<PAGE>

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

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

                  For the quarterly period ended JUNE 30, 2003
                  --------------------------------------------

                         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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date.

As of August 11, 2003 - Common stock, $.001 Par Value, 38,027,320 shares





<PAGE>

                                                          2003 - LIFEPOINT, INC.
                                             For The Quarter Ended June 30, 2003

INDEX TO FINANCIAL STATEMENTS
-----------------------------

PART I -  FINANCIAL INFORMATION

    o   BALANCE SHEETS AT JUNE 30, 2003 (UNAUDITED) AND MARCH 31, 2003 ...     3

    o   STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED
             JUNE 30, 2003 AND 2002 (UNAUDITED) ..........................     4

    o   STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED
             JUNE 30, 2003 AND 2002 (UNAUDITED)...........................     5

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

    o   ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS ....................    18

    o   ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   33

    o   ITEM 4 - CONTROLS AND PROCEDURES .................................    33

PART II -  OTHER INFORMATION

    o   ITEM 1 - LEGAL PROCEEDINGS .......................................    34

    o   ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K ........................    34

                                       2





<PAGE>
<TABLE>

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

                                                                     JUNE 30, 2003      MARCH 31, 2003
                                                                     -------------      -------------
ASSETS                                                                (Unaudited)
<S>                                                                  <C>                <C>
Current assets:
 Cash                                                                $     67,149       $     75,588
 Inventory, net of allowance for excess inventory of $1,097,000
  at June 30, 2003 and March 31, 2003, respectively                     2,376,583          2,376,583
 Prepaid expenses and other current assets                                355,353            337,343
                                                                     -------------      -------------

  Total current assets                                                  2,799,085          2,789,514

Property and equipment, net                                             2,256,706          2,428,141
Patents and other assets, net                                             690,072            690,555
                                                                     -------------      -------------

                                                                     $  5,745,863       $  5,908,210
                                                                     =============      =============

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
 Accounts payable                                                    $  3,470,336       $  2,871,963
 Accrued expenses                                                         806,626            683,439
 Notes payable, net of discount                                         1,539,283            388,859
 Capital lease, short-term                                                289,094            412,606
                                                                     -------------      -------------

  Total current liabilities                                             6,105,339          4,356,867
Convertible debt, net of discount                                       1,723,750          1,620,250
                                                                     -------------      -------------

                                                                        7,829,089          5,977,117
                                                                     -------------      -------------
Stockholders' deficit:
 Preferred Stock, Series C 10% Cumulative Convertible, $.001
  par value, 600,000 shares authorized, 389,791 outstanding
  at June 30, 2003 and March 31, 2003, respectively                           390                390
 Common stock, $.001 par value; 75,000,000 shares authorized,
  38,027,320 and 37,226,378 shares issued and outstanding
  at June 30, 2003 and March 31, 2003, respectively                        38,027             37,226
 Additional paid-in capital                                            58,319,610         57,966,015
 Notes receivable-key employee                                            (15,000)           (15,000)
 Accumulated deficit                                                  (60,426,253)       (58,057,538)
                                                                     -------------      -------------

  Total stockholders' deficit                                          (2,083,226)           (68,907)
                                                                     -------------      -------------

                                                                     $  5,745,863       $  5,908,210
                                                                     =============      =============

                   The accompanying notes are an integral part of the financial statements.
</TABLE>
                                                      3





<PAGE>

                                 LIFEPOINT, INC.
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                                                           FOR THE
                                                     THREE MONTHS ENDED
                                                           JUNE 30
                                               --------------------------------
                                                    2003              2002
                                               -------------      -------------

Revenues                                       $         --       $         --

Costs and expenses:
 Cost of goods sold                                      --            256,566
 Research and development                           705,830          1,958,175
 Selling expenses                                   106,912            552,287
 General & Administrative Expenses                  937,241            461,794
                                               -------------      -------------

 Total costs and expenses from operations         1,749,983          3,228,822
                                               -------------      -------------

Loss from operations                             (1,749,983)        (3,228,822)

Interest income                                       1,799              9,823
Interest expense                                   (284,135)           (22,921)
                                               -------------      -------------

Net loss                                         (2,032,319)        (3,241,920)

Less registration effectiveness fee
 to Series C stockholders                                --            413,615
Less preferred dividends                            336,396            343,523
                                               -------------      -------------

Loss applicable to common stockholders           (2,368,715)        (3,999,058)
                                               =============      =============

Loss applicable to common stockholders
 per common share:
 Weighted average common shares
  outstanding - basic and assuming dilution      37,235,180         35,315,522
                                               =============      =============
Net loss per share applicable to
 common stockholders                           ($      0.06)      ($      0.11)
                                               =============      =============

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

                                       4





<PAGE>
<TABLE>

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

                                                      Three Months Ended June 30,
                                                   --------------------------------
                                                        2003               2002
                                                   -------------      -------------
<S>                                                <C>                <C>
OPERATING ACTIVITIES
Net loss                                           $ (2,032,319)      $ (3,241,920)
Adjustments to reconcile net loss to net
cash used by operating activities
 Depreciation and amortization                          180,555            124,356
 Amortization of debt discount                          166,000                 --
 Loan fees on note payable                              416,633                 --
 Inventory reserve                                           --            250,000
 Changes in operating assets and liabilities:
  Inventory                                                  --         (2,357,636)
  Prepaid expenses and other current assets             (18,010)            45,504
  Patents and other assets                               (8,637)            51,248
  Accounts payable                                      598,373            486,019
  Accrued expenses                                      123,187            (77,462)
                                                   -------------      -------------
Net cash used by operating activities                  (574,218)        (4,719,891)

INVESTING ACTIVITIES
Purchases of property and equipment                          --           (231,583)
                                                   -------------      -------------
Cash used by investing activities
                                                             --           (231,583)
FINANCING ACTIVITIES
Sales of common stock                                        --         10,200,000
Expenses of common stock offering                            --           (772,507)
Exercise of stock options                                    --             25,834
Exercise of warrants                                         --             30,510
Proceeds from note payable                              690,000                 --
Adjustment to previously issued capital stock                --              8,811
Payments on capital leases                             (124,221)          (129,832)
                                                   -------------      -------------
Net cash provided by financing activities               565,779          9,362,816
                                                   -------------      -------------
Increase (decrease) in cash                              (8,439)         4,411,342
Cash at beginning of year                                75,588          2,985,364
                                                   -------------      -------------
Cash at end of period                              $     67,149       $  7,396,706
                                                   =============      =============

SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION:
Cash paid for interest                             $    118,135       $     22,921
                                                   =============      =============

Noncash financing activities:
 Value of common stock issued and additional
  paid-in capital issued as dividends
  on preferred stock                               $    336,396       $    343,523
                                                   =============      =============
 Value of common stock issued and additional
   paid-in capital issued payment of
   registration effectiveness fees                 $         --       $    573,882
                                                   =============      =============
</TABLE>

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

                                       5





<PAGE>

                                 LIFEPOINT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2003

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BUSINESS

         LifePoint, Inc. ("LifePoint" or the "Company") has developed,
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, Inc. (the "Company"), 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. The 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. 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, 2003 (the "Annual Report").

         The Company incurred net losses of $2.4 million for the quarter ended
June 30, 2003, and had a deficit in working capital of $3.3 million and an
accumulated deficit of $60.4 million at June 30, 2003. The ability of the
Company to continue as a going concern is dependent upon its ability to close on
the current financing to obtain the needed capital and ultimately to achieve
profitable operations. These factors raise doubt about the Company's ability to
continue as a going concern. The Company has reduced its operating expenses
through a reorganization of its operations by reducing its headcount by
approximately 54% from September 30, 2002 as well as reducing its facilities
expenses, certain research and development expenses and certain outside
consulting and contract costs. As the reduction of above expenses alone will not
prevent future operating losses, the Company has been actively seeking further
funding in order to satisfy its projected cash needs at least through June 30,
2004. See Note 8 for a discussion of the Company's recent financing.

         The Company will need to continue to rely on outside sources of
financing to meet its capital needs for the current fiscal year. The Company's
ability to complete the current financing cannot be assured at this time.
Further, there can be no assurance, assuming the Company successfully completes
the current financing, , that the Company will achieve positive cash flow in the
next fiscal year or ever. If the Company is not able to close on the current
financing, it will be required to further scale back its research and
development programs, manufacturing, selling, general, and administrative
activities and may not be able to continue in business. These financial
statements do not include any adjustments to the specific amounts and
classifications of assets and liabilities, which might be necessary should the
Company be unable to continue in business.

                                       6





<PAGE>

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.

CASH

         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 5 to 7 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, 2003,
2002 and 2001 were approximately $622,907, $516,021 and $251,196 respectively.
Depreciation expense for the three months ended June 30, 2003 and 2002 were
$171,435 and $122,985, respectively.

PATENTS

         The cost of patents is being amortized over their expected useful
lives, generally of 17 years. At June 30, 2003 accumulated amortization of
patents was approximately $46,500. At March 31, 2003, 2002 and 2001, accumulated
amortization of patents was approximately $37,000, $22,000 and $17,000,
respectively. No additional patent costs were incurred during the quarter ended
June 30, 2003. For the years ended March 31, 2003, 2002, and 2001 additional
patent costs were approximately $61,000, $160,000 and $37,000, 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 June 30, 2003.

RESEARCH AND DEVELOPMENT COSTS

         Research and development costs are expensed as incurred.

                                       7





<PAGE>

INVENTORIES

         Inventories are priced at the lower of cost or market using the
first-in, first-out (FIFO) 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.

REVENUE RECOGNITION

         The majority of the Company's revenue was from sales of the IMPACT Test
System, which launched at the end of fiscal 2002. The Company recognizes revenue
in the period in which products are shipped, title transferred and acceptance
and other criteria are met in accordance with the Staff Accounting Bulletin No.
101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 provides
guidance on the recognition, presentation and disclosure of revenue in financial
statements. While the Company believes it has met the criteria of SAB 101, due
to delays in receiving payments on some of the Company's initial shipments of
products, the Company has elected to record revenue related to shipments only to
the extent the related cash has been collected.

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.

         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, 2003, 2002 and 2001:
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>
<CAPTION>
                                                            Years ended March 31,
                                                  2003              2002              2001
                                              -------------    --------------     ------------
<S>                                           <C>              <C>                <C>
Loss applicable to common stockholders        $(18,418,601)    $ (13,592,801)     $(7,162,529)
Stock-based employee compensation
   expense determined under fair value
   presentation for all options                 (1,777,179)       (1,547,995)      (1,003,238)
                                              -------------    --------------     ------------

Pro forma net loss                            $(20,195,780)    $ (15,140,796)     $(8,165,767)
                                              =============    ==============     ============
</TABLE>

                                       8





<PAGE>

         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.

NET LOSS PER COMMON SHARE

         Net loss per common 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.

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, 2003, 2002 and 2001 did not
differ from net loss.

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.

NOTES RECEIVABLE - KEY EMPLOYEE

         Key employee notes receivable represent full recourse notes issued to
the Company by certain members of management in exchange for shares of the
Company's common stock. The sole note outstanding at June 30, 2003, is secured
by the underlying shares of the common stock, bears interest at 9% and is
payable by September 14, 2006. At June 30, 2003 and March 31, 2003, key employee
notes receivable totaled $15,000, and is included as a contra-equity item in the
accompanying Statements of Stockholders' Deficit. 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.

NEW ACCOUNTING PRONOUNCEMENTS

         In December 2002, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 148 "Accounting for Stock-Based Compensation, Transition and
Disclosure." SFAS No. 148 provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation. SFAS No. 148 also requires that disclosures of the pro
forma effect of using the fair value method of accounting for stock-based
employee compensation be displayed more prominently and in a tabular format.

                                       9





<PAGE>

Additionally, SFAS No. 148 requires disclosure of the pro forma effect in
interim financial statements. The transition, and annual and interim disclosure
requirements of SFAS No. 148 are effective for fiscal years ended after December
15, 2002. The Company has currently chosen to not adopt the voluntary change to
the fair value based method of accounting for stock-based employee compensation.
If the Company should choose to adopt such a method, its implementation pursuant
to SFAS No. 148 could have a material effect on the Company's financial position
and results of operations.

         In November 2002, the EITF reached consensus on EITF 00-21, "Accounting
for Revenue Arrangements with Multiple Deliverables", which addresses how to
account for arrangements that may involve the delivery or performance of
multiple products, services, and/or rights to use assets. The final consensus of
EITF 00-21 will be applicable to agreements entered into fiscal periods
beginning after June 15, 2003, with early adoption permitted. Additionally,
companies will be permitted to apply the consensus guidance to all existing
arrangements as the cumulative effect of a change in accounting principle in
accordance with Accounting Principal Board Opinion No. 20, "Accounting Changes".
The Company does not believe that the adoption of EITF 00-21 in fiscal year 2004
will have a material effect on its financial statements.

         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. Upon adoption of SFAS No. 150, the Company will reclassify its redeemable
preferred stock as a liability.

2.  INVENTORY

         Inventory is summarized as follows:

                                           June 30,      March 31,
                                            2003           2003
                                         -----------   -----------
           Raw Materials                 $2,210,479    $2,210,479
           Work in process                1,262,675     1,262,675
                                         -----------   -----------
                                          3,473,154     3,473,154
           Less:  inventory reserve       1,096,571     1,096,571
                                         -----------   -----------
                                         $2,376,583    $2,376,583
                                         ===========   ===========

                                       10





<PAGE>

3.  PROPERTY AND EQUIPMENT

         Property and equipment is summarized as follows:
<TABLE>
<CAPTION>
                                              Estimated         June 30,        March 31,
                                              Useful Lives        2003            2003
                                                               -----------     -----------
<S>                                           <C>              <C>             <C>
           Furniture and Fixtures             3 - 7 years      $2,891,723      $2,891,723
           Test Equipment                     5 - 7 years         425,768         425,768
           Leasehold Improvements             3 - 5 years       1,372,966       1,372,966
                                                               -----------     -----------
                                                                4,690,457       4,690,457
           Less:  Accumulated Depreciation                      2,433,751       2,262,316
                                                               -----------     -----------
                                                               $2,256,707      $2,428,141
                                                               ===========     ===========
</TABLE>

         Depreciation expense for the quarters ended June 30, 2003, and 2002 was
$171,435, and $124,356 respectively.

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 bears interest at a sixteen percent (16%) of which
six percent (6%) is due in cash on a quarterly basis and ten percent (10%) in
cash at maturity. The principal balance and all accrued and unpaid interest is
due on May 11, 2005. The amount outstanding under the loan and any accumulated
interest on the loan may be converted into LifePoint's common stock at a price
of $4.00 per share at any time at the option of the lender. In addition, the
Company has 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 is 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 year ended March 31, 2003, the
Company recorded $155,250 to interest expense as amortization of debt discount.
The Company believes that the carrying value of this note approximates fair
value as the note is 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 result in the issuance of additional five year warrants to purchase up to
a maximum of 450,000 shares of common stock also with an exercise price of $3.00
per share. At March 31, 2003 the Company had issued 25,000 warrants 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 February 19, 2003, the Company entered into a Note and Warrant
Purchase Agreement with a current investor to provide additional working
capital. The Company may draw up to $1,000,000 over the life of the agreement,
subject to limitations. Borrowings bear interest at 3% and all outstanding
principal and interest are due on the earlier of September 30, 2003 or the next
financing of at least $4,000,000. The amount outstanding under the loan and any
accumulated interest may be converted into LifePoint's equity at the same terms

                                       11





<PAGE>

of the next financing of at least $4,000,000. In addition, the Company has
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 year ended March 31, 2003, the Company recorded
$45,758 to interest expense as amortization of debt discount. At June 30, 2003,
$1,544,782 is outstanding under the loan, which includes accrued interest and
loan fees of $416,633. The note is recorded as a current note payable in the
balance sheet. 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 due on the earlier of
September 30, 2003 or the next completed equity financing. The note is recorded
as a current note payable in the balance sheet.

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 $.20 per share in year one, $.24
per share in year two, $.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 (including three of the purchasers of shares of the Series B Preferred
Stock) an aggregate of 228.007 Units. Each Unit consisted of 1,000 shares of the
newly-designated Series C Convertible Preferred Stock (the "Series C Preferred
Stock") and a common stock purchase warrant expiring June 19, 2006 (the
"Investor Warrant") to purchase 10,000 shares of the Company's common stock at
$3.50 per share.

         Of the 3,000,000 authorized shares of the Company's Preferred Stock,
430,000 shares were designated as the Series C Preferred Stock in order to cover
not only the original sale by the Company, but also subsequent sales during the
90 days after the original issuance on June 20, 2001. On June 29, 2001, an
additional 85.713 Units were exchanged for the Series B Preferred Stock as
described above.

         On September 28, 2001, the Company closed on an additional 80.196 Units
at the same purchase price per Unit to sixteen accredited investors in the final
closing of this private placement. As a result, the Company has sold an
aggregate of 393.916 Units for gross proceeds of $13,787,060.





<PAGE>

         By agreement dated August 16, 2001, the Company and the investors
unanimously agreed that a holder could convert a share of the Series C Preferred
Stock at an initial conversion price of $3.00 (not $3.50) into 11.67 shares (not
10 shares) of common stock. In addition, the exercise price of the Investor
Warrants was reduced from $3.50 to $3.00 per share. A holder would also receive
11,670 shares, not 10,000 shares, upon exercise of an Investor Warrant included
in a Unit. Furthermore, the provision requiring quarterly resets of the exercise
price of the Investor Warrants based on the market prices for common stock
during the first year was deleted. The changes to the Series C Preferred Stock
were to become effective only if the related certificate of designation
governing the terms and conditions was so amended. This action would have
required the consent or approval of the holders of a majority of the outstanding
shares of common stock. However, the investors agreed, as of November 21, 2001,
to waive the requirement of an amendment to the certificate of designation. They
will instead rely on a contractual commitment by the Company to honor
conversions on the basis set forth above. Such action is permitted by Delaware
law, which governs the Company.

         Pursuant to an escrow agreement, unless waived, 50% of the proceeds
from the sale of Series C Preferred Stock and the Investor Warrants were to be
held in escrow pending achievement by the Company of certain milestones. As of
March 22, 2002, the Company confirmed to the escrow agent achievement of the
milestones. Accordingly, all proceeds have been released to the Company and the
investors have received all of their securities held in escrow.

         To assist the Company in bridging the gap between December 31, 2001 and
receiving the escrowed funds, on February 1, 2002, General Conference
Corporation of Seventh-day Adventists, the Company's largest stockholder and one
of the investors with escrowed purchase proceeds and securities, loaned the
Company $1,500,000 with a 5% per annum interest rate. The loan was paid in full
from the first escrow release along with interest of $10,685. The Company also
issued a warrant to the General Conference Corporation to purchase 500,000
shares of common stock at $3.25 per share.

         On the last date of each of the Company's fiscal quarters, commencing
December 31, 2001, in which shares of the Series C Preferred Stock are
outstanding, the Company is required to redeem all accrued and unpaid dividends
as of such date. Dividends are paid at 10% per year through June 30, 2004 and 5%
per year thereafter. The Company currently elects to pay the dividend by the
issuance of shares of common stock to each holder of the Series C Preferred
Stock. The number of shares of common stock issued is calculated by dividing the
aggregate amount of dividend then due on the shares of the Series C Preferred
Stock by the market price of the common stock on such date. Market price is
calculated as the average closing sales price for the twenty trading days
preceding the close of the quarter. For the quarter ended June 30, 2003 the
Company paid $336,396 through the issuance of 800,942 shares of common stock.
For the quarter ended June 30, 2002 the Company paid $343,523 through the
issuance of 139,891 shares of common stock.

         As a result of a registration statement for the shares of common stock
issuable upon conversion of the Series C Preferred Stock not being declared
effective by January 2002, the Company became obligated to pay an effectiveness
registration penalty fee. The total fee due to the Series C Preferred Stock
holders was $780,696, of which $367,081 was accrued but unpaid in fiscal 2002;
the balance of $413,615 was recognized in the quarter ended June 30, 2002. The
Company issued a total of 260,232 shares of common stock, with a market value of
$3.00 per share as payment of this fee. In May 2002, the Company issued 191,294
shares of common stock, and an additional 68,938 shares of common stock were
issued in July 2002 to complete payment of the registration penalty fee.

         As of June 30, 2003, there were 389,791 shares of the Series C
Preferred Stock and warrants to purchase an aggregate of 4,597,002 shares of the
common stock outstanding. During the year ended March 31, 2003, three holders
converted 4,125 shares of the Series C Preferred Stock into 48,139 shares of
common stock.

                                       13





<PAGE>

COMMON STOCK

         On April 2, 2002, the Company sold 272 units, at $37,500 per unit, to
eight accredited investors. Each unit consisted of 10,000 shares of common stock
and a common stock purchase warrant expiring April 1, 2007 to purchase 2,000
shares of the common stock at $4.50 per share. The Company realized $10,200,000
in gross proceeds and incurred $780,112 in expenses related to the private
placement from the sale of the units. In July 2002, the Company issued warrants
to purchase 326,400 shares of common stock as a penalty for not registering the
shares issued in the private placement on time. The warrants were valued at
$567,936 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.

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.

         As of June 30, 2003, options to purchase an aggregate of 2,306,735
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 1,037,343 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.

         If all of the common stock purchase warrants that were outstanding on
June 30, 2003 were subsequently exercised (16,360,559 shares), the Company would
realize $48,690,618 in gross proceeds. If all of the options pursuant to the
Company's two Stock Option Plans to purchase an aggregate of 2,293,457 shares
outstanding on June 30, 2003 were subsequently exercised, the Company would
realize $5,969,111 in gross proceeds. However, there can be no certainty as to
when and if any of these securities may be exercised, especially as to the
options, which were not all currently exercisable as of June 30, 2003.
Accordingly, management believes that the Company cannot rely on these exercises
as a source of financing.

6.  COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

         LifePoint entered into a lease agreement commencing October 1, 1997,
which was extended by an amendment and will terminate on June 30, 2004, 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. The Company has an option to renew until June 30, 2005 so as to be
consistent with the term of the lease of its corporate offices and manufacturing
facility described in the next paragraph. As of June 30, 2003, the Company was
three months in arrears on its lease, or $18,600.

                                       14





<PAGE>

         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. As of June 30, 2003, the Company was three months
in arrears on its lease, or $70,425.

         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,
2003 and 2002, $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 June 30, 2003, the Company was four months in arrears on
its lease of its capital equipment, or $164,982.

         The Company leases certain equipment under noncancelable 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 $1,249, as of June 30, 2003 and 2002,
respectively. Accumulated depreciation for assets under capital lease was
$613,664, and $472,900 at June 30, 2003, and 2002, 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 will be calculated and paid in accordance with
the confidential terms of the agreement. There are no conditions for the Company
to meet other than the delivery of product to receive the fees. CMI has minimum,
confidential, sales requirements for the three-year term of the contract in
order to retain the exclusive marketing rights. CMI will 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.

                                       15





<PAGE>

         The three-year term of the agreement did not begin until general
marketing of our IMPACT Test System began on February 26, 2002. CMI will 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.

7.  LEGAL MATTERS

         Global Consultants, LLC d/b/a Global Capital instituted an action on
June 18, 2001 in a California state court against the Company and Linda H.
Masterson, Chairman, President and Chief Executive Officer. The plaintiff seeks
damages aggregating $4,500,000 for the non-issuance and termination of common
stock purchase warrants for an aggregate of 392,275 shares of the Common Stock.
The plaintiff's computation of damages is based on the market price of the
Common Stock on one day reaching $8.00 per share and on an excessive and
unsupportable number of shares subject to the warrants. The plaintiff's second
amended complaint does not allege the previously alleged claims relating to
fraud, negligence and accounting and for punitive or exemplary damages. The
Company believes that the plaintiff's remaining causes of action for breach of
contract, conversion and violation of a California statute are without merit.
The Company believes that the effect of any settlement will not have a material
effect on the financial statements.

         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.

8.  SUBSEQUENT EVENT

         On July 14, 2003, the Company closed a $2.2 million private placement
of Series D Convertible Preferred Stock ("Series D Preferred Stock") and
warrants to purchase Common Stock ("Warrants"). The investors in the private
placement have also agreed to purchase an additional $6.6 million of Series D
Preferred Stock and Warrants at a second closing. The second closing is subject
to the satisfaction of the following closing conditions: (i) the Company's
receipt of stockholder approval of the private placement under AMEX rules and of
an amendment to the Company's Restated Certificate of Incorporation increasing
the authorized Common Stock of the Company, (ii) the Company negotiating certain
compromise agreements with holders representing at least 75% of its outstanding
trade payables, and (iii) other customary closing conditions. In addition, if
the second closing is consummated, the holders of the Company's secured
indebtedness have agreed to convert their secured indebtedness plus interest
into approximately $4.2 million of Series D Preferred Stock and Warrants at the
second closing.

         If the second closing does not occur, the Company will be obligated to
repurchase from each holder of the Series D Preferred Stock, at a per share
price equal to the original purchase price paid for each share of Series D
Preferred Stock, together with accrued and unpaid dividends through such date,
all of the shares of Series D Preferred Stock (together with the Warrants) sold
in the private placement.

                                       16





<PAGE>

         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,
payable in 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 and
Series C Preferred 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). 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.

         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) shares of Common Stock equal
to 90% of the 90-day volume weighted average price of the Common Stock ending on
the date prior to such third anniversary.

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

         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.

         The purchasers of the Series D Preferred Stock in the initial closing
of the private placement also received for no additional consideration Warrants
exercisable for an aggregate of 13,619,000 shares of Common Stock at an initial
exercise price of $0.50 per share, subject to certain anti-dilution adjustments.
If the Warrants are exercised within 12 months of the closing, however, the
exercise price will be $0.30 per share, subject to certain anti-dilution

adjustments. The Warrants expire on July 13, 2008. If the second closing of the
private placement occurs, Warrants to purchase an additional 40,044,000 shares
of Common Stock will be issued.

                                       17





<PAGE>

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

FINANCIAL CONDITION

         As of June 30, 2003, the Company had an accumulated deficit of
$60,426,253. Until recently, when the Company initiated manufacturing and sales,
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 just begun generating revenue from product sales. There can be no
assurance as to when the Company will achieve profitability, if at all. 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 least the next twelve months.

         The Company cannot guarantee that additional funding will be available
when needed or on favorable terms. If it is not, the Company will be required to
scale back its research and development programs, manufacturing, and selling,
general, and administrative activities, or otherwise reduce or cease operations
and its business and financial results and condition would be materially
adversely affected.

         Prior to December 2001, the Company had not produced any revenues as a
result of its being a development stage company. The Company had been dependent
on the net proceeds derived from seven private placements pursuant to Regulation
D under the Securities Act to fund its operations. The next four paragraphs
describe the private placements from early 2000 through June 30, 2003.

         In June 2001, the Company closed an initial round of a private
placement and in September 2001, closed the final round of the private
placement. The Company realized $13,787,085 in gross proceeds (less $1,092,278
in expenses related to the private placement) from the sale of 393.916 units,
each unit consisting of 1,000 shares of the Series C Preferred Stock and a
common stock purchase warrant to purchase 11,670 shares of the common stock. The
Company had previously realized $3,000,000 in gross proceeds from the sale of
75,000 shares of the then designated Series B Preferred Stock and related common
stock purchase warrants. However, the $3,000,000 purchase price for these shares
was applied to purchase units of the Series C Preferred Stock and the shares of
Series B Preferred Stock were cancelled and the related common stock purchase
warrants surrendered.

         On April 2, 2002, the Company sold 272 units, at $37,500 per unit, to
eight accredited investors. Each unit consisted of 10,000 shares of the common
stock and a common stock purchase warrant expiring April 1, 2007 to purchase
2,000 shares of the common stock at $4.50 per share. The Company realized
$10,200,000 in gross proceeds and incurred $780,112 in expenses related to the
private placement from the sale of 2,720,000 shares of common stock.

         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 due
diligence review by the lender. The lender notified the Company on January 29,

                                       18





<PAGE>

2003 that they were exercising their right not to extend the $7.5 million
additional funding. The current debt balance of $2.5 million bears interest at a
sixteen percent (16%) annual rate payable six percent (6%) in cash on a
quarterly basis and ten percent (10%) in cash at maturity. The loan and
accumulated interest payable may be converted into LifePoint's common stock at a
price of $4.00 per share at the option of the lender. The Company has issued to
the lender a warrant with an exercise price of $3.00 per share and a term of
five years to purchase 1.5 million shares of common stock. The debt amount
presented in the balance sheet of approximately $1.5 million is net of a debt
discount of approximately $1 million, which represents the unamortized portion
of the value assigned to the warrants using the Black-Scholes method. The
Company believes that the carrying value of this note approximates fair value as
the note is at prevailing market interest rates. The agreement is collateralized
by the assets of the Company. In addition to the collaterized 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 would result in the issuance of
additional warrants on terms similar to those described above.

         On February 19, 2003, the Company entered into a Note and Warrant
Purchase Agreement with a current investor to provide additional working
capital. The Company may draw up to $1,000,000 over the life of the agreement,
subject to limitations. Borrowings bear interest at 3% and all outstanding
principal and interest are due on the earlier of September 30, 2003 or the next
financing of at least $4,000,000. The amount outstanding under the loan and any
accumulated interest may be converted into LifePoint's equity at the same terms
of the next financing of at least $4,000,000. In addition, the Company has
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 $268,000 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 year ended March 31, 2003, the Company recorded
$45,758 to interest expense as amortization of debt discount. At June 30, 2003,
$1,544,782 is outstanding under the loan, which includes accrued interest and
loan fees of $416,633.

         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 due on the earlier of September 30,
2003 or the next completed equity financing. The note is recorded as a current
note payable in the balance sheet.

         On July 14, 2003, the Company closed a $2.2 million private placement
of Series D Convertible Preferred Stock ("Series D Preferred Stock") and
warrants to purchase Common Stock ("Warrants"). The investors in the private
placement have also agreed to purchase an additional $6.6 million of Series D
Preferred Stock and Warrants at a second closing. The second closing is subject
to the satisfaction of the following closing conditions: (i) the Company's
receipt of stockholder approval of the private placement under AMEX rules and of
an amendment to the Company's Restated Certificate of Incorporation increasing
the authorized Common Stock of the Company, (ii) the Company negotiating certain
compromise agreements with holders representing at least 75% of its outstanding
trade payables, and (iii) other customary closing conditions. In addition, if
the second closing is consummated, the holders of the Company's secured
indebtedness have agreed to convert their secured indebtedness plus interest
into approximately $4.2 million of Series D Preferred Stock and Warrants at the
second closing.

         If the second closing does not occur, the Company will be obligated to
repurchase from each holder of the Series D Preferred Stock, at a per share
price equal to the original purchase price paid for each share of Series D
Preferred Stock, together with accrued and unpaid dividends through such date,
all of the shares of Series D Preferred Stock (together with the Warrants) sold
in the private placement.

                                       19





<PAGE>

         The Company has entered into a strategic partnering agreement with CMI
to distribute the Company's products exclusively to the law enforcement market.
Based on its initial forecasts, CMI will make payments of approximately $5
million to LifePoint over a two and one-half year period. However, there can be
no assurance that CMI will make payments approximating that amount. Fees will be
calculated and paid in accordance with the confidential terms of the agreement.
There are no conditions for the Company to meet other than the delivery of
product to receive the fees. CMI has minimum, confidential, sales requirements
for the three-year term of the contract in order to retain the exclusive
marketing rights.

         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 is about to enter
into, distribution agreements with sixteen distributors covering twenty-five
countries in Europe and the Pacific Rim. There can be no assurance as to when or
if the outstanding agreements will be completed. All international transactions
are billed in US dollars and, therefore, no currency risk is involved.

         The Company has completed 510(k) submissions to the Food and Drug
Administration (the "FDA") for the IMPACT Test System and the NIDA-5 drugs of
abuse and is waiting for clearance of the submissions prior to selling its
product in the US regulated markets.. The Company recently received a request
for clarification from the FDA and expects to respond shortly. 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
("the 1997 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 has
executed, or will in the future execute, a Note in payment of the exercise price
for an option or warrant may, at his or her election, surrender to the Company
shares of common stock to pay off the Note. The number of shares surrendered is
determined by taking the total principal on the Note plus all accrued interest
and dividing it by the Fair Market Value (as defined in the 2000 Option Plan) on
the date of surrender. On December 2, 2002 Linda H. Masterson, Chief Executive
Officer, surrendered 424,586 shares to payoff Notes due to the Company totaling
$897,500 in principal and $36,588 in interest. Ms. Masterson has no further
Notes due to the Company. As of June 30, 2003, a single Note for $15,000 was
outstanding with a due date of September 14, 2006 and bearing interest at the
rate of 9%. A detailed list of the Notes due from officers and senior staff as
of March 31, 2002 may be found in Item 13 Certain Relationships and Related
Transactions in the Company's Annual Report on Form 10-K. All other Notes
previously issued have been fully repaid, including interest payments. 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.

         If all of the common stock purchase warrants that were outstanding on
June 30, 2003 were exercised (16,360,559 shares), the Company would realize
$48,690,618 in gross proceeds. If all of the options pursuant to the Company's
two Stock Option Plans to purchase an aggregate of 2,293,457 shares outstanding
on June 30, 2003, were subsequently exercised, the Company would realize
$5,969,111 in gross proceeds. However, there can be no certainty as to when and
if any of these securities may be exercised, especially as to the options, which
were not all currently exercisable as of June 30, 2003. Accordingly, management
believes that the Company cannot rely on these exercises as a source of
financing.

                                       20





<PAGE>

OPERATING CASH FLOWS

         Net cash used for operations for the three months ended June 30, 2003
amounted to $574,000 as compared to $4,720,000 for the same period ended June
30, 2002, a decrease of $4,146,000, as a result of decreased staffing and
limited operating expenses as the Company completed negotiations of its Series D
financing. See Note 8 - Subsequent Events for a full discussion of this
financing.

INVESTING CASH FLOWS

         During the three months ended June 30, 2003, net cash used by investing
activities was $0, compared to $232,000 for the same period in fiscal 2002. The
$232,000 decrease in cash used in the first three months of fiscal 2003 over the
same period in fiscal 2002 was as a result of the limited operating resources as
the Company completed negotiations of its Series D financing.

FINANCING CASH FLOWS

         Net cash provided by financing activities amounted to $566,000 during
the three months ended June 30, 2003 related to draws on the $1 million line of
credit. See Note 4 - Debt for a full discussion of the line of credit agreement.

         Net cash provided by financing activities amounted to $9,363,000 during
the three months ended June 30, 2002, related to the seventh private placement
of common stock with gross proceeds of $10,200,000 and proceeds from the
exercise of warrants and options of $56,000.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2003 VS. JUNE 30, 2002

         On January 29, 2003, the Company lost critical funding and the ability
to draw on a $7.5 million available on a debt facility. (See Note 4 - Debt for a
full discussion of these events). As a result of the lost funding the Company
was forced to reduce operating expenses and headcount during the quarter ended
June 30, 2003. The Company did not record any sales, nor any cost of sales
expense during this quarter. During the period ending June 30, 2002 the Company
recorded $256,566 as a cost of sales expense as a reserve against inventory.
During the quarter ended June 30, 2003, the Company spent $705,830 on research
and development, $937,241 on general and administrative expenses and an
additional $106,912 on selling expenses, as compared with $1,958,175, $461,794
and $552,287, respectively, during the quarter ended June 30, 2002. The decrease
of $1,252,245, or 64%, in research and development expenditures in 2003 is
primarily related to decreased staffing as a result of reduced operating
expenses and payroll due to the short term lack of funding available to the
Company. General and administrative expenses increased $475,447, or 103%,
primarily as a result of a one-time expenses due to loan fees on the $1 million
bridge loan and increased accounting fees related to the audit of fiscal 2003
results. Selling expenses decreased $445,375, or 81%, as a result of reduced
operating expenses and reduced salaries due to the short-term lack of available
funding. Interest expense for the quarter ended June 30, 2003 was $284,135, and
includes $166,000 of non-cash interest expense, while interest income was
$1,799, as compared to $22,921 and $9,823, respectively, for the same period in
2002.

THREE MONTHS ENDED JUNE 30, 2002 VS. JUNE 30, 2001

         The Company was in a backorder situation during the quarter ended June
30, 2002. This backorder resulted from the decision to incorporate final
modifications to the instrument and cassettes prior to filling additional
orders. The total backlog of sales at the end of June was approximately
$860,000. As a result, no revenue was recorded. The Company recognized $256,566
as a cost of sales expense in the quarter ended June 30, 2002 as a reserve
against inventory to offset the higher start-up costs associated with purchases

                                       21





<PAGE>

of initial parts, modification of existing IMPACT Test Systems and operational
inefficiencies. During the prior year period, the Company was still in a
development stage, and no revenues or cost of goods were recorded. During the
quarter ended June 30, 2002, the Company spent $1,958,175 on research and
development, $461,794 on general and administrative and an additional $552,287
on selling expenses, as compared with $1,728,595, $346,838 and $424,106,
respectively, during the quarter ended June 30, 2001. The increase of $229,580,
or 13%, in research and development expenditures in 2002 is primarily related to
increased staffing and related expenses during the final phase of product
transfer from development to manufacturing. General and administrative expenses
increased $114,956, or 33%, primarily as a result of increased staffing. Selling
expenses increased $128,181, or 30% as a result of increased staffing and focus
on marketing the IMPACT Test System. Interest expense for the quarter ended June
30, 2002 was $22,921 while interest income was $9,823, as compared to $39,150
and $35,495, respectively for the same period in 2001

                                       22





<PAGE>

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 and the risk factors in this Quarterly Report. Forward-looking
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 this
Report in Note 1 of Notes to the Financial Statements. As disclosed therein, 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.

         The Company believes the following critical accounting policies are
important to the presentation of the Company's financial condition and results.

INVENTORIES

         Inventories are priced at the lower of cost or market using the
first-in, first-out (FIFO) method. The Company maintains an allowance against
inventory for the potential future obsolescence of 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.

REVENUE RECOGNITION

         The majority of the Company's revenue is from sales of the IMPACT(R)
Test System, which launched at the end of fiscal 2002. The Company recognizes
revenue in the period in which products are shipped, title transferred and
acceptance and other criteria are met in accordance with the Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB
101 provides guidance on the recognition, presentation and disclosure of revenue
in financial statements. While the Company believes it has met the criteria of
SAB 101, due to delays in receiving payments on some of the Company's initial
shipments of products, the Company has elected to record revenue related to
shipments only to the extent the related cash has been collected. RISK FACTORS

                                       23





<PAGE>

         The following is a discussion of certain significant risk factors that
could potentially affect the Company's financial condition, performance and
prospects.

THE COMPANY HAS OPERATED AT A LOSS AND IT EXPECTS TO CONTINUE TO ACCUMULATE
DEFICIT. THE COMPANY'S INDEPENDENT AUDITORS HAVE INCLUDED IN THEIR REPORT AN
EXPLANATORY PARAGRAPH DESCRIBING CONDITIONS THAT RAISE DOUBT ABOUT THE COMPANY'S
ABILITY TO CONTINUE AS A "GOING CONCERN" IF THE COMPANY DOES NOT CLOSE ON THE
SECOND TRAUNCHE OF THE FINANCING CURRENTLY IN PROCESS

         As of June 30, 2003, the Company had an accumulated deficit of
$60,426,253. The Company has operated at a loss since inception and expects this
to continue for some time. The amount of the accumulated deficit will continue
to grow, as the Company continues to complete product trial acceptance with
certain distributors, further develop the product distribution network and
manufacturing capacity for our product.

         In July 2003, the Company closed a $2.2 million private placement of
Series D Convertible Preferred Stock ("Series D Preferred Stock") and warrants
to purchase Common Stock ("Warrants"). The investors in the private placement
have also agreed to purchase an additional $6.6 million of Series D Preferred
Stock and Warrants at a second closing. The second closing is subject to the
satisfaction of the following closing conditions: (i) the Company's receipt of
stockholder approval of the private placement under AMEX rules and of an
amendment to the Company's Restated Certificate of Incorporation increasing the
authorized Common Stock of the Company, (ii) the Company negotiating certain
compromise agreements with holders representing at least 75% of its outstanding
trade payables, and (iii) other customary closing conditions. In addition, if
the second closing is consummated, the holders of the Company's secured
indebtedness have agreed to convert their secured indebtedness plus interest
into approximately $4.2 million of Series D Preferred Stock and Warrants at the
second closing.

         If the second closing does not occur, the Company will be obligated to
repurchase from each holder of the Series D Preferred Stock, at a per share
price equal to the original purchase price paid for each share of Series D
Preferred Stock, together with accrued and unpaid dividends through such date,
all of the shares of Series D Preferred Stock (together with the Warrants) sold
in the private placement.

         If the second closing does not occur 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 has not yet obtained sufficient
capital to meet its projected operating needs for at least the next twelve
months. The Company's independent auditors have included in their report on the
financial statements for the twelve months ended March 31, 2003, an explanatory
paragraph describing conditions that raise substantial doubt about the Company's
ability to continue as a going concern.

THE COMPANY WILL HAVE A NEED FOR SIGNIFICANT AMOUNT OF MONEY IN THE FUTURE AND
THERE IS NO GUARANTEE THAT IT WILL BE ABLE TO OBTAIN THE AMOUNTS IT NEEDS.

         As discussed, the Company has operated at a loss, and expects that to
continue for some time in the future. The Company's plans for continuing product
refinement and development, further develop the distribution network and
manufacturing capacity will involve substantial costs. The extent of these costs
will depend on many factors, including some of the following:

o        The progress and breadth of product refinement and manufacturing
         capacity, and timing of product trial acceptance by distributors, all
         of which directly influence cost and product sales;

                                       24





<PAGE>

o        The costs involved in completing the regulatory process to get the
         Company's products approved, including the number, size, and timing of
         necessary clinical trials and costs associated with the current
         assembly and review of existing clinical and pre-clinical information;
o        The costs involved in patenting our technologies and defending them;
o        The cost of manufacturing and distributing the IMPACT Test System;
o        Competition for the Company's products and the Company's ability, and
         that of its distributors, to commercialize its product.

         In the past, the Company has raised funds by public and private sale of
its stock, and the Company is likely to do this in the future to raise needed
funds. Sale of the Company's stock to new private or public investors usually
results in existing stockholders becoming "diluted". The greater the number of
shares sold, the greater the dilution. A high degree of dilution can make it
difficult for the price of the Company's stock to rise rapidly, among other
things. Dilution also lessens a stockholder's voting power.

         The Company cannot assure you that it will be able to raise sufficient
capital needed to fund operations, or that it will be able to raise capital
under terms that are favorable to the Company.

OPERATIONAL LOSSES ARE EXPECTED TO CONTINUE FOR PROBABLY AT LEAST ANOTHER FIVE
QUARTERS AFTER COMPLETING THE JULY 2003 FUNDING.

         From the date the Company was incorporated on October 8, 1992 through
June 30, 2003, the Company has an accumulated deficit of $60,426,253. These
losses were due to the fact that the Company has only recently initiated the
marketing of its first product.

         In February 2002, the Company launched marketing of the IMPACT Test
System, its first product, to the international law enforcement market, one of
three initial worldwide target markets. There was no governmental approval
required as a prerequisite to market to these potential users of the Company's
product. However, as indicated elsewhere in this section "Risk Factors," there
are certain legal challenges that the Company must overcome to make its product
fully acceptable in this market.

         For the Company to market its product in the United States to hospitals
and other medical facilities (including medical emergency rooms), which are
another of the three initial worldwide target markets, the Company must first
obtain clearance from the FDA for its product. The Company has initiated six and
expects to complete all nine filings of 510(k) applications, including the
latest drugs developed, for clearance with the FDA during the quarter ending
September 30, 2003.

         The Company's other initial target market is industrial companies that
currently test employees for drugs and alcohol. In November 2000, the FDA
announced its intention to be consistent in its regulation of drugs of abuse
screening tests used in the home, work place, insurance and sports settings.
Should the FDA enforce such regulations, despite the Company's efforts and those
of others to dissuade the FDA from doing so, such regulations would delay the
start of marketing to the industrial market in the United States until the
Company complies. However, in anticipation of such adoption, the Company has
been collecting the additional field data which management believes, based on
discussions with the FDA, this agency would require to approve the Company's
entry into the industrial market in the United States. The Company will seek
this clearance from the FDA simultaneously with seeking its approval of use of
its product for medical purposes. In addition, the Company has commenced efforts
to market its product to law enforcement agencies and medical users in Europe
and Australia prior to obtaining FDA approval for use in the United States. This
program could offset any loss in early revenues due to the delay, if it occurs,
in the Company's marketing to the industrial market in the United States.

                                       25





<PAGE>

         The Company may not meet the schedule described in the preceding two
paragraphs, both as to its additional market launches and making its submissions
to the FDA. In addition, the FDA or a foreign government may not grant clearance
for the sale of the Company's product for routine screening and/or diagnostic
operations. Furthermore, the clearance process may take longer than projected.
Even if the Company does meet its schedule and although the Company has begun to
generate revenues, it is anticipated that profitability will not be attained
sooner than five quarters after completion of the July 2003 funding (see Item 7
of this Report for a detailed discussion of the July 2003 funding). Although the
Company can estimate, it cannot assure, as to when expected revenues will exceed
expenses.

THE COMPANY MAY HAVE A NEED FOR ADDITIONAL FINANCING TO CONTINUE OR EXPAND ITS
BUSINESS.

         On January 29, 2003, LifePoint announced that its lender decided not to
extend an additional $7.5 million available under a $10.0 million credit
facility. Since then, LifePoint, in conjunction with two investment bankers, has
been aggressively seeking $7.5 to $10.0 million in alternative financing to
replace the additional funds no longer available under the credit facility.

         In July 2003, the Company closed a $2.2 million private placement of
Series D Convertible Preferred Stock ("Series D Preferred Stock") and warrants
to purchase Common Stock ("Warrants"). The investors in the private placement
have also agreed to purchase an additional $6.6 million of Series D Preferred
Stock and Warrants at a second closing. The second closing is subject to the
satisfaction of the following closing conditions: (i) the Company's receipt of
stockholder approval of the private placement under AMEX rules and of an
amendment to the Company's Restated Certificate of Incorporation increasing the
authorized Common Stock of the Company, (ii) the Company negotiating certain
compromise agreements with holders representing at least 75% of its outstanding
trade payables, and (iii) other customary closing conditions. In addition, if
the second closing is consummated, the holders of the Company's secured
indebtedness have agreed to convert their secured indebtedness plus interest
into approximately $4.2 million of Series D Preferred Stock and Warrants at the
second closing.

         If the second closing does not occur, the Company will be obligated to
repurchase from each holder of the Series D Preferred Stock, at a per share
price equal to the original purchase price paid for each share of Series D
Preferred Stock, together with accrued and unpaid dividends through such date,
all of the shares of Series D Preferred Stock (together with the Warrants) sold
in the private placement.

         The Company believes that, with the gross proceeds from the July 2003
financing of $2.2 million, the $6.6 million in proceeds to be received from the
second closing of that financing, the elimination of secured debt and reduction
in non-secured debt,, the marketing fees and sales proceeds forecasted to be
paid from CMI, the proceeds from standard commercial banking lines of credit
and/or commercial equipment leasing lines which the Company plans to negotiate,
the Company shall have sufficient funds to manufacture and market its product
and reach profitability. The Company expects to achieve profitability not sooner
than five quarters after completion of the July 2003 funding (see Item 7 of this
Report for a detailed discussion of the July 2003 funding). There can be no
assurance that the Company's estimate as to costs and timing will be correct. In
addition, the Company may not be able to consummate standard commercial banking
lines of credit and/or commercial equipment leasing lines on an acceptable and
timely basis. Furthermore, if there is a reduced rate of growth in revenues from
those anticipated, the Company may require additional funding. In addition, if
orders for the Company's product come in faster than anticipated, the Company
could require additional financing to expand manufacturing, sales and other
capabilities. The Company's inability to meet any such increased demand could
result in the cancellation of orders and thus delay the attainment of
profitability.

         The ability of the Company to continue as a going concern will be
dependent upon its ability to achieve profitable operations The Company will
need to rely on the new financing to meet its capital needs until it achieves a
positive cash flow from operations. The Company's ability to raise additional
capital cannot be predicted at this time. Further, there can be no assurance
that the Company will achieve positive cash flow in the next fiscal year or
ever. If there is a reduced rate of growth in revenues from those anticipated,
the Company may require additional funding. In addition, if orders for the
Company's product come in faster than anticipated, the Company could require
additional financing to expand manufacturing, sales and other capabilities. The
Company's inability to meet any such increased demand could result in the
cancellation of orders and thus delay the attainment of profitability.

                                       26





<PAGE>

WE WILL BE INCREASING THE DEMANDS ON OUR LIMITED RESOURCES AS WE TRANSITION OUR
EFFORTS FROM RESEARCH AND DEVELOPMENT TO PRODUCTION AND SALES.

         The Company currently has limited financial and personnel resources. We
have only recently begun to transition from a research and development focused
organization to a production and sales organization. To successfully manage this
transition, we will be required to grow the size and scope of our operations,
maintain and enhance our financial and accounting systems and controls, hire and
integrate new personnel and manage expanded operations. There can be no
assurance that we will be able to identify, hire and train qualified individuals
as the Company transitions and expands. Our failure to manage these changes
successfully could have a material adverse effect on the quality of our products
and technology, our ability to retain customers and key personnel and our
operating results and financial condition.

TRANSITION TO AN OPERATIONAL COMPANY MAY STRAIN MANAGERIAL, OPERATIONAL AND
FINANCIAL RESOURCES.

         The Company expects to encounter the risks and difficulties frequently
encountered by companies that have recently made a transition from research and
development activities to commercial production and marketing. The Company has
set forth below certain of these risks and difficulties in this section "Risk
Factors." As an example, the transition from a development stage company to a
commercial company may strain managerial, operational and financial resources.
If the Company's product achieves market acceptance, then the Company will need
to increase the number of employees, significantly increase manufacturing
capability and enhance operating systems and practices. The Company can give no
assurances that it will be able to effectively do so or otherwise manage future
growth.

OUR IMPACT TEST SYSTEM MAY HAVE A LENGTHY SALES CYCLE IN SOME MARKETS AND OUR
CUSTOMERS MAY DECIDE TO CANCEL OR CHANGE THEIR PRODUCT PLANS, WHICH COULD CAUSE
US TO LOSE ANTICIPATED SALES.

         Based on our early stages of product sales and the new technology
represented by our product, our customers test and evaluate our product
extensively prior to ordering our product. In some markets, our customers may
need three to six months or longer to test and evaluate our product prior to
ordering. Due to this lengthy sales cycle, we have and may continue to
experience delays from the time we increase our operating expenses and our
investments in inventory until the time that we generate revenues for these
products. It is possible that we may never generate any revenues from these
products after incurring such expenditures. The delays inherent in our lengthy
sales cycle in some markets increase the risk that a customer will decide to
cancel or change its product plans. Such a cancellation or change in plans by a
customer could cause us to lose sales that we had anticipated. In addition, our
business, financial condition and results of operations could be materially and
adversely affected if significant customers curtail, reduces or delay orders.

THROUGH THE EARLY STAGES OF PRODUCT RELEASE, OUR AVERAGE PRODUCT CYCLES HAVE
TENDED TO BE SHORT AND, AS A RESULT, WE MAY HOLD EXCESS OR OBSOLETE INVENTORY
WHICH COULD ADVERSELY AFFECT OUR OPERATING RESULTS.

         While our sales cycles in our initial markets have been long, our
current average product life cycles tend to be short as a result of the rapidly
changing product designs we make based on customer feedback. As a result, the
resources devoted to product sales and marketing may not generate material
revenues for us, and from time to time, we may need to write off excess and
obsolete inventory. If we incur significant marketing and inventory expenses in
the future that we are not able to recover, and we are not able to compensate
for those expenses, our operating results could be adversely affected. In
addition, if we sell our products at reduced prices in anticipation of cost
reductions and we still have higher cost products in inventory, our operating
results would be harmed.

                                       27





<PAGE>

UNEXPECTED PROBLEMS AS TO HOW THE COMPANY'S PRODUCT FUNCTIONS CAN DELAY RECEIPT
OF REVENUES AND ULTIMATELY THE COMPANY ATTAINING PROFITABILITY AND COULD
POTENTIALLY ADVERSELY IMPACT THE COMPANY'S ABILITY TO CONTINUE AS A GOING
CONCERN.

         The Company experienced delays in marketing its product because of
unanticipated performance problems that had arisen first in the Company's own
testing in its research and development facility and later at market trial and
customer sites. Accordingly, when a product performance problem surfaced, the
Company had no choice except to make product improvements and modifications. The
Company also had to delay completion of the field-testing necessary to furnish
the data for some of the FDA submissions, and with it, to delay completion of
the FDA submission.

         By delaying the time of product production, these product problems
delayed receipt of revenues. They increased the Company's need for additional
financing. Any future delays in obtaining revenues will increase the Company's
need for additional financing. And with the past delays, and future delays, if
any, in receiving revenues, the Company's opportunity to achieve profitability
was, and will be, also delayed and could potentially adversely impact the
Company's ability to continue as a going concern.

         Attention is also directed to the possible delays at the FDA described
in this section "Risk Factors."

THE COMPANY WILL FACE COMPETITION FROM NEW AND EXISTING DIAGNOSTIC TEST SYSTEMS.

         The Company has begun to compete with many companies of varying size
that already exist or may be founded in the future. Substantially all of their
current tests available either use urine or blood samples as a specimen to test
for drugs of abuse or use breath, saliva, or blood samples to test for alcohol.
In addition, the Company recognizes that other products performing on-site
testing for drugs in blood or saliva may be developed and introduced into the
market in the future.

         The Company also faces as competitors BioSite Diagnostics Inc., Syva
Company (a division of Dade International Inc.), Varian Inc. and at least five
other major diagnostic and/or pharmaceutical companies. All of these competitors
currently use urine as the specimen for on-site drug testing. Almost all of
these prospective competitors have substantially greater financial resources
than the Company has to develop and market their products.

         With respect to breath testing for the presence of alcohol, the Company
will compete with CMI, Inc., Intoximeters, Inc., Draeger Safety, Inc., and other
small manufacturers.

         Furthermore, because of the time frame it has taken the Company to
bring its product to market, the Company's competition may have developed name
recognition among customers that will handicap future marketing efforts.

FAILURE TO COMPLY WITH THE SUBSTANTIAL GOVERNMENTAL REGULATION TO WHICH THE
COMPANY IS SUBJECT MAY ADVERSELY AFFECT ITS BUSINESS.

         Attention has been drawn to the fact that the Company cannot market its
saliva based testing device to hospitals and other medical facilities unless the
Company has obtained FDA approval. The Company has also pointed out that FDA
announced its intention to regulate marketing to the industrial market in the
United States. (See the section "Government Regulation" under this caption
"Business"). There can be no assurance that the Company will attain FDA approval
on a timely basis, if at all. In addition, if the FDA determines to regulate the
industrial market in the United States, this will delay the receipt of revenues
by the Company in this market.

                                       28





<PAGE>

         Attention has also been drawn to the fact that, if the Company cannot
obtain a waiver from CLIA regulation (see the section "Government Regulation"
under this caption "Business"), the cost of running the IMPACT Test System could
be higher for potential customers.

THE COMPANY MAY NOT BE ABLE TO EXPAND MANUFACTURING OPERATIONS ADEQUATELY OR AS
QUICKLY AS REQUIRED TO MEET EXPECTED ORDERS.

         The Company first began its manufacturing process in January 2001. It
is anticipated that it could take up to nine months to complete the full
automation of the saliva test module assembly line, once started. However, the
Company has not as yet made any significant deliveries of its product.
Accordingly, the Company has not as yet demonstrated the ability to manufacture
its product at the capacity necessary to support expected commercial sales. In
addition, the Company may not be able to manufacture cost effectively on a large
scale.

         The Company expects to conduct all manufacturing of the STM's at its
own facility. In addition, the Company intends to continue to assemble the
current instrument for at least another four to six months or more. If the
Company's facility or the equipment in its facility is significantly damaged or
destroyed, the Company may not be able to quickly restore manufacturing
capacity. The Company has engaged an OEM supplier to final assemble the current
instrument in conjunction with its own in-house assembly. The Company's current
timetable for transfer of some of the final assembly of the current instrument
is during the quarter ending March 31, 2003. The Company could, accordingly,
turn over instrument assembly to a number of qualified OEM instrument assembly
suppliers in the event of such problems at the Company facility. The Company can
use another manufacturer for the final assembly of its instrument because other
suppliers furnish the subassemblies and other components. Accordingly, any
capable electronics manufacturer would have the capability to produce this type
of equipment. The Company has identified several potential electronic
manufacturers as potential alternatives to its initial OEM supplier should it so
require. However, the cassette is a proprietary device developed by the Company
and, accordingly the Company is not currently aware of any alternative
manufacturer for the STM.

DEPENDENCE ON CMI, THE COMPANY'S STRATEGIC PARTNER TO MARKET TO THE LAW
ENFORCEMENT MARKET, MAY ADVERSELY AFFECT INITIAL MARKETING EFFORTS IF CMI DOES
NOT SELL IN THE QUANTITIES ANTICIPATED.

         As already indicated, the initial target market in the United States
was the law enforcement market. On June 4, 2001, the Company entered into an
exclusive three-year, renewable, distributorship agreement with CMI, Inc.
("CMI") to distribute the IMPACT Test System to the law enforcement markets in
the United States and Canada. The Company selected CMI because, to its
knowledge, it is the marketing and manufacturing leader for evidentiary breath
alcohol testing instruments in law enforcement in this country. Nevertheless,
CMI may not be able to sell the quantities of IMPACT Test Systems of which the
Company believes that CMI is capable. In such event, the Company would be
required to seek another distributor or increase its own internal selling staff.
The Company can give no assurance as to how quickly or successfully these
alternative methods of product distribution will be implemented. Another risk to
the Company is, of course, that if MPD Inc., CMI's parent corporation, became
bankrupt or had similar financial problems, this would prevent CMI from paying
fees or making purchases. Otherwise, based on CMI's initial forecasts, CMI will
pay the Company approximately $5,000,000 during the first two and one-half years
of the agreement whose three year term does not begin until general marketing of

                                       29





<PAGE>

the IMPACT Test System begins in the law enforcement market. The Company can
give no assurance, however, that CMI will make sales as it initially forecasted
and, accordingly, make significant payments to the Company. Even if CMI were to
pay the Company the contractual minimum amounts to maintain its exclusive
marketing rights, such payments would be materially less than the forecasted
amount of $5,000,000. For the Company to realize such forecasted amount from
CMI, CMI would have to sell, on the average, at least 15 IMPACT Test Systems per
month during the two-and-one-half-year period. As of June 30, 2003, the Company
had received no payments from CMI.

         The three-year term does not begin until general marketing of the
IMPACT Test System begins in the law enforcement market. Due to the loss of
financing, this is not expected to begin prior to the quarter ending September
30, 2003. The Company notes that CMI will benefit from volume discounts and,
therefore, 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.

         Another risk is that CMI may terminate the distribution agreement as
described in the section "Marketing and Distribution" under this caption
"Business".

LEGAL PRECEDENT HAS NOT YET BEEN ESTABLISHED FOR UPHOLDING THE RESULTS OF
LIFEPOINT'S DIAGNOSTIC TEST SYSTEM.

         The legal precedents for performing drug and alcohol testing in both
law enforcement and the industrial workplace have been well established. Blood
and urine testing are the currently accepted standard samples for drugs. Blood,
breath and saliva are the currently accepted standard samples for alcohol.
However, several saliva-based drug tests are beginning to be used. The Company
believes that its product meets the Daubert and Frye standards for admission as
scientific evidence in court. These two standards have been adopted in all 50
states. These standards require acceptance of the Company's product or
technology by members of the scientific community and proven performance equal
to currently used methods. The Company anticipates that the papers it has
presented over this past year and the papers that it will publish from its field
evaluations currently being completed will enable it to meet this requirement
prior to the first legal challenge to its product. However, the Company cannot
give assurance that its technology will be accepted. Until the Company's product
is challenged in court, legal precedence will not have occurred.

         The desire to use saliva for drug testing in the workplace market is
very strong. As an example, SAMHSA, the federal agency that regulates drug
testing on federal safety-sensitive workers, has indicated that it is in the
process of adding saliva to the menu of applicable technologies for drug testing
of federal safety sensitive personnel. There are few state laws limiting the use
of saliva for workplace testing. Currently, saliva or other bodily substances
testing of employees for drugs is permitted in all states but Maryland.

         State laws are being revised on an ongoing basis to allow law
enforcement officers to use saliva as a specimen for testing for drivers under
the influence of drugs or alcohol. Currently, saliva and other bodily substance
testing for DUI testing with consent is permitted in all states. However, such
testing will be subject to a variety of factors. Saliva or other bodily
substances for DUI testing for drugs or alcohol is specifically permitted in 24
states, but specifically excluded in only six. Additional efforts will be needed
to change the laws in these states which have not adopted saliva as a test
specimen. The Company believes this change will occur because law enforcement
officials are anxious to have a non-invasive test method for drug testing and
are willing to support legislation. The Company is currently working on draft
legislation for this joint effort. Nevertheless, the Company cannot give
assurance as to when and if this legislation will be adopted in the other
states.

                                       30





<PAGE>

         Lastly, the National Highway and Traffic Safety Administration must
approve alcohol test products for Department of Transportation use, either as a
screening method or an evidentiary method. The Company believes that its product
meets the requirements of an evidentiary product. Nevertheless, because the
Company has not yet submitted its product for approval, it cannot guarantee
acceptance by this governmental agency.

THE COMPANY'S EFFORTS TO LEGALLY PROTECT ITS PRODUCT MAY NOT BE SUCCESSFUL.

         The Company will be dependent on its patents and trade secret law to
legally protect the uniqueness of its testing product. However, if the Company
institutes legal action against those companies that it believes may have
improperly used its technology, the Company may find itself in long and costly
litigation. This result would increase costs of operations and thus adversely
affect the Company's results of operations.

         In addition, should it be successfully claimed that the Company has
infringed on the technology of another company, the Company may not be able to
obtain permission to use those rights on commercially reasonable terms. In any
event, payment of a royalty or licensing fee to any such company would also add
to costs of operations and thereby adversely affect the Company's results of
operations.

THE COMPANY MAY BE SUED FOR PRODUCT LIABILITY RESULTING FROM THE USE OF ITS
DIAGNOSTIC PRODUCT.

         The Company may be held liable if the IMPACT Test System causes injury
of any type. The Company has obtained product liability insurance to cover this
potential liability. The Company believes that the amount of its current
coverage is adequate for the potential risks in these areas. However, assuming a
judgment is obtained against the Company, its insurance may not cover the
potential liabilities. The Company's policy limits may be exceeded. If the
Company is required at a later date to increase the coverage, the Company may
obtain the desired coverage, but only at a higher cost.

THE COMPANY'S INCREASING EFFORTS TO MARKET PRODUCTS OUTSIDE THE UNITED STATES
MAY BE AFFECTED BY REGULATORY, CULTURAL OR OTHER RESTRAINTS.

         Now that the Company has held the market launch of the IMPACT Test
System in the United States, it has commenced efforts to market its product
through distributors in other countries, starting with certain of the Western
European and Asian countries.

         In addition to economic and political issues, the Company may encounter
a number of factors that can slow or impede its international sales, or
substantially increase the costs of international sales, including the
following:

         The Company does not believe that its compliance with the current
regulations for marketing its product in European countries will be a problem.
However, new regulations (including customs regulations) can be adopted by these
countries which may slow, limit or prevent the Company's marketing its product.
In addition, other countries in which the Company attempts, through
distributors, to market its product may require compliance with regulations
different from those of the Western European market.

         Cultural and political differences may make it difficult to effectively
obtain market acceptances in particular countries.

         Although the Company's distribution agreements provide for payment in
U.S. dollars, exchange rates, currency fluctuations, tariffs and other barriers
and extended payment terms could effect the Company's distributors' ability to
perform and, accordingly, impact the Company's revenues.

                                       31





<PAGE>

         Although the Company made an effort to satisfy itself as to the
credit-worthiness of its distributors, the credit-worthiness of the foreign
entities to which they sell may be less certain and their accounts receivable
collections may be more difficult.

ADDITIONAL RISK FACTORS MAY BE FOUND IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.

                                       32





<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.

         An evaluation was performed under the supervision and with the
participation of the Company's management, including the Chief Executive Officer
(CEO), and the Controller and Chief Accounting Officer (CAO), of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures within 90 days before the filing date of this quarterly report.
Based on that evaluation, the Company's management, including the CEO and CAO,
concluded that the Company's disclosure controls and procedures were effective.
There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect internal controls subsequent to
their evaluation.

                                       33





<PAGE>

                                     PART II
                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         Global Consultants, LLC d/b/a Global Capital instituted an action on
June 18, 2001 in a California state court against the Company and Linda H.
Masterson, Chairman, President and Chief Executive Officer. The plaintiff seeks
damages aggregating $4,500,000 for the non-issuance and termination of common
stock purchase warrants for an aggregate of 392,275 shares of the Common Stock.
The plaintiff's computation of damages is based on the market price of the
Common Stock on one day reaching $8.00 per share and on an excessive and
unsupportable number of shares subject to the warrants. The plaintiff's second
amended complaint does not allege the previously alleged claims relating to
fraud, negligence and accounting and for punitive or exemplary damages. The
Company believes that the effect of any settlement will not have a material
effect on the financial statements.

         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.

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

         None

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

         (a)      EXHIBITS

         99.1     Certification pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002 (18 U.S.C.ss.1350, as adopted)

         (b)      REPORTS ON FORM 8-K

         On July 14, 2003, the Company filed with the Securities and Exchange
         Commission a Current Report on Form 8-K regarding the Company's
         recently completed $8 million equity offering of Series D Preferred
         Stock.

                                       34





<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.
                                         (Registrant)

Date:    August 19, 2003                 By /s/ Linda H. Masterson
                                            ------------------------
                                         Linda H. Masterson
                                         Chief Executive Officer
                                            and duly authorized representative

                                         By /s/ Donald W. Rutherford
                                            --------------------------------
                                         Donald W. Rutherford
                                         Chief Financial Officer
                                            and duly authorized representative

                                       35





<PAGE>

CERTIFICATIONS

I, Linda H. Masterson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of LifePoint, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this quarterly report (the "Evaluation Date"); and

         c) presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: August 19, 2003

/s/ Linda H. Masterson
---------------------------
Linda H. Masterson
Chief Executive Officer

                                       36





<PAGE>

CERTIFICATIONS (CONTINUED)

I, Donald W. Rutherford, certify that:

1. I have reviewed this quarterly report on Form 10-Q of LifePoint, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this quarterly report (the "Evaluation Date"); and

         c) presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: August 19, 2003

/s/ Donald W. Rutherford
------------------------
Donald W. Rutherford
Chief Financial Officer

                                       37