of the Series E Preferred Stock
may require the Company to redeem their shares for cash at a redemption price
equal to the greater of (i) the fair market value of such Series E Preferred
Stock and (ii) the liquidation preference for the Series E Preferred Stock. For
a three-year period following the closing, each holder of Series E Preferred
Stock has a right to purchase its pro rata portion of any securities the Company
may offer in a privately negotiated transaction, subject to certain exceptions.

         The Company is utilizing distributors and/or partners for sales and
service of its products in the international markets. The distributors the
Company has elected to work with have knowledge of their respective markets and
local rules and regulations. The Company has entered into, or expects to enter
into, distribution agreements with distributors in Europe and Asia. There can be
no assurance as to when or if such distribution agreements will be completed.

         The Company has filed 510(k) submissions to the Food and Drug
Administration (the "FDA") for the IMPACT Test System and the NIDA-5 drugs of
abuse, with the first submission filed in the fall of 2002. Although the
applications were delayed because the Company could not provide additional data
requested by FDA on a timely basis, principally due to a lack of funding and
personnel, the Company responded to the FDA in December 2003, April 2004 and
June 2004 in response to additional inquiries. The Company received FDA
clearance to market the LifePoint(R) IMPACT(R) Test System in conjunction with
the opiate test (morphine and heroin) for use in medical markets and repetitive
use situations. FDA clearance on other applications are still pending. There can
be no assurance as to when or if the FDA will grant clearance on these products.

         On March 6, 2000 and June 16, 2000, the Compensation Committee
authorized that executive officers and senior staff designated as significant
employees, who are optionees under the LifePoint, Inc. 1997 Stock Option Plan
and the 2000 Option Plan, respectively, or who hold common stock purchase
warrants may exercise an option or a warrant by delivering a promissory note
(the "Note") to the order of the Company. On December 15, 2000, the Board of
Directors authorized that an executive officer who executed a note in payment of
the exercise price for an option or warrant could, at his or her election,
surrender to the Company shares of common stock to pay off such note. The number
of shares surrendered was determined by taking the total principal on a note
plus all accrued interest and dividing it by the fair market value on the date
of surrender. On December 2, 2002, Linda H. Masterson, President and Chief
Executive Officer, surrendered 424,586 shares of common stock to payoff notes
totaling $897,500 in principal and $36,588 in interest due to the Company. Ms.
Masterson has no further notes due to the Company. As of June 30, 2004, no
additional notes remain outstanding. Due to the recent changes enacted under The
Sarbanes-Oxley Act of 2002, the Company will accept no further notes in favor of
the Company from executive officers covered by the Sarbanes-Oxley Act.

         Ms. Masterson resigned as President and CEO of the Company on December
14, 2004. Per the severance agreement dated December 13, 2004, she is entitled
to her current base salary for a period of eighteen months. On December 31, 2004
a total of $325,789 was expensed for salary and payroll taxes.


                                       21


<PAGE>

OPERATING CASH FLOWS

         Net cash used by the Company in operations for the nine months ended
December 31, 2004 amounted to $6,407,676 as compared to $3,857,501 for the nine
months ended December 31, 2003, an increase of $2,550,175. This was due
primarily to the higher net loss associated with the re-deployment of the
operations in fiscal year 2005 in comparison to the furloughed position of the
organization during fiscal year 2004. In addition, $3,709,203 was expensed
relating to the issuance of warrants and the beneficial conversion feature
associated with the Series E private placement for the nine months ended
December 31, 2004.For the nine months ended December 31, 2003, $7,745,427 was
expensed relating to the beneficial conversion feature associated with the
Series D and dividends on Preferred Stock. During the nine months ended December
31, 2003, $416,633 in loan fees and $166,000 for the amortization of the debt
was converted to preferred stock during the nine months ended December 31, 2003
and was eliminated as of June 30, 2004.

INVESTING CASH FLOWS

         During the nine months ended December 31, 2004, net cash used by
investing activities was $131,942 compared to $5,976 for the nine months ended
December 31, 2003. The $117,188 increase in cash used was for the capitalization
of patents during the nine months ended December 31, 2004. Adjustments to
property and equipment of $14,754 during the nine months ended December 31, 2004
was related to the transfer of internal systems to marketing expense.

FINANCING CASH FLOWS

         Net cash provided by financing activities amounted to $5,019,463 for
the nine months ended December 31, 2004 compared to $7,659,791 for the nine
months ended December 31, 2003. The $2,640,328 decrease in cash provided by
financing activities for the nine months ended December 31, 2004 was principally
from the net proceeds of $7,777,993 raised during the nine months ended December
31, 2003 from the sale of preferred stock. This was partially offset by the
$1,772,810 in proceeds raised in the exercise of warrants and the issuance of
$4,000,000 in Series E Preferred Stock during the nine months ended December 31,
2004 with net proceeds of $3,743,982.

RESULTS OF OPERATIONS

THREE MONTHS ENDED DECEMBER 31, 2004 VS. DECEMBER 31, 2003

         The Company recognized $5,836 in revenues during the three months ended
December 31, 2004 compared to no revenue for the three months ended December 31,
2003. These revenues reflect payments made on previous shipments of the
Company's products. As adopted in fiscal year 2003, the Company has elected to
record revenue only when related cash has been collected. During the six months
ended June 30, 2003 the Company was in the middle of a furlough related to the
loss of its critical funding and was forced to reduce its staff during the
quarter. This factor was a main contributing factor as to the lower operating
expenses that occurred during the nine months ended December 31, 2003. Over the
past nine months, the Company has resumed shipping product to potential
customers and based on this, $966,466 was recognized as cost of goods sold for
the three months ended December 31, 2004. This includes the manufacturing
overhead incurred during that period. All standard cost of sales associated with
the shipment of product has been deferred and will be recognized as a cost of
sales upon payment of the invoice. The Company recognized no cost of sales
during the three months ended December 31, 2003 due to manufacturing costs being
expensed as research and development charges. During the three months ended
December 31, 2004, the Company spent $389,235 on research and development,
excluding manufacturing costs, $710,350 on general and administrative expenses
and $414,913 on selling expenses, as compared with $1,032,061, including
manufacturing costs, $587,387, and $173,489, respectively, during the three
months ended December 31, 2003. The decrease of $642,826, or 62 %, in research


                                       22


<PAGE>

and development expenditures was primarily due to the reduction of engineering
costs due to the transition from a research organization to a manufacturing and
marketing focused company. General and administrative expenses increased
$122,963, or 21%, during the three months ended December 31, 2004 primarily due
to severance expense of $325,789 for Linda Masterson. The increase of $241,424,
or 139%, in selling and marketing expenses for the three months ended December
31, 2004 was primarily related to the Company's increase in its sales and
marketing personnel which accounted for higher salary and travel charges in
comparison to the three months ended December 31, 2003 in which there was
limited staffing during the furlough. Interest expense for the three months
ended December 31, 2004 was $576,501, which primarily represented the expense
incurred for the re-price of the warrants associated with the loan that was
converted to Preferred Stock in comparison to $0 for the three months ended
December 31, 2003, when there was no debt. Interest income was $4,617 for the
three months ended December 31, 2004, as compared to $590 during the three
months ended December 31, 2003. This represented interest earned on short-term
investments. Additionally, the Company recognized a favorable adjustment of
$3,694 in the three months ended December 31, 2004 on a discount from the
settlement of trade payables in comparison to the $3,558 discount as a result
from the settlement of trade payables during the three months ended December 31,
2003.

NINE MONTHS ENDED DECEMBER 31, 2004 VS. DECEMBER 31, 2003

         The Company recognized $81,904 in revenues during the nine months ended
December 31, 2004 compared to a credit for the return of instruments of $18,500
in revenues for the nine months ended December 31, 2003. On January 29, 2003,
the Company lost critical funding and the ability to draw on a $7.5 million line
previously available under a debt facility. As a result, the Company was forced
to reduce operating expenses and headcount during the nine months ended December
31, 2003. The Company recognized $2,559,301 in cost of goods sold during the
nine months ended December 31, 2004 in comparison to no cost of goods sold
during the nine months ended December 31, 2003. The Company recognized no cost
of sales during the nine months ended December 31, 2003 due to the employee
furlough and manufacturing costs being expensed as research and development
charges. During the nine months ended December 31, 2004, the Company spent
$1,570,958 on research and development, excluding manufacturing expenses,
1,599,965 on general and administrative expenses and an additional $1,110,432 on
selling expenses, as compared with $2,556,230, $1,628,735, and $419,967,
respectively, during the nine months ended December 31, 2003. The decrease of
$985,272, or 39%, in research and development expenditures was primarily due to
the reduction of engineering costs due to the transition from a research
organization to a manufacturing and marketing focused company. The decrease of
$28,770, or 2%, in general and administrative expenses was primarily due to the
expensing of loan fees and increased accounting fees associated with the bridge
loan and financing during the nine months ended December 31, 2003, partially
offset by the severance expense for Linda Masterson during the nine months
ending December 31, 2004. The increase of $690,465, or 164%, in selling expenses
in the nine months ended December 31, 2004 was primarily related to the
Company's increase in its sales and marketing personnel. Interest expense for
the nine months ended December 31, 2004 was $578,432 while interest income was
$8,704, as compared to $323,140 and $16,656, respectively, for the period ending
December 31, 2003. Additionally, the Company recognized a favorable adjustment
of $203,743 in the nine months ended December 31, 2004 on a discount from the
settlement of trade payables in comparison to the $727,171 discount as a result
from the settlement of trade payables for the nine months ended December 31,
2003.

FORWARD-LOOKING STATEMENTS

         Some of the information in this Report may contain forward-looking
statements. These statements can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "anticipate," "estimate,"
"continue" or other similar words. These statements discuss future expectations,
contain projections of results of operations or of financial condition or state
other "forward looking" information. When considering forward-looking
statements, a stockholder or potential investor in LifePoint should keep in mind
the risk factors and other cautionary statements in the Company's Annual Report
on Form 10-K for the fiscal year ended March 31, 2004. These forward-looking


                                       23


<PAGE>

statements could involve known and unknown risks, uncertainties and other
factors that might materially alter the actual results suggested by the
statements. In other words, although forward-looking statements may help to
provide complete information about future prospects, the Company's performance
may be quite different from what the forward-looking statements imply. The
forward-looking statements are made as of the date of this Report and LifePoint
undertakes no duty to update these statements.

INFLATION

The Company believes that inflation has not had a material effect on its results
of operations.

CRITICAL ACCOUNTING POLICIES

         The Company's accounting policies are more fully described in Note 1 of
 Notes to the Financial Statements. As disclosed in Note 1 of Notes to the
 Financial Statements, the preparation of financial statements in conformity
 with accounting principles generally accepted in the United States of America
 requires management to make estimates and assumptions about future events that
 affect the amounts reported in the financial statements and accompanying notes.
 Future events and their effects cannot be determined with absolute certainty.
 Therefore, the determination of estimates requires the exercise of judgment.
 Actual results inevitably will differ from those estimates, and such
 differences may be material to the financial statements.

         A critical accounting policy is defined as one that has both a material
impact on the Company's financial condition and results of operations and
requires the Company to make difficult, complex and subjective judgments, often
as a result of the need to make estimates about matters that are inherently
uncertain. The Company believes the following critical accounting policies
involve significant judgements and estimates that are used in the preparation of
the Company's financial statements.

INVENTORY

         Inventories are priced at the lower of cost or market using standard
costs, which approximate actual costs on a first-in, first-out basis. The
Company maintains a perpetual inventory system and continuously records the
quantity on-hand and standard cost for each product, including purchased
components, subassemblies and finished goods. The Company maintains the
integrity of perpetual inventory records through periodic physical counts of
quantities on hand. Finished goods are reported as inventories until the point
of transfer to the customer. Generally, title transfer is documented in the
terms of sale.

         Standard costs are generally re-assessed at least annually and reflect
achievable acquisition costs, generally the most recent vendor contract prices
for purchased parts, currently obtainable assembly and test labor, and overhead
for internally manufactured products. Manufacturing labor and overhead costs are
attributed to individual product standard costs at a level planned to absorb
spending at average utilization volumes.

         The Company maintains an allowance against inventory for the potential
future obsolescence or excess inventory that is based on the Company's estimate
of future sales. A substantial decrease in expected demand for the Company's
products, or decreases in the Company's selling prices could lead to excess or
overvalued inventories and could require the Company to substantially increase
its allowance for excess inventory. If future customer demand or market
conditions are less favorable than our projections, additional inventory
write-downs may be required, and would be reflected in cost of sales in the
period the revision is made.


                                       24


<PAGE>

         Finished goods inventory also includes the standard cost of product in
customers' hands until payment is received for the goods.

REVENUE RECOGNITION

         The majority of the Company's revenue is from sales of the IMPACT Test
System. The Company recognizes revenue in the period in which cash payments are
received for products shipped, title transferred and acceptance and other
criteria are met in accordance with the Staff Accounting Bulletin No. 104,
"Revenue Recognition" ("SAB 104"). SAB 104 provides guidance on the recognition,
presentation and disclosure of revenue in financial statements. While the
Company believes it has met the criteria of SAB 104, due to delays in receiving
payments on some of the Company's initial shipments of products, the Company
elected, during the quarter ended December 31, 2002, to begin recording revenue
related to shipments only to the extent the related cash has been collected,
based on the guidance provided in SAB 104, as amended by SAB 104. At December
31, 2004, the Company had $56,400 in product shipments to customers that are
subject to customer evaluations and acceptance. These product shipments are
included in finished goods inventory at cost.

WARRANTY AND RETURNS

         Typically, marketing and selling diagnostic instruments includes
providing parts and service warranty to customers as part of the overall price
of the product. The Company provides standard warranties for the systems that
run generally for a period of twelve months from system acceptance. The Company
does not provide warranties on sales of its cassette products as these items are
perishable. Actual warranty expenses are incurred on a system-by-system basis.
Because historical activity is minimal, the Company must rely on present
information for a determination of future costs.

         The Company does not typically accept the return of either its
instrument products or its disposable cassettes and therefore does not maintain
a reserve. However, at the Company's discretion, it may allow for returns as
dictated by the market, product enhancements, or any other business factor that
may arise and the costs associated with these products would be expensed as a
period cost in the month incurred.


                                       25


<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         The Company does not hold any investments in market risk sensitive
instruments. Accordingly, the Company believes that it is not subject to any
material risks arising from changes in interest rates, foreign currency exchange
rates, commodity prices, equity prices or other market changes that affect
market risk instruments.

ITEM 4. CONTROLS AND PROCEDURES.

         The Company maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in the Company's
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms and that such information is accumulated and communicated to the Company's
management, including its Chief Executive Officer and Chief Accounting Officer,
as appropriate, to allow for timely decisions regarding required disclosure. In
designing and evaluating the disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management is required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.

         As required by SEC Rule 13a-15(b), the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and the Company's
Chief Accounting Officer, of the effectiveness of the design and operation of
the Company's disclosure controls and procedures as of the end of the quarter
covered by this report. Based on the foregoing, the Company's Chief Executive
Officer and Chief Accounting Officer concluded that the Company's disclosure
controls and procedures were effective at the reasonable assurance level.

         There has been no change in the Company's internal controls over
financial reporting during the Company's most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal controls over financial reporting.


                                       26


<PAGE>

PART II
                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         Not applicable

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

         On November 19, 2004, the Company closed a $4 million private placement
of Series E Convertible Preferred Stock ("Series E Preferred Stock") and
warrants to purchase Common Stock ("Warrants") pursuant to Regulation D under
the Securities Act of 1933. On December 7, 2004, at the closing (the "Closing")
of the private placement, the Company issued 4,000 shares of Series E Preferred
Stock convertible into 20,000,000 shares of Common Stock of the Company and
Warrants to purchase 20,000,000 shares of Common Stock of the Company to various
institutional investors (the "Investors"). In addition, 870,000 warrants to
purchase Common Stock were issued to the placement agent per this transaction.
The Company intends to use the proceeds from this private placement to fund its
operations in the near term.

         The Series E Preferred Stock has an aggregate stated value of $1,000
per share and is entitled to a quarterly dividend at a rate of 5% per annum,
generally payable in Common Stock or cash at the Company's option.

          The Series E Preferred Stock is entitled to a liquidation preference
over the Company's Common Stock upon a liquidation, dissolution, or winding up
of the Company. The Series E Preferred Stock is convertible at the option of the
holder into Common Stock at a conversion price of $0.20 per share, subject to
certain anti-dilution adjustments (including full-ratchet adjustment upon any
issuance of equity securities at a price less than the conversion price of the
Series E Preferred Stock, subject to certain exceptions). Following the second
anniversary of the closing, the Company has the right to force conversion of all
of the shares of Series E Preferred Stock provided that a registration statement
covering the underlying shares of Common Stock is in effect and the 20-day
volume weighted average price of the Company's Common Stock is at least 200% of
the conversion price and certain other conditions are met.

         The Company is required to redeem any shares of Series E Preferred
Stock that remain outstanding on the third anniversary of the closing, at its
option, in either (i) cash equal to the face amount of the Series E Preferred
Stock plus the amount of accrued dividends, or (ii) subject to certain
conditions being met, shares of Common Stock equal to the lesser of the then
applicable conversion price or 90% of the 90-day volume weighted average price
of the Common Stock ending on the date prior to such third anniversary. As the
redemption is not required to be paid in cash, the Company has not recorded the
preferred stock as a liability in the accompanying balance sheet.

         Upon any change of control, the holders of the Series E Preferred Stock
may require the Company to redeem their shares for cash at a redemption price
equal to the greater of (i) the fair market value of such Series E Preferred
Stock and (ii) the liquidation preference for the Series E Preferred Stock. For
a three-year period following the closing, each holder of Series E Preferred
Stock has a right to purchase its pro rata portion of any securities the Company
may offer in a privately negotiated transaction, subject to certain exceptions.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         Not applicable


                                       27


<PAGE>

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not applicable.

ITEM 5.  OTHER INFORMATION

         Not applicable

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      EXHIBITS

         31       Certifications pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002.
         32       Certifications pursuant to Section 906 of the Public Company
                  Accounting Reform and Investor Act of 2002

         (b)      REPORTS ON FORM 8-K

         On December 14, 2004, the Company issued a press release announcing the
         retirement of Linda H. Masterson as President and CEO.

         On December 1, 2004, the Company issued a letter to stockholders
         detailing the Company's current progress.

         On November 24, 2004, the Company issued a notice to its stockholders
         that it sought and obtained from the American Stock Exchange a waiver
         of the shareholder approval requirements contained in Section 713 of
         the AMEX Company Guide in connection with its private placement of
         Series E Convertible Preferred Stock and warrants.

         On November 22, 2004, the Company issued a press release announcing the
         closing of an equity private placement of Series E Preferred
         Convertible Stock and warrants.

         On November 15, 2004, the Company announced via press release its
         results for the second quarter ended September 30, 2004.


                                       28


<PAGE>

SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned therein to be duly authorized.

                                 LIFEPOINT, INC.

Date:    February 14, 2005       By /s/ M. Richard Wadley
                                    --------------------------------------------
                                    M. Richard Wadley
                                    Acting President and Chief Executive Officer


                                 By /s/ Craig S. Montesanti
                                    --------------------------------------------
                                    Craig S. Montesanti
                                    Chief Accounting Officer


                                       29


<PAGE>

                                 EXHIBIT INDEX
                                 -------------


         31       Certifications pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002.

         32       Certifications pursuant to Section 906 of the Public Company
                  Accounting Reform and Investor Act of 2002.