<PAGE>


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


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

                  For the quarterly period ended     DECEMBER 31, 2003
                  ----------------------------------------------------

                  OR

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

                         Commission File Number: 1-12362

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

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

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

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


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

[X] Yes            [ ] No

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

[ ] Yes            [X] No

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

As of February 11, 2004 there were 51,401,538 shares of the registrant's Common
Stock, $.001 par value outstanding.



<PAGE>

                                                          2003 - LIFEPOINT, INC.
                                         For The Quarter Ended December 31, 2003


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

PART I -  FINANCIAL INFORMATION

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

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

     o    STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED
               DECEMBER 31, 2003 AND 2002 (UNAUDITED)........................  4

     o    STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED
               DECEMBER 31, 2003 AND 2002 (UNAUDITED)........................  5

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

     o    ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS........................... 18

     o    ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
               RISK.......................................................... 29

     o    ITEM 4 - CONTROLS AND PROCEDURES................................... 29

PART II -  OTHER INFORMATION

     o    ITEM 1 - LEGAL PROCEEDINGS......................................... 31

     o    ITEM 2- CHANGES IN SECURITIES AND USE OF PROCEEDS.................. 31

     o    ITEM 3 - DEFAULTS UPON SENIOR SECURITIES........................... 31

     o    ITEM 4- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........ 31

     o    ITEM 5- OTHER INFORMATION.......................................... 32

     o    ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.......................... 32


                                       2
<PAGE>
<TABLE>

                                                PART I
                                         FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
                                            LIFEPOINT, INC.
                                            BALANCE SHEETS
<CAPTION>
                                                                        DECEMBER 31,      MARCH 31,
                                                                            2003            2003
                                                                        -------------   -------------
<S>                                                                     <C>             <C>
ASSETS                                                                   (Unaudited)
Current assets:
  Cash and cash equivalents                                             $  3,871,902    $     75,588
  Inventory, net of allowance for excess inventory of $1,097,000 and       2,420,898       2,376,583
     $1,097,000 at December 31, 2003 and March 31, 2003, respectively
  Prepaid expenses and other current assets                                  417,199         337,343
                                                                        -------------   -------------
          Total current assets                                             6,709,999       2,789,514
Property and equipment, net                                                1,928,932       2,428,141
Patents and other assets, net                                                751,797         690,555
                                                                        -------------   -------------
Total assets                                                            $  9,390,728    $  5,908,210
                                                                        =============   =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                      $  1,379,053    $  2,871,963
  Accrued expenses                                                           362,658         683,439
  Notes payable                                                              187,848         388,859
  Capital lease, short-term                                                   81,654         412,606
                                                                        -------------   -------------
          Total current liabilities                                        2,011,213       4,356,867
Notes payable, long-term                                                     116,888              --
Convertible debt, net of discount                                                 --       1,620,250
                                                                        -------------   -------------
Total liabilities                                                          2,128,101       5,977,117
Commitments and contingencies (Note 6)
Stockholders' equity (deficit):
  Preferred Stock, Series C 10% Cumulative Convertible,
    $.001 par value, 600,000 shares authorized, 378,134 and 389,791
    outstanding at December 31, 2003 and March 31, 2003, respectively            378             390
  Preferred Stock, Series D 6% Cumulative Convertible,
    $.001 par value, 15,000 shares authorized, 11,351 and none
    outstanding at December 31, 2003 and March 31, 2003, respectively             12              --
  Common stock, $.001 par value; 350,000,000 shares authorized,
    44,862,925 and 37,226,378 shares issued and outstanding
    at December 31, 2003 and March 31, 2003, respectively                     44,862          37,226
  Additional paid-in capital                                              76,357,253      57,966,015
  Dividends payable in common stock                                          880,832              --
  Notes receivable-key employee                                              (15,000)        (15,000)
  Accumulated deficit                                                    (70,005,710)    (58,057,538)
                                                                        -------------   -------------
           Total stockholders' equity (deficit)                            7,262,627         (68,907)
                                                                        -------------   -------------
Total liabilities and stockholders' equity (deficit)                    $  9,390,728    $  5,908,210
                                                                        =============   =============


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

                                                  3
</TABLE>

<PAGE>
<TABLE>

                                               LIFEPOINT, INC.
                                           STATEMENTS OF OPERATIONS
                                                 (UNAUDITED)
<CAPTION>
                                                           FOR THE                       FOR THE
                                                      THREE MONTHS ENDED             NINE MONTHS ENDED
                                                          DECEMBER 31                   DECEMBER 31
                                                -----------------------------   -----------------------------
                                                     2003           2002            2003             2002
                                                -------------   -------------   -------------   -------------
<S>                                             <C>             <C>             <C>             <C>
Revenues                                        $         --    $     (1,240)   $    (18,500)   $    163,095

Costs and expenses:

  Cost of goods sold                                      --         238,433              --       1,270,428
  Research and development                         1,032,061       1,431,415       2,556,230       5,456,899
  Selling expenses                                   173,489         533,022         419,967       1,654,674
  General and administrative expenses                587,387         644,066       1,628,735       1,798,477
                                                -------------   -------------   -------------   -------------

    Total costs and expenses from operations       1,792,937       2,846,936       4,604,932      10,180,478
                                                -------------   -------------   -------------   -------------
Loss from operations                              (1,792,937)     (2,848,176)     (4,623,432)    (10,017,383)

Interest income                                          590          (4,031)         16,656         (21,355)
Interest expense                                          --         (51,750)       (323,140)        (51,750)
Discount on settlement of trade payables               3,558              --         727,171              --
                                                -------------   -------------   -------------   -------------

   Total other income (expense)                        4,148         (55,781)        420,687         (73,105)
                                                -------------   -------------   -------------   -------------

Net loss                                          (1,788,789)     (2,903,957)     (4,202,745)    (10,090,488)

Less registration effectiveness fee                       --              --              --         413,615
Less preferred dividends                             524,531         343,867       7,745,427       1,033,468
                                                -------------   -------------   -------------   -------------

Loss applicable to common stockholders          $ (2,313,320)   $ (3,247,824)   $(11,948,172)   $(11,537,571)
                                                =============   =============   =============   =============

Loss applicable to common stockholders
  per common share:
  Weighted average common shares
    outstanding - basic and assuming dilution     42,122,394      35,827,164      39,135,182      35,604,319
                                                =============   =============   =============   =============
Net loss per share applicable to
    common stockholders                         $      (0.05)   $      (0.08)   $      (0.31)   $      (0.32)
                                                =============   =============   =============   =============


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

                                                      4
</TABLE>

<PAGE>
<TABLE>

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

                                                                              Nine Months Ended December 31,
                                                                              -----------------------------
                                                                                  2003             2002
                                                                              -------------   -------------
<S>                                                                           <C>             <C>
OPERATING ACTIVITIES
Net loss                                                                      $ (4,202,745)   $(10,090,488)
Adjustments to reconcile net loss to net cash used by operating activities:
    Depreciation and amortization                                                  532,545         483,019
    Loan fees on note payable                                                      416,633              --
    Amortization of debt discount                                                  166,000          51,750
    Provision for doubtful accounts                                                     --          70,000
    Provision for excess inventory                                                      --         699,812
    Changes in operating assets and liabilities:
        Accounts receivable                                                             --        (141,607)
        Inventories                                                                (44,315)     (4,706,178)
        Prepaid expenses and other current assets                                  (79,856)        (47,877)
        Other assets                                                               (88,602)       (405,613)
        Accounts payable                                                        (1,336,653)      1,303,084
        Accrued expenses                                                           779,492        (172,816)
                                                                              -------------   -------------
Net cash used by operating activities                                           (3,857,501)    (12,956,914)

INVESTING ACTIVITIES
Purchases of property and equipment                                                 (5,976)       (547,718)
                                                                              -------------   -------------
Net cash used by investing activities                                               (5,976)       (547,718)

FINANCING ACTIVITIES
Sales of common stock                                                                   --      10,200,000
Expenses of common stock offering                                                       --        (780,112)
Sales of preferred stock                                                         7,777,993              --
Expenses of preferred stock offering                                              (608,326)             --
Exercise of stock options                                                               --          25,834
Exercise of warrants                                                               144,991         180,510
Proceeds from convertible debt                                                          --       2,500,000
Proceeds from note payable                                                         690,000              --
Interest received on notes receivable by officers                                       --         (27,778)
Payments on notes payable                                                          (13,915)             --
Payments on capital leases                                                        (330,952)       (351,906)
                                                                              -------------   -------------
Net cash provided by financing activities                                        7,659,791      11,746,548
                                                                              -------------   -------------
Increase/(decrease) in cash and cash equivalents                                 3,796,314      (1,758,084)

Cash and cash equivalents at beginning of period                                    75,588       2,985,364
                                                                              -------------   -------------
Cash and cash equivalents at end of period                                    $  3,871,902    $  1,227,280
                                                                              =============   =============
SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION:
Cash paid for interest                                                        $    157,150    $     89,304
                                                                              =============   =============
NONCASH FINANCING ACTIVITIES:

    Conversion of accounts payable to long-term note                          $    255,695    $         --
                                                                              =============   =============
    Value of common stock issued as dividends on preferred stock              $  1,006,370    $  1,033,468
                                                                              =============   =============
    Value of common stock surrendered as payment on note
       receivable-key employee                                                                $    925,278
                                                                              =============   =============
    Value of common stock as payment of registration effectiveness fees       $         --    $    780,696
                                                                              =============   =============


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

                                                     5
</TABLE>
<PAGE>

                                 LIFEPOINT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

ORGANIZATION AND BUSINESS

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

BASIS OF PRESENTATION

         In the opinion of LifePoint, 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. 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").

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.

OTHER RECEIVABLES

         Other receivables represent a full recourse note issued to the Company
by a member of management who is not an officer. The note outstanding at
December 31, 2003 is secured by shares of Company common stock held by such
member of management, bears interest at 8.25% and is due and payable by March
31, 2004. At December 31, 2003 and March 31, 2003, other receivables, included
in the prepaid and other current assets in the accompanying balance sheets,
totaled $96,465 and $91,824, respectively.


                                       6
<PAGE>

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 was approximately $622,907, $516,021 and $251,196, respectively.
Depreciation expense for the nine months ended December 31, 2003 and 2002 was
$532,545 and $483,019, respectively.

PATENTS

         The cost of patents is being amortized over their expected useful
lives, which is generally 17 years. At December 31, 2003 accumulated
amortization of patents was approximately $64,688. 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 December 31, 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 December 31, 2003.

RESEARCH AND DEVELOPMENT COSTS

         Research and development costs are expensed as incurred.

INVENTORIES

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

DIVIDENDS

         During the quarter ended December 31, 2003, the Company accrued
dividend expense of $524,531 on its preferred stock; $346,972 on its Series C,
and $177,659 on its Series D, to be paid in common stock. Additionally, the
Company has accrued dividends for this period and prior quarter to be paid with
1,660,573 shares of its common stock. In addition, during the quarter ended
September 30, 2003, the Company sold 13,007 shares of the Series D preferred
stock for net cash proceeds of $8,058,316, and conversion of $4.2 million in
secured debt. At the time the issuance of Series D preferred stock was
negotiated, the conversion price was set at the fair market value of the common
stock; however, at the time of issuance, the conversion price of the Series D
preferred stock was less than the fair market value of the common stock. Since
the Series D preferred stock was convertible immediately, the Company recorded
as dividend expense a beneficial conversion feature upon issuance of $6,501,649.


                                       7
<PAGE>

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>

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.

                                       8
<PAGE>

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 a member of management, who is not an officer, in exchange for
shares of the Company's common stock. The sole note outstanding at December 31,
2003 is secured by shares of Company common stock held by such member of
management, bears interest at 9% and is due and payable by September 14, 2006.
At December 31, 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.
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.

                                       9
<PAGE>

         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. The Company believes the adoption of this Statement will have no material
impact on its financial statements.

2.  INVENTORY

         Inventory is summarized as follows:

                                                     December 31,    March 31,
                                                        2003           2003
                                                     -----------    -----------

           Raw Materials                             $2,254,794     $2,210,479
           Work in process                            1,262,675      1,262,675
                                                     -----------    -----------
                                                      3,517,469      3,473,154
           Less:  inventory reserve                   1,096,571      1,096,571
                                                     -----------    -----------
                                                     $2,420,898     $2,376,583
                                                     ===========    ===========




                                       10
<PAGE>

3.  PROPERTY AND EQUIPMENT

         Property and equipment is summarized as follows:
<TABLE>
<S>                                           <C>
                                              Estimated          December 31,    March 31,
                                              Useful Lives           2003           2003
                                                                 ------------   ------------
           Furniture and Fixtures             3 - 7 years        $ 2,906,819    $ 2,891,723
           Test Equipment                     5 - 7 years            425,768        425,768
           Leasehold Improvements             3 - 5 years          1,372,966      1,372,966
                                                                 ------------   ------------
                                                                   4,705,553      4,690,457
           Less:  Accumulated Depreciation                         2,776,621      2,262,316
                                                                 ------------   ------------
                                                                 $ 1,928,932    $ 2,428,141
                                                                 ============   ============
</TABLE>

Depreciation expense for the quarters ended December 31, 2003 and 2002 was
$180,555, and $179,331, 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 certain limitations.
The $10.0 million maximum commitment consisted of $2.5 million initially
available and a $7.5 million balance that was to have been available following
due diligence review by the lender. The lender notified the Company on January
29, 2003 that they were exercising their right not to extend the $7.5 million
additional funding.

         The $2.5 million commitment was advanced to the Company in November
2002 and bore interest at sixteen percent (16%) of which six percent (6%) was
due in cash on a quarterly basis and ten percent (10%) due in cash at maturity.
On September 23, 2003, concurrent with the second closing of the Company's
private placement of Series D Preferred Stock, the convertible loan principal
and accrued interest totaling $2,711,507 was converted into 2,712 shares of
Series D Preferred Stock. Prior to the conversion, the Company issued to the
lender a warrant with an exercise price of $3.00 per share and a term of five
years to purchase up to 1.5 million shares of common stock. The loan was
collateralized by the assets of the Company. The estimated fair value of the
warrants of $1,035,000 was recorded as debt discount and was based on the
Black-Scholes valuation model with the following assumptions: dividend yield of
0%; expected volatility of 60%; risk-free interest rate of 4.5%; and a term of
five years. During the year ended March 31, 2003, the Company recorded $155,250
to interest expense as amortization of debt discount. In addition to the
collateralized interest, the agreement called 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
resulted in the issuance of additional five year warrants to purchase 25,000
shares of common stock also with an exercise price of $3.00 per share. 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 borrowed approximately $1,100,000 under the agreement. On
September 23, 2003, concurrent with the second closing of the Series D Preferred
Stock financing, the loan principal, accrued interest and fees totaling
$1,544,782 was converted into 1,544 shares of Series D Preferred Stock.
Borrowings under the loan bore interest at 3% per annum. Prior to the
conversion, the Company issued the lender a warrant with an exercise price of
$3.00 per share and a term of five years to purchase 1,120,000 shares of common
stock. The estimated fair value of the warrants of $286,000 was recorded as debt
discount and was based on the Black-Scholes valuation model with the following
assumptions: dividend yield of 0%; expected volatility of 121%; risk-free
interest rate of 3.0%; and a term of five years. During the year ended March 31,
2003, the Company recorded $45,758 to interest expense as amortization of debt
discount.

                                       11
<PAGE>

         On December 30, 2002 the Company entered into a Promissory Note with a
vendor for services rendered to the Company amounting to $162,394. No interest
is due under the terms of the note which is payable through the period ending
January 31, 2005. At December 31, 2003, $118,479 is outstanding under the note.
The note is recorded as a long-term note payable in the balance sheet. In
addition, during the period ending September 30, 2003, the Company reached
agreement with a number of its vendors to extend payment terms on outstanding
accounts payable resulting in an additional $255,695 in long-term notes payable.

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 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 accrued dividends totaling $336,396 to be paid through the issuance of
800,942 shares of common stock. For the quarter ended December 31, 2003, the
Company accrued dividends totaling $667,167, to be paid through the issuance of
1,635,693 shares of common stock.

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

                                       12
<PAGE>

         During the quarter ended December 31, 2003, holders of 11,657 shares of
Series C preferred stock converted their shares into 760,004 shares of the
Company's common stock.

         As of December 31, 2003, there were 378,134 shares of the Series C
Preferred Stock and corresponding warrants to purchase an aggregate of 4,597,000
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.

SERIES D PREFERRED STOCK

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

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

          The Series D Preferred Stock is entitled to a liquidation preference
over the Company's Common Stock 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 and certain other
conditions are met.

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

                                       13
<PAGE>

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

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

         The purchasers of the Series D Preferred Stock also received Warrants
exercisable for an aggregate of 91,543,345 shares of Common Stock (including a
warrant exercisable for 4,838,683 shares of Common Stock issued to the placement
agent for the offering, Roth Capital Partners) at an initial exercise price of
$0.50 per share, subject to certain non-price based 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 non-price based
anti-dilution adjustments. The Warrants issued at the First Closing expire on
July 13, 2008 and the Warrants issued at the Second Closing expired on September
21, 2003.

         During the quarter ended September 30, 2003, the Company sold 13,007
shares of the Series D preferred stock for net cash proceeds of $8,058,316 and
conversion of $4.2 million in secured debt. At the time of issuance, the
conversion price of the preferred stock was less than the fair market value of
the common stock. Since the Series D was convertible immediately, the Company
recorded as dividend expense a beneficial conversion feature upon issuance of
$6,501,649.

         The Company has accrued cumulative dividends in the amount of $880,832
for the quarter ended, which represents all unpaid dividends in arrears through
December 31, 2003.

         During the quarter ended December 31, 2003, holders of 1,656 shares of
the Series D preferred stock converted their preferred stock into 5,519,448
shares of common stock. Related to the conversion, the Company issued 77,968
shares of common stock as dividend shares. The dividend shares amounted to
$24,742 and has been recorded on the Company's Statement of Operations.

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.


                                       14
<PAGE>

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 obtained on August 13, 1998.
The options may either be incentive stock options as defined in Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code") to be granted to
employees or nonqualified stock options to be granted to employees, directors or
consultants. On August 25, 2000, the stockholders approved the Company's 2000
Stock Option Plan that would permit the granting of options to purchase an
aggregate of 2,000,000 shares of the Common Stock on terms substantially similar
to those of the 1997 Option Plan. On January 14, 2004, the stockholders approved
the Company's 2003 Stock Option Plan that would permit the granting of options
to purchase an aggregate of 10,000,000 shares of the Common Stock on terms
substantially similar to those of the 1997 Option Plan.

         As of December 31, 2003, options to purchase an aggregate of 2,274,146
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 776,749 shares of the Common Stock had been exercised and options
to purchase an aggregate of 722,465 shares of the Common Stock were then
exercisable. Options granted to date under the 1997 Option Plan and 2000 Option
Plan 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.

         During the quarter ended December 31, 2003, holders of warrants to
purchase 483,307 shares of common stock exercised their purchase rights.
Accordingly, the Company has recorded proceeds of $144,991 for the exercise of
these warrants.

         If all of the common stock purchase warrants that were outstanding on
December 31, 2003 (106,759,620 shares) were subsequently exercised in cash, the
Company would realize $79,211,591 in gross proceeds. If all of the options
outstanding on December 31, 2003 pursuant to the Company's 1997 Option Plan and
2000 Option Plan to purchase an aggregate of 2,274,146 shares were subsequently
exercised, the Company would realize $5,846,460 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 December 31, 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.

                                       15
<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.

         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 December 31, 2003, the
Company was ten months in arrears on its lease of its capital equipment, or
$456,898.

         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 $1,223,000 and $1,249,000 as of December
31, 2003 and 2002, respectively. Accumulated depreciation for assets under
capital lease was $666,700, and $529,800 at December 31, 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, the
Company 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.

                                       16
<PAGE>

         The three-year term of the agreement did not begin until general
marketing of the Company's 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.

         On November 25, 2003, CMI notified LifePoint that they were terminating
their distribution agreement with LifePoint. LifePoint believes that this
notification is not valid under the terms of the agreement and on December 30,
2003, LifePoint demanded a break-up fee from CMI for their desired early
termination of this agreement with LifePoint.


7.  LEGAL MATTERS

         Finova Capital instituted an action on December 10, 2003 in an Arizona
Superior Court against the Company. The plaintiff seeks damages aggregating
$350,000 for the non-payment of their lease financing agreement. While the
outcome of these proceedings cannot be predicted with certainty, the Company's
management does not believe that any of the proceedings will have a material
adverse effect on the operations or financial position of the Company.


8.  SUBSEQUENT EVENTS

         On January 1, 2004, Dr. Tom Foley resigned as Sr. Vice President of
Research and Development and as an officer of LifePoint. Since the development
of the IMPACT Test System is complete and the product transferred to
manufacturing, Dr. Foley was able to semi-retire; he will continue to support
the Company as a consultant on a part-time basis.

         On January 14, 2004, the board of directors approved the issuance of a
stock grant of 53,890 shares of Common Stock to a vendor that had agreed to
accept equity in lieu of cash to retire a debt of $26,945.


                                       17

<PAGE>


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

FINANCIAL CONDITION

            As of December 31, 2003, the Company had an accumulated deficit of
$70,005,710. The Company has devoted substantially all of its resources to
research and development and has experienced an ongoing deficiency in working
capital. The Company has recently initiated manufacturing and shipment of its
product to beta sites. There can be no assurance as to when the Company will
achieve profitability, if at all. The Company's revenues and results of
operations have fluctuated and can be expected to continue to fluctuate
significantly from quarter to quarter and from year to year. Various factors
that may affect operating results include: a) the length of time to close
product sales; b) customer budget cycles; c) the implementation of cost
reduction measures; d) the timing of required approvals from government
agencies, such as the Food and Drug Administration; and e) the timing of new
product introductions by the Company and its competitors.

         Prior to December 2001, the Company was a development stage company and
had not produced any revenues. The Company has been dependent on the net
proceeds derived from seven private placements pursuant to Regulation D under
the Securities Act of 1933 to fund its operations.

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

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

          The Series D Preferred Stock is entitled to a liquidation preference
over the Company's Common Stock 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 and certain other
conditions are met.

         The Company is required to redeem any shares of Series D Preferred
Stock that remain outstanding on the third anniversary of the closing, at its
option, in either (i) cash equal to the face amount of the Series D Preferred
Stock plus the amount of accrued dividends, or (ii) subject to certain
conditions being met, shares of Common Stock equal to the lesser of the then
applicable conversion price or 90% of the 90-day volume weighted average price
of the Common Stock ending on the date prior to such third anniversary.


                                       18
<PAGE>

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

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

         The purchasers of the Series D Preferred Stock also received Warrants
exercisable for an aggregate of 91,543,345 shares of Common Stock (including a
warrant exercisable for 4,838,683 shares of Common Stock issued to the placement
agent for the offering, Roth Capital Partners) at an initial exercise price of
$0.50 per share, subject to certain non-price based 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 non-price based
anti-dilution adjustments. The Warrants issued at the First Closing expire on
July 13, 2008 and the Warrants issued at the Second Closing expired on September
21, 2003.

         At the time the issuance of Series D preferred stock was negotiated,
the conversion price was set at the fair market value of the common stock;
however, at the time of issuance, the conversion price of the Series D preferred
stock was less than the fair market value of the common stock. Since the Series
D preferred stock was convertible immediately, the Company recorded as dividend
expense a beneficial conversion feature upon issuance of $6,501,649.

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

         The Company has filed 510(k) submissions to the Food and Drug
Administration (the "FDA") for the IMPACT Test System and the NIDA-5 drugs of
abuse in the fall of 2002. Although the applications were delayed because the
Company could not provide additional data requested by FDA on a timely basis,
principally due to a lack of funding and personnel, the Company responded to the
FDA in December 2003. There can be no assurance as to when or if the FDA will
grant clearance on these products.

         On March 6, 2000 and June 16, 2000, the Compensation Committee
authorized that executive officers and senior staff designated as significant
employees, who are optionees under the LifePoint, Inc. 1997 Stock Option Plan
and the 2000 Option Plan, respectively, or who hold common stock purchase
warrants may exercise an option or a warrant by delivering a promissory note
(the "Note") to the order of the Company. On December 15, 2000, the Board of
Directors authorized that an executive officer who executed a note in payment of
the exercise price for an option or warrant could, at his or her election,
surrender to the Company shares of common stock to pay off such note. The number
of shares surrendered was determined by taking the total principal on a note

                                       19
<PAGE>

plus all accrued interest and dividing it by the fair market value on the date
of surrender. On December 2, 2002, Linda H. Masterson, Chief Executive Officer,
surrendered 424,586 shares of common stock to payoff notes totaling $897,500 in
principal and $36,588 in interest due to the Company. Ms. Masterson has no
further notes due to the Company. As of December 31, 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 for the fiscal year ended March 31, 2003. 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.

OPERATING CASH FLOWS

         Net cash used by the Company in operations for the nine months ended
December 31, 2003 amounted to $3,857,501 as compared to $12,956,914 for the same
period ended December 31, 2002, a decrease of $9,099,413. This was due to
decreased staffing and limited operating expenses in the first nine months of
fiscal year 2004. The Company has also paid down outstanding payables by
$1,336,653 during the nine months ended December 31, 2003.

INVESTING CASH FLOWS

         During the nine months ended December 31, 2003, net cash used by
investing activities was $5,976 compared to $547,718 for the same period ended
December 31, 2002. The $541,742 decrease in cash used in the first nine months
of fiscal 2004 over the same period in fiscal 2003 is a result of the limited
operating resources available to the Company as it completed its Series D
preferred stock financing.

FINANCING CASH FLOWS

         Net cash provided by financing activities amounted to $7,659,791 for
the nine months ended December 31, 2003 compared to $11,746,548 for the same
period ended December 31, 2002. The net cash provided by financing activities
for the nine months ended December 31, 2003 was principally from the $7,777,993
in net proceeds from the Series D preferred stock financing. The net cash
provided by financing activities for the same period in fiscal 2003 was
principally from the $10,200,000 in gross proceeds from the Company's private
placement of common stock.





                                       20
<PAGE>

RESULTS OF OPERATIONS

THREE MONTHS ENDED DECEMBER 31, 2003 VS. DECEMBER 31, 2002

         The Company recognized no revenues during the quarter ended December
31, 2003, as compared to a credit for returns to revenues of $1,240 during the
quarter ended December 31, 2002. The Company recognized no cost of sales during
the quarter ended December 31, 2003 and $238,433 as cost of sales during the
period ended December 31, 2002. During the quarter ended December 31, 2003, the
Company spent $1,032,061 on research and development, including manufacturing
costs, $587,387 on general and administrative expenses and an additional
$173,489 on selling expenses, as compared with $1,431,415, $644,066 and
$533,022, respectively, during the quarter ended December 31, 2002. The decrease
of $399,354, or 28%, in research and development expenditures, the decrease of
$56,679, or 9%, in general and administrative expenses, and the decrease of
$359,533, or 67%, in selling expenses during the quarter ended December 31, 2003
was primarily related to the Company's reduction of operating expenses and
payroll due to its lack of capital funding beginning in January 2003. There was
no interest expense for the quarter ended December 31, 2003 and interest income
was $590, as compared to $51,750 and $(4,031), respectively, during the quarter
ended December 31, 2002. In addition, the Company recognized a gain on the
settlement of trade payables of $3,558 for the quarter ended December 31, 2003.

NINE MONTHS ENDED DECEMBER 31, 2003 VS. DECEMBER 31, 2002

         On January 29, 2003, the Company lost critical funding and the ability
to draw on a $7.5 million previously available under a debt facility. (See "Note
4 - Debt" for a full discussion of these events). As a result the Company was
forced to reduce operating expenses and headcount during the nine months ended
December 31, 2003. The Company recognized a credit of $18,500 for instruments
returned from one customer during the nine months ended December 31, 2003, as
compared to $163,095 in revenues for the sales of IMPACT Test Systems and Saliva
Test Modules during the nine months ended December 31, 2002. The Company
recognized no cost of sales during the nine months ended December 31, 2003 and
$1,270,428 as cost of sales during the nine months ended December 31, 2002.
During the nine months ended December 31, 2003, the Company spent $2,556,230 on
research and development, including manufacturing, $1,628,735 on general and
administrative expenses and an additional $419,967 on selling expenses, as
compared with $5,456,899, $1,798,477 and $1,654,674, respectively, during the
nine months ended December 31, 2002. The decrease of $2,900,669, or 53%, in
research and development expenditures, the decrease of $169,742, or 9%, in
general and administrative expenses, and the decrease of $1,234,707, or 75%, in
selling expenses during the nine months ended December 31, 2003 is primarily
related to the Company's reduction of operating expenses and payroll due to its
lack of capital funding beginning in January 2003. Additionally, during the nine
months ended December 31, 2003, the Company recognized a favorable adjustment of
$272,500 against general and administrative expenses resulting in the settlement
of the Global lawsuit. Interest expense during the nine months ended December
31, 2003 was $323,140 and interest income was $16,656, as compared to $51,750
and $(21,355), respectively, during the nine months ended December 31, 2002. In
addition, the Company recognized a gain on the settlement of trade payables of
$727,171 for the nine months ended December 31, 2003.

FORWARD-LOOKING STATEMENTS

         Some of the information in this Report may contain forward-looking
statements. These statements can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "anticipate," "estimate,"
"continue" or other similar words. These statements discuss future expectations,
contain projections of results of operations or of financial condition or state
other "forward looking" information. When considering forward-looking
statements, a stockholder or potential investor in LifePoint should keep in mind
the risk factors and other cautionary statements listed below and in the
Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2003.
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.

                                       21
<PAGE>

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 the
accompanying financial statements 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 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

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



                                       22
<PAGE>

THE FOLLOWING RISK FACTORS RELATE TO OUR OPERATIONS:

WE MAY NEED TO RAISE ADDITIONAL MONEY IN THE FUTURE AND THERE IS NO GUARANTEE
THAT WE WILL BE ABLE TO OBTAIN THE AMOUNTS WE MAY NEED.

         Our independent auditors have included in their report on our financial
statements for the twelve months ended March 31, 2003 an explanatory paragraph
describing conditions that raise substantial doubt about our ability to continue
as a going concern, unless we are able to raise additional funds. We just
completed an offering of Series D preferred stock, which may provide us with
sufficient funds to meet our needs in the near-term. However, if we are not able
to meet our business goals, including certain sales revenues, we may need to
raise additional funds in the future.

         We have operated at a loss and expect that to continue for some time in
the future. Our plans for continuing product refinement and development, and to
further develop our 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 scale-up of
              manufacturing capacity and the timing and completion of product
              trial acceptance by distributors and customers, all of which
              directly influence cost and product sales;
         o    The costs involved in completing the regulatory process to get our
              products approved, including the number, size, and timing of any
              potential requested additional field data and costs associated
              with any potential additional clinical data review and assembly;
         o    The costs involved in patenting our technologies and defending
              such patents;
         o    The cost of manufacturing scale-up and distributing the IMPACT
              Test System; and
         o    Competition for our products and our ability, and that of our
              distributors, to complete commercialization of our product.

         In the past, we have raised funds by public and private sales of our
stock, and we are likely to do this in the future to raise needed funds. Sales
of our stock to new private or public investors will usually result 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 our stock to rise rapidly, among other things. Dilution also lessens a
stockholder's voting power.

         We cannot assure you that we will be able to raise sufficient capital
to fund our operations, or that we will be able to raise capital under terms
that are favorable to us.

WE EXPECT OUR OPERATIONAL LOSSES TO CONTINUE FOR PROBABLY AT LEAST ANOTHER FOUR
QUARTERS AFTER DECEMBER 31, 2003.

         From the date we were incorporated on October 8, 1992 through December
31, 2003, we have incurred an accumulated deficit of $70,005,710. In February
2002, we launched the marketing of the IMPACT TEST SYSTEM, our first product, to
the international law enforcement market, one of our three initial worldwide
target markets. There was no governmental approval required as a prerequisite to
market to these potential users of our product. However, as indicated elsewhere
in this section "Risk Factors," there are certain legal challenges that we must
overcome to make our product fully acceptable in this market.

         For us to market our product in the United States to hospitals and
other medical facilities (including medical emergency rooms), which is another
one of our target markets, we must first obtain clearance from the FDA for our
product. The Company has filed 510(k) submissions to the FDA for the IMPACT Test
System and the NIDA-5 drugs of abuse in the fall of 2002. Although the
applications were delayed because the Company could not provide additional data
requested by FDA on a timely basis due to the lack of funding and personnel, the
Company has responded to the FDA in December 2003.

                                       23
<PAGE>

         Our 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 our 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 we comply with such
regulations. However, in anticipation of such adoption, we have been collecting
the additional field data which management believes, based on discussions with
the FDA, the FDA would require to approve our entry into the industrial market
in the United States. We will seek this clearance from the FDA simultaneously
with seeking approval of use of our product for medical purposes. In addition,
we have commenced efforts to market our 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 our marketing to the industrial market in the United
States.

         We may not meet the schedule described in the preceding two paragraphs,
both as to our additional market launches and making our submissions to the FDA.
In addition, the FDA or a foreign government may not grant clearance for the
sale of our product for routine screening and/or diagnostic operations.
Furthermore, the clearance process may take longer than projected. Even if we
meet our schedule and although we have generated revenues, we cannot predict
when or if we will ever attain profitability.

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

         We currently have 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 we transition and expand. 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.

         We expect 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. We have 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 our
product achieves market acceptance, then we will need to increase our number of
employees, significantly increase our manufacturing capability and enhance our
operating systems and practices. We can give no assurances that we will be able
to effectively do so or otherwise effectively manage future growth.


                                       24
<PAGE>

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 it. 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 from 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 may
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, reduce 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 we devote 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.

UNEXPECTED PROBLEMS AS TO HOW OUR PRODUCT FUNCTIONS CAN DELAY RECEIPT OF
REVENUES AND COULD ADVERSELY IMPACT OUR ABILITY TO CONTINUE AS A GOING CONCERN.

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

         These delays in product production and other product problems delayed
our receipt of revenues, which has increased our need for additional financing.
Attention is also directed to the possible delays at the FDA described in this
section "Risk Factors." Any future delays in obtaining revenues will increase
our need for additional financing and could adversely impact our ability to
continue as a going concern.

WE WILL FACE COMPETITION FROM NEW AND EXISTING DIAGNOSTIC TEST SYSTEMS.

         We face competition from many companies of varying size. Substantially
all of our competitors current products 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. Based on our knowledge of the marketplace, we believe that
there are no products currently available that both test simultaneously for
drugs of abuse and alcohol and provide lab-quality, blood-comparable, "under the
influence" information for drugs of abuse on-site. Drug testing is primarily
done on urine, both in a central lab or on-site, with limited testing being done
on blood in a central lab. Recently, saliva-based, lateral-flow membrane,
on-site drug tests have been introduced.


                                       25
<PAGE>

         Four companies, Avitar, Inc. ("Avitar"), OraSure Technologies, Inc.
("OraSure"), Varian, Inc. ("Varian"), formerly known as AnSys, Brannan Medical
("Brannan") and Cozart Bioscience Ltd. ("Cozart"), market oral screening drugs
of abuse devices. The type of technology used by these companies is called
lateral flow membrane technology, which is the process by which a specimen flows
across a treated test strip (membrane) and which produces colored test result on
a portion of the test strip. Home pregnancy tests are a good example of lateral
flow membrane technology. This type of test is less sensitive than the flow
immunosensor technology and cannot provide quantifiable results, but only
qualitative, yes/no answers. While we believe this type of technology is not
sensitive enough to detect certain drugs at levels that are found in saliva, we
recognize that other products performing on-site testing for drugs in blood or
saliva may be developed and introduced into the market in the future.

         We also face 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 we
have to develop and market their products.

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

         Furthermore, because of the time frame we have taken to bring our
product to market, our competition may have developed name recognition among
customers that will adversely effect our future marketing efforts.

FAILURE TO COMPLY WITH THE SUBSTANTIAL GOVERNMENTAL REGULATION TO WHICH WE ARE
SUBJECT MAY ADVERSELY AFFECT OUR BUSINESS.

         We cannot market our saliva-based testing device to hospitals and other
medical facilities unless we have obtained FDA approval. Additionally, the FDA
announced its intention to regulate marketing to the industrial market in the
United States. If the FDA determines to regulate the industrial market in the
United States, this will further delay the receipt of revenues by us in this
market. If we cannot obtain a waiver from CLIA regulation, the cost of running
the IMPACT TEST SYSTEM could be higher for potential customers. There can be no
assurance that we will obtain a waiver from CLIA regulation or FDA approval on a
timely basis, if at all. If we do not obtain such waiver and approvals, our
business will be adversely effected.

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

         We first began our manufacturing process in January 2001. However, we
have not as yet made any significant deliveries of our product. Accordingly, we
have not as yet demonstrated the ability to manufacture our product at the
capacity necessary to support expected commercial sales. In addition, we may not
be able to manufacture cost effectively on a large scale.

         We expect to conduct all manufacturing of the Saliva Test Module's
(STM) at our own facility. In addition, we intend to continue to assemble the
IMPACT TEST SYSTEM instrument for at least another four to six months or more.
If our facility or the equipment in our facility is significantly damaged or
destroyed, we may not be able to quickly restore manufacturing capacity. We have
engaged an outside manufacturer of instruments to final assemble the current
instrument in conjunction with our own in-house assembly. Our current timetable
for transfer of some of the final assembly of the current instrument is during
the quarter ending March 31, 2004. We could, accordingly, turn over instrument
assembly to a number of qualified outside instrument assembly suppliers in the
event of such problems at our facility. We can use another manufacturer for the
final assembly of our 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. We
have identified several potential electronic manufacturers as possible
alternatives to our initial outside supplier should we so require. However, the
STM is a proprietary device developed by us and, accordingly we are not
currently aware of any alternative manufacturer for the STM.

                                       26
<PAGE>

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

         The legal precedents for performing drug and alcohol testing in both
law enforcement and the industrial workplace are well established. Blood and
urine are the currently accepted standard samples for testing for drugs. Blood,
breath and saliva are the currently accepted standard samples for testing for
alcohol. However, several saliva-based drug tests are beginning to be used. We
believe that our product meets the legal standards for admission as scientific
evidence in court. However, until our product is challenged in court and a legal
precedence is established, we cannot give assurance that our technology will be
admissible in court and accepted by the market.

         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 or other bodily substances
for DUI testing for drugs or alcohol is specifically permitted in 24 states, but
specifically excluded in six. Additional efforts will be needed to change the
laws in these states which have not adopted saliva as an acceptable test
specimen for DUI testing. We cannot give assurance as to when and if this
legislation will be adopted in the other states.

         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. We believe that our product meets the
requirements of an evidentiary product. However, because we have not yet
submitted our product for approval, we cannot guarantee acceptance by this
governmental agency.

OUR EFFORTS TO LEGALLY PROTECT OUR PRODUCT MAY NOT BE SUCCESSFUL.

         We will be dependent on our patents and trade secret law to legally
protect the uniqueness of our testing product. However, if we institute legal
action against those companies that we believe may have improperly used our
technology, we may find ourselves in long and costly litigation. This result
could increase costs of operations and adversely affect our results of
operations.

         In addition, should it be successfully claimed that we have infringed
on the technology of another company, we may not be able to obtain permission to
use those rights on commercially reasonable terms, if at all. Moreover, in such
event a company could bring legal action against us and we may find ourselves in
long and costly litigation.

WE MAY BE SUED FOR PRODUCT LIABILITY RESULTING FROM THE USE OF OUR DIAGNOSTIC
PRODUCT.

         We may be held liable if the IMPACT TEST SYSTEM causes injury of any
type. We have obtained product liability insurance to cover us against this
potential liability. We believe that the amount of our current coverage is
adequate for the potential risks in these areas. However, assuming a judgment is
obtained against us, our insurance policy limits may not cover all of the
potential liabilities. If we are required at a later date to increase the
coverage, we may obtain the desired coverage, but only at a higher cost.


                                       27
<PAGE>

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

         We have commenced efforts to market our product through distributors in
countries outside the United States, starting with certain of the Western
European and Asian countries. In addition to economic and political issues, we
may encounter a number of factors that can slow or impede our international
sales, or substantially increase the costs of international sales, including the
following:

         o    We do not believe that our compliance with the current regulations
              for marketing our 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 our
              marketing our product. In addition, other countries in which we
              attempt, through distributors, to market our product may require
              compliance with regulations different from those of the Western
              European market.

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

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

         o    Although we made an effort to satisfy ourselves as to the
              credit-worthiness of our 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.


THE FOLLOWING RISK FACTORS RELATE TO OWNERSHIP OF OUR CAPITAL STOCK:

WE DO NOT ANTICIPATE PAYING DIVIDENDS ON COMMON STOCK IN THE FORESEEABLE FUTURE.

         We intend to retain future earnings, if any, to fund our operations and
expand our business. In addition, our expected continuing operational losses and
our Series C and Series D preferred stock will limit legally our ability to pay
dividends on our common stock. Accordingly, we do not anticipate paying cash
dividends on shares of our common stock in the foreseeable future.

OUR BOARD'S RIGHT TO AUTHORIZE ADDITIONAL SHARES OF PREFERRED STOCK COULD
ADVERSELY IMPACT THE RIGHTS OF HOLDERS OF OUR COMMON STOCK.

         Our board of directors currently has the right, with respect to the
2,385,000 shares of our preferred stock not designated as our Series C or Series
D preferred stock, to authorize the issuance of one or more additional series of
our preferred stock with such voting, dividend and other rights as our directors
determine. Such action can be taken by our board without the approval of the
holders of our common stock. The sole limitation is that the rights of the
holders of any new series of preferred stock must be junior to those of the
holders of the Series D, followed by the Series C preferred stock with respect
to dividends, upon redemption and upon liquidation. Accordingly, the holders of
any new series of preferred stock could be granted voting rights that reduce the
voting power of the holders of our common stock. For example, the preferred
holders could be granted the right to vote on a merger as a separate class even
if the merger would not have an adverse effect on their rights. This right, if
granted, would give them a veto with respect to any merger proposal. Or they
could be granted 20 votes per share while voting as a single class with the
holders of the common stock, thereby diluting the voting power of the holders of
our common stock. In addition, the holders of any new series of preferred stock
could be given the option to be redeemed in cash in the event of a merger. This
would make an acquisition of us less attractive to a potential acquirer. Thus,
our board could authorize the issuance of shares of the new series of preferred
stock in order to defeat a proposal for the acquisition of us which a majority
of our then holders of our common stock otherwise favor.


                                       28
<PAGE>

OUR CERTIFICATE OF INCORPORATION CONTAINS CERTAIN ANTI-TAKEOVER PROVISIONS,
WHICH COULD FRUSTRATE A TAKEOVER ATTEMPT AND LIMIT YOUR ABILITY TO REALIZE ANY
CHANGE OF CONTROL PREMIUM ON SHARES OF OUR COMMON STOCK .

         There are two provisions in our certificate of incorporation or bylaws
which could be used by us as an anti-takeover device. Our certificate of
incorporation provides for a classified board -- one third of our directors to
be elected each year. Accordingly, at least two successive annual elections will
ordinarily be required to replace a majority of the directors in order to effect
a change in management. Thus, the classification of the directors may frustrate
a takeover attempt which a majority of our then holders of our common stock
otherwise favor.

         In addition, we are obligated to comply with the procedures of Section
203 of the Delaware corporate statute, which may discourage certain potential
acquirors which are unwilling to comply with its provisions. Section 203
prohibits us from entering into a business combination (for example, a merger or
consolidation or sale of assets of the corporation having an aggregate market
value equal to 10% or more of all of our assets) for a period of three years
after a stockholder becomes an "interested stockholder." An interested
stockholder is defined as being the owner of 15% or more of the outstanding
voting shares of the corporation. There are exceptions to its applicability
including our board of directors approving either the business combination or
the transaction which resulted in the stockholder becoming an interested
stockholder. At a minimum we believe such statutory requirements may require the
potential acquirer to negotiate the terms with our directors.

ADDITIONAL RISK FACTORS MAY BE FOUND IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED MARCH 31, 2003 FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

ITEM 4. CONTROLS AND PROCEDURES.

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


                                       29
<PAGE>

         As of December 31, 2003, the end of the quarter covered by this report,
the Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer and the Company's Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. Based on the foregoing, the Company's Chief Executive Officer
and Chief Accounting Officer concluded that the Company's disclosure controls
and procedures were effective at the reasonable assurance level.

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




                                       30
<PAGE>


PART II
                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         Not applicable.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         Not applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         Not applicable.

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

         (a) The Annual Meeting of Stockholders (the "Annual Meeting") was held
on January 14, 2004.

         (b) The following matters received the votes at the Annual Meeting, set
forth below:

                  (1) On the proposal to elect M.Richard Wadley as a Class A
         director to serve until the Annual Meeting of Stockholders in 2004 or
         until his successor is duly elected and qualified and Linda H.
         Masterson and Nuno Brandolini as Class C directors to serve until the
         Annual Meeting of Stockholders in 2006 or until his or her successor is
         duly elected and qualified:

                                         For            Against        Abstain
                                         ---            -------        -------
         M. Richard Wadley            53,833,015              0        623,312
         Linda H. Masterson           53,636,645              0        819,682
         Nuno Brandolini              53,814,012              0        642,315

                  (2) On the proposal to approve an amendment to the Company's
         Amended and Restated Certificate of Incorporation increasing the total
         number of shares of the Company's common stock authorized for issuance
         by 100,000,000 shares:

                                         For            Against        Abstain
                                         ---            -------        -------
                                      48,306,725      6,000,724        148,878

                  (3) On the proposal to approve the adoption of the Company's
         2003 Incentive Award Plan which provides for 10,000,000 shares of
         Company Common Stock to be authorized for issuance thereunder:

                                         For            Against        Abstain
                                         ---            -------        -------
                                      31,605,616      6,315,915     16,534,796

                  (4) On the proposal to ratify the appointment of Singer Lewak
         Greenbaum & Goldstein as independent auditors for the fiscal year
         ending March 31, 2004:

                                         For            Against        Abstain
                                         ---            -------        -------
                                     53,125,990         185,131      1,145,206




                                       31
<PAGE>

ITEM 5.  OTHER INFORMATION

         Not applicable.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      EXHIBITS

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

         (b)      REPORTS ON FORM 8-K

         On November 19, 2003, the Company filed with the Securities and
         Exchange Commission a Current Report on Form 8-K related to the
         announcement detailing the Company's progress.

         On November 13, 2003, the Company filed with the Securities and
         Exchange Commission a Current Report on Form 8-K related to the
         Company's announcement of its financial results for the quarter ended
         September 30, 2003.



SIGNATURES

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

                                        LIFEPOINT, INC.

Date: February 11, 2004                 By /s/ Linda H. Masterson
                                           ------------------------------
                                           Linda H. Masterson
                                           Chief Executive Officer


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


                                       32
<PAGE>


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


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

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





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