Washington, D.C. 20549

_______________

For the fiscal year ended March 31, 2001

Commission File No. 1-12362

(Exact name of Registrant as specified in its charter)

(909) 418-3000

Safe Harbor Statement under the Private Litigation Reform Act of 1995

With the exception of historical information, the matters discussed in this Annual Report on Form 10-K include certain forward-looking statements that involve risks and uncertainties. Among the risks and uncertainties to which LifePoint, Inc. ("LifePoint" or the "Company") is subject are the risks that it will not obtain the financing necessary to bridge the gap between the commencement of marketing and the attainment of profitability, as to which profitability there can be no assurance as to when and if it will occur; that it will not complete the commercialization of its first product on a timely or successful basis and that the costs will be higher than projected; that before the third quarter of 2001 when LifePoint's management currently believes that it will begin marketing its saliva based drugs of abuse and alcohol test product to non-medical markets and that before the fourth quarter of 2001 when the product will be submitted for United States governmental approval, competitors, with greater financial resources, will have produced and offered for sale a saliva based product which is more competitive to LifePoint's product than those currently being offered; and that the potential market for LifePoint's products will not be as large as currently anticipated. As a result, the actual results realized by LifePoint could differ materially from the statements made herein. Stockholders of LifePoint, as well as prospective investors, are cautioned not to place undue reliance on forward-looking statements made in this Report. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Forward Looking Statements" in Item 7 to this Report.

LifePoint is a medical technology company that has designed, is manufacturing and will shortly be marketing the IMPACT^TM Test System - a rapid diagnostic testing, screening, and therapeutic drug monitoring device for use in the workplace, home health care, ambulances, pharmacies and law enforcement. LifePoint is focused on the commercialization of the flow immunosensor technology licensed from the United States Navy (the "USN"). This patented technology, when used in conjunction with LifePoint's own patented and proprietary technologies using saliva as a non-invasive test specimen, has allowed for the development of a broadly applicable non-invasive, rapid, on-site diagnostic test system. The first product being commercialized is for the simultaneous detection of drugs of abuse and alcohol, the market for which is estimated to be over $1.6 billion by 2002.

LifePoint's objective is to become a highly profitable, industry leader of non-invasive, on-site, cost-effective, rapid diagnostic products. The Company's strategies for achieving this objective include the following:

• develop and sell products that exploit the unique capabilities of the flow immunosensor and saliva aspiration technologies;
• continue to invest in research and development to develop new applications for the use of saliva as a diagnostic specimen;
• form strategic partnerships to quickly and effectively penetrate identified markets (a partnership for distribution into the law enforcement market has already been established);create brand recognition for LifePoint's trademarks, including the IMPACT Test System;
• and protect and enhance the Company's proprietary technology base.

The Company was incorporated on October 8, 1992 under the laws of the State of Delaware, under the name "U.S. Drug Testing Inc.," as a wholly owned subsidiary of Substance Abuse Technologies, Inc. ("SAT"), then a public company and now named Employee Information Services, Inc. The Company's name was changed to "LifePoint, Inc." on February 25, 1998.

From its inception until October 31, 1997, the Company was under the control of SAT. On October 29, 1997, SAT sold the controlling stockholder interest in the Company to Meadow Lane Partners, LLC ("Meadow Lane"), then an unaffiliated party, for $250,000. On October 31, 1997, two directors of the Company who were then directors of SAT (and one of whom was then SAT's Chief Executive Officer) resigned. On November 4, 1997, Linda H. Masterson, the President and Chief Executive Officer of the Company, resigned as a director of SAT, thereby terminating SAT's last relationship with the Company. The Company has operated as a totally independent company since that time.

The Company has not produced any revenues through March 31, 2001 because the Company is still in the process of commercializing its first marketable product, the IMPACT Test System. The Company has developed proprietary systems that will generate immediate, diagnostic results for a broad variety of substances by non-invasively testing saliva. The first product is a test for substance abuse, specifically for the following five commonly used drugs of abuse: cocaine, opiates (heroin, morphine and codeine), phencyclidine (PCP), amphetamine (including methamphetamine), and tetrahydrocannabinol (THC, marijuana) (collectively the "Drugs of Abuse"), and alcohol.

In April 1999, the Company and the USN completed negotiations for an expansion of the ten-year license agreement (the "License Agreement") granted to SAT in 1992 and transferred to the Company in 1997. The original License Agreement covered the exclusive use by the Company of the USN's technology for testing urine for drugs of abuse. The new terms expand the field-of-use from drugs of abuse and anabolic steroids on urine samples to include all possible diagnostic uses for saliva. The Company is further developing the USN-developed technology for application in its own proprietary test system. See the sections "Patents and Technology" and "Material Contracts" under this caption "Business."

Until the saliva based test system is submitted to the Food and Drug Administration (the "FDA") and/or marketing has commenced, no revenues from product sales are likely to be produced. The Company currently expects to submit its six-panel cassette to the FDA in the fourth quarter of 2001 at the earliest, and to begin selling to non-medical markets in the third quarter of 2001 at the earliest, and to begin selling to medical markets after obtaining FDA clearance. However, there can be no assurance that such submission or such commencement of marketing will occur by such dates or that the final commercial product will be completed by the third quarter of 2001.

The Company will be able to market the product in the United States for non-medical purposes, such as law enforcement agencies' testing and safety sensitive testing by industrial companies, and in Europe where no FDA clearance is required prior to product submission to the FDA. The Company will be able to commence marketing of the product in US medical markets when FDA clearance is obtained. The Company anticipates such clearance to occur approximately 100 days (based on the current experience of other companies at the FDA) after submission if such approval is obtained. There can be no assurance as to when and if the Company will submit such assay to the FDA, as to when and if the FDA will give its clearance and as to when and if marketing in either medical or non-medical markets will commence. Management recognizes that, although FDA clearance is not generally required for use of drug testing for non-medical purposes, such as law enforcement agencies' testing and industrial safety sensitive testing, FDA clearance of the product will assist the Company's marketing in the United States to such customers. Preliminary marketing efforts, including markets research, participation at trade shows, and presentation of peer-reviewed papers have been initiated for each target market segment. See the sections "Governmental Regulation" and "Marketing and Distribution" under this caption "Business."

Management anticipates that the Company's saliva based drugs of abuse and alcohol test will become evidentiary in the law enforcement market. However, management expects that the Company's tests may be performed on a non-evidentiary basis in some portions of the industrial marketplace. If a drug of abuse is detected in the initial test, for some markets, the sample may need to be forwarded to a laboratory, where an expensive confirmatory analysis will be performed. Usually gas chromatography/mass spectrometry ("GC/MS") is employed for the confirmatory test. The Company's marketing analysis has indicated a greater market potential for a saliva-based test for drugs of abuse and alcohol via a completely automated, quantitative transportable instrument by law enforcement agencies, occupational health clinics, hospitals and other medical facilities than for a urine sample, tested either at a laboratory or on-site. However, the use of this product in other potential markets that are testing for recent drug use (over the last two to five days) or "lifestyle testing," such as pre-employment testing, may be limited with the Company's initial product.

Based on its knowledge of the marketplace, management believes that there are no products currently available that both test simultaneously for drugs of abuse and alcohol and provide quantitative, blood-equivalent "under the influence" information for the drugs of abuse on-site. In July 1999, Avitar, Inc. ("Avitar") announced that it had commenced shipping of the first oral screening test for cocaine, opiates and marijuana. The type of technology (lateral flow membranes) used by Avitar (and other companies developing similar products) is less sensitive than the flow immunosensor technology and does not provide quantitative results, but only qualitative, yes/no answers. The results, therefore, cannot be evidentiary (used in court). LifePoint believes this type of technology is not sensitive enough to detect certain drugs at levels that are found in saliva, and recent independent studies seem to confirm this information. Additionally, any test results which is not instrumented and automated will generally not be court defensible in law enforcement and industrial markets.

In 2001, AnSys, Inc. ("AnSys") announced the release of a similar type product, a lateral flow membrane test for drugs of abuse using saliva as a test specimen. In addition, management has been advised that one or more other companies may have a saliva sample testing product under development, although the technology they are using is believed to be similar to those mentioned above, and very different from that of the Company. There can be no assurance that other competitors will not begin to offer a saliva sample testing product in the future, whether before or after the Company completes the commercialization of its first product. In addition, there can be no assurance that Avitar and AnSys will not modify their products to meet the Company's criticism described in this and the preceding paragraph. See the section "Competition" under this caption "Business."

As a result of LifePoint being a development stage company and, accordingly, not deriving revenues from the sales of products and/or services, the Company has, since obtaining its independence from SAT in October 1997 (see the section "History of the Company" under this caption "Business"), been dependent on the net proceeds derived from six private placements pursuant to Regulation D under the Securities Act of 1933, as amended (the "Securities Act"), to fund its operations. The succeeding three paragraphs describe the private placements during the fiscal years ended March 31, 2000 ("fiscal 2000") and 2001 ("fiscal 2001").

On February 29 and March 14, 2000, the Company closed a fourth private placement as to the sale in the aggregate of 1,840 units at $5,000 per unit, each unit consisting of 2,500 shares of the Common Stock and a Common Stock purchase warrant expiring February 28 or March 13, 2005 (the "Investor Warrant") to purchase 2,500 shares of the Common Stock at $3.00 per share. The Company realized approximately $8,577,000 in net proceeds from this offering. As the result of an offer to the holders of the Investor Warrants of a reduced exercise price of $2.40 per shares during the period October 16, 2000 to December 16, 2000, both dates inclusive, the Company realized $903,600 in net cash from the holders who exercised.

On March 29, 2001, the Company closed a fifth private placement as to the sale of 75,000 shares of Series B 20% Convertible Preferred Stock, $.001 par value (the "Series B Preferred Stock"), at $40.00 per share and the Company realized $3,000,000 in gross proceeds.

On June 20, 2001, the Company held an initial closing of a sixth private placement in which it sold, at a purchase price of $35,000 per Unit, an aggregate of 228.007 Units, each Unit consisting of 1,000 shares of a newly designated Series C Convertible Preferred Stock (the "Series C Preferred Stock") and a Common Stock purchase warrant expiring June 19, 2006 (the "Series C Warrant") to purchase at $3.50 per share 10,000 shares of the Common Stock. The Company realized almost $8,000,000 in gross proceeds from this offering.

On June 29, 2001, the Company sold an additional 85.714 Units and realized an additional $3,000,000 in gross proceeds. The Company is seeking to sell an additional 114 Units.

On June 29, 2001, the Company called the shares of the Series B Preferred Stock for redemption, paying the holders an aggregate of $3,000,000. The holders also surrendered their Common Stock purchase warrants expiring March 28, 2006 to purchase an aggregate of 225,000 shares of the Common Stock, which warrants they had received with their shares of the Series B Preferred Stock.

The Company has entered into a strategic partnering agreement with CMI, Inc. ("CMI") to distribute the Company's products exclusively to the law enforcement market. As part of this agreement, CMI will make payments of approximately $5 million to LifePoint over a two and one-half year period. Additionally, the Company continues to pursue additional strategic partnering in the industrial market and is in discussions with a large potential partner. Several large pharmaceutical and diagnostic corporations have also expressed their initial interest in partnering with the Company. Management anticipates that an additional partnering agreement may be completed. See the section "Marketing and Distribution" under this caption "Business."

Management believes that, with the net proceeds from the private placements described above, and the payments from CMI, the Company has sufficient funds to finish the product commercialization, generate field trials and pilot studies, initiate marketing and reach profitability. Management estimates that it will reach profitability five quarters post product introduction. There can be no assurance that management's estimate as to the costs will be correct or that profitability will be achieved, whether by the projected date or later. Any delays may further increase the Company's costs.

Management has investigated the possibility of an underwritten public offering and has received expressions of interest from several well-known firms, but only on a post-revenue basis. However, because currently the market is not generally receptive to public offerings, there can be no assurance that stock market conditions later in 2001 or 2002 will be receptive to a public offering by the Company, especially in view of the volatility of the market generally in 2000 and the first quarter of 2001. In addition, competitive conditions in the substance abuse testing industry at that time may make the Company less attractive to potential public investors. See the section "Competition" under this caption "Business."

Having successfully consummated six private placements pursuant to Regulation D under the Securities Act since November 1997, the Company may seek to raise any additional financing, if needed, through this method. As with a public offering, there can be no assurance that potential investors would be receptive to a private placement by the Company when the Company seeks to sell additional stock, either because of general stock market conditions or conditions generally in the substance abuse testing industry.

Lastly, on a post-revenue basis, other sources of financing are available to the Company, including, without limitation, capital leasing, working capital credit facilities, inventory and receivable credit facilities.

If all of the Common Stock purchase warrants (the "Warrants") to purchase an aggregate of 8,286,993 shares of the Common Stock, which were outstanding on March 31, 2001, were subsequently exercised, the Company would realize $20,086,732 in gross proceeds. If all of the stock options (the "Options") pursuant to the LifePoint, Inc. 1997 and 2000 Stock Option Plans (the "Stock Option Plans") to purchase an aggregate of 1,897,988 shares, which were outstanding on March 31, 2001, were subsequently exercised, the Company would realize $5,163,895 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 and certain of the Warrants which were not all currently exercisable as of March 31, 2001. Accordingly, management believes that the Company cannot rely on these exercises as a source of financing.

There can be no assurance that the Company will be successful in securing additional financing, if required, whether through a capital leasing firm, a strategic partner, a public offering or a private placement.

LifePoint has initially been focused on the commercialization of the flow immunosensor technology licensed from the USN. This patented technology will be used in conjunction with the Company's patented proprietary saliva collection technology and other proprietary inventions under patent review. The flow immunosensor technology is a rapid and highly sensitive kinetic immunoassay, or immunological biosensor. This flow immunosensor technology is very simple and flexible, allowing assays that utilize methods other than the flow immunosensor technology (i.e., the alcohol test is a kinetic enzymatic method) to be run simultaneously in the same reagent cassette system. With the flexibility and sensitivity of this technology, the Company has been able to develop a cost-effective testing system that, for the first time, can generate immediate, non-invasive test results, with analytical performance equal to or superior to current laboratory test methods.

To maximize the market utility of the flow immunosensor technology in combination with saliva as a specimen, the Company has developed a small and simple-to-use instrument, which is designed to be exempt from clinical laboratory regulation, the IMPACT Test System. The proprietary system also consists of a fully contained disposable test cassette, which serves as a sample collection device and reaction/read chamber. The test system is designed to quantitatively detect up to ten analytes simultaneously (for panel testing) in one cassette from a single saliva sample in approximately five minutes. The transportable instrument automatically generates hardcopy test results and interpretation to provide the necessary legal documentation of test results.

LifePoint's IMPACT Test System will be broadly applicable with uses for rapid diagnostic testing, screening and for therapeutic drug monitoring in environments such as the workplace, law enforcement, home health care, ambulances, and pharmacies. The simplicity and effectiveness of the instrument's design will allow its use by technical and non-technical personnel, in unregulated and regulated environments.

Tests for five drugs of abuse and alcohol simultaneously

Delivers quantitative "blood-equivalent" results

Provides rapid, results in under five minutes

Reduces chain-of-custody issues associated with laboratory transport

Complete automation minimizes training

On-site testing eliminates transportation of donors and/or samples

The small desktop instrument automatically manages all functions related to collecting the sample and running the test panel including:

Ensures adequate sample collection

Automatic quality check of instrument systems to ensure proper function

Automatic quality control

Automatic sample processing and analysis

Delivers and stores electronic and hard-copy test results

Laboratory quality test results

Automatic result interpretation

User definable breakpoints

In addition to its rights under the USN patent license (see the section "History of the Company" and "Material Contracts" under this caption "Business"), the Company has rights under the following patents:

In addition, the Company has the following patent applications pending:

The expiration date of the USN patent is February 23, 2010. The terms of the other patents are 17 years from the respective dates of issuance, subject to renewal. The Company is not certain whether and when any pending patents may issue. Termination of the Licensing Agreement for the USN patent, which would occur only on the Company's default, would end the Company's rights to develop products under the patent. Termination of the license would require the Company to make changes to its products that could further delay development and marketing thereof. For additional information, see the section "Material Contracts" under this caption "Business."

The patent position of technology firms is highly uncertain and involves complex legal and factual questions. Competitors have filed applications for, and in some instances have been issued, patents and may obtain additional patents and other proprietary rights relating to products or processes, such as the Company's proposed immunoassay sensor, which may be competitive with those of the Company. The Company does not currently know the scope and validity of these patents. Management is not aware of any patents covering an immunoassay sensor similar to the Company's.

Companies that have or may obtain patents relating to products or processes competitive with those of the Company could bring legal actions against the Company claiming damages and seeking to enjoin it from manufacturing, licensing and marketing the affected product. To date, no claims have been made against the Company for infringement of any patents. However, marketing of the Company's products has not begun and claims, if any, would not likely be asserted until market introduction of such products. If such a claim was to be made, its defense could be costly and the Company's business could be adversely affected, even if the Company were to prevail. No assurance can be given that the Company would be able to prevail in any such action or that any license required under any such patent would be made available on acceptable terms.

Process patents have certain disadvantages when compared with product patents. It is more difficult to detect and prove infringement of process patents because it is sometimes impossible to ascertain the method by which any product has been produced. In addition, the value to the Company of receiving a process patent may be reduced if products that can be derived from such processes have been patented by others. The patents owned by, or licensed to, the Company include both process patents and product patents.

The Company maintains a policy of seeking patent protection in the United States and other countries in connection with certain elements of its technology when it believes that such protection will benefit the Company. Lyophilization and saliva aspiration patent applications have been filed in Canada, certain European countries and certain Asian countries including Japan. The pH patent was originally only applied for in the United States, but the Company has initiated efforts to file this patent in international countries as indicated above. As the Company receives patent approval from the United States, management plans to file all patents internationally within one year of the United States patent approval.

The patent laws of foreign countries may differ from those of the United States as to the patentability of the Company's products and processes. Accordingly, the degree of protection afforded by foreign patents, if issued, may be different from protection afforded under associated United States patents. There can be no assurance that patents will be obtained either in the United States or in foreign jurisdictions with respect to the Company's inventions or that, if issued, the patents will be of substantial protection or commercial benefit to the Company.

Certain inventions of the Company may prove to be unpatentable or the Company may conclude that it would be more advisable to retain a patentable invention as a trade secret. In either case, the Company would have to rely on trade secrets, proprietary know how and continuing technological innovation to develop and maintain its competitive position. All key employees and consultants of the Company have executed, and vendors and manufacturers will be required to execute, agreements to maintain the confidentiality of the Company's proprietary information to which they have access. There can be no assurance that these confidentiality agreements will be honored or will be effective. Manufacturers, project sponsors and consultants may be engaged in competing research projects outside the scope of their agreements with the Company. There can be no assurance that such sponsors and consultants will not develop similar or superior technology independently. To the extent that such persons apply technical information independently developed by them to projects undertaken by the Company, disputes may arise as to the proprietary rights to such information.

The Company maintains a 10,000 square-foot research and development facility in Rancho Cucamonga, California. The core competencies of the Company include significant engineering development capabilities, including expertise in optics, electronics, mechanical engineering, software development, and the Company has a fully equipped machine shop. Additionally, the core competencies for the chemistry group include significant expertise in organic chemistry, flow immunosensor technology, immunoassays, saliva physiology, alcohol, toxicology, and the ability to develop long-lived production formulas.

The Company is of the opinion that it has been able to develop and transfer the novel and unique IMPACT Test System as quickly as it has because its research and development group is much more vertically integrated than most similar companies.

The development of the IMPACT Test System is essentially complete, including the development of the first six assays - alcohol, marijuana, cocaine, opiates, amphetamine/methamphetamine and angel dust (PCP). The research and development department has already initiated efforts on the expanded menu for the IMPACT Test System that includes: a smaller portable instrument and the assays, ecstasy, benzodiazepines, barbiturates and tri-cyclic antidepressants.

During the fiscal 2001, fiscal 2000 and the fiscal year ended March 31, 1999 ("fiscal 1999"), the Company incurred approximately $5,180,000, $2,448,000 and $1,118,000, respectively, for development of the saliva drug and alcohol testing technology. From October 8, 1992 (inception) to March 31, 2001, the Company has spent $14,466,000 on development of the drug testing technology. See the section "Need for Financing" under this caption "Business" for information as to the financing of the Company's product development efforts and the possible additional financing requirement to bring the Company to profitability.

LifePoint leases a 31,000 square foot building that houses its corporate headquarters and manufacturing facility. The Company intends to manufacture the disposable cassettes, but to use an outside manufacturer for the instrument production, after the initial scale-up of production. For the disposable cassette and mouthpiece, detailed manufacturing requirements for the initial 24 months have been defined and scale-up plans are being executed- pilot lots of product have already been manufactured. Cassette production protocols have been established; semi-automated column filling and lyophilization equipment has been qualified, and production of reagents has already been transferred from the Company's development personnel to its manufacturing personnel. Additionally, the quality control systems are in place, and raw materials for the final product are being processed. The Company has developed a detailed cost reduction plan that includes utilizing multi-cavity molds and, longer term, full automation. The Company expects to begin to automate its cassette manufacturing process within four months after starting production. There can be no assurance that the Company's automation of its manufacturing process will significantly reduce its costs.

LifePoint's instrument production involves simple snap in place, low cost assembly operations to construct, test and certify the finished instrument system. The system has been designed as a series of pre-assembled and pre-tested modular sub-assemblies. Assemblies would include modules for optics and detection, mechanical cassette handling, fluid flow, and modules for I/O. All printed circuit boards (PCBs) will be outsourced. LifePoint instrument manufacturing will consist of assembly, certification, packaging and labeling of the instrument system.

For medical markets in the United States, the Company is required in its manufacturing facility to follow current Good Manufacturing Practices ("cGMP") as prescribed by the FDA and will ultimately need to become ISO 9001 certified for European sales. See the section "Government Regulation" under this caption "Business." There can be no assurance that the Company will be able to bring its plant into compliance and/or cause its prospective third party manufacturers to comply with cGMP. The Company's future dependence on third parties for the manufacture and supply of product components could have a material adverse effect on the Company's profit margins and its ability to deliver its products on a timely and competitive basis.

The Company estimates the total market opportunity for its first product to grow from $1.4 billion in 1999 to $ 1.6 billion in 2002. This opportunity is one of the single largest, individual product market opportunities in the worldwide in-vitro immunodiagnostic industry. The Company estimates its market opportunity for its initial planned products to be over $3.3 billion.

The simultaneous detection of drugs of abuse and alcohol in a simple-to-perform, rapid format is of significant importance in industrial (workplace), law enforcement and emergency department markets. Saliva as a sample choice is preferred over urine because it reflects the blood-equivalent or "under the influence" of a substance and, because it can be tested as it is collected, it cannot be adulterated. The traditional urine sample, which can be easily adulterated, indicates drug use over the previous two to five days and does not necessarily reflect a current status.

The demand for current status testing is clearly defined in the four key target markets. First, substance abuse in the industrial market has become so significant that as of 1997 66% of Fortune 1000 United States companies had drug/alcohol testing policies in place. In addition, the United States Department of Transportation requires testing of all employees in safety-sensitive positions (as, for example, airlines and trucking.) There is a need to improve the effectiveness and reduce the cost of these programs. Second, a very high need was identified in the law enforcement market. Driving under the influence of drugs is as big a problem as drunk driving in the United States. Yet law enforcement agencies do not currently have the ability to objectively test for drugs at roadside. Third, up to 50% of all emergency department visits implicate drug and/or alcohol use; however, less than 13% of hospitals in the United States can provide useful, rapid and on-site information to physicians treating unconscious patients where drugs and/or alcohol are suspected. Fourth, the European markets for law enforcement agencies and medical emergency departments are similar to those in the United States, while the workplace market is in its infancy, creating a significant market opportunity with a first-to-market system.

Other major medical market opportunities include rapid diagnostic testing, therapeutic drug monitoring, and wellness testing and screening.

There can be no assurance that the potential markets for the Company's products described above will be as large as estimated or as to what degree the Company will be able to penetrate such markets.

The Company initiated marketing efforts to include lobbying and pre-marketing efforts to help ensure quick acceptance of the product by the respective markets several years ago. Additionally, for the last year, LifePoint has demonstrated a marketing prototype of its first product at trade shows and presented technical data at scientific meetings and conferences. LifePoint intends to market the system globally to law enforcement and industrial markets in conjunction with strategic partners and distributors and, to that end, has a distribution agreement with CMI for the law enforcement markets, and is in discussion with a large corporation to market in the industrial market. LifePoint intends to retain the medical emergency markets and portions of the industrial workplace market for its own direct marketing and sales effort.

CMI, headquartered in Owensboro, Kentucky, and its sister subsidiary, Lion Laboratories, headquartered in Barry, Wales, United Kingdom, are the exclusive, worldwide, law enforcement marketing partners for the IMPACT Test System. CMI and Lion, both subsidiaries of MPD, also headquartered in Owensboro, Kentucky, are the market and manufacturing leaders for evidential and screening breath alcohol testing instruments in the United States, and market to over 60 other countries. The terms of the renewable, three-year agreement establish CMI as the exclusive distributor of the IMPACT Test System for law enforcement in the United States and Canada. Lion will be the exclusive distributor of the IMPACT Test System in major markets in Europe, Australia, New Zealand, Asia and Africa. CMI and Lion 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. The agreement with CMI provides for payment of an exclusive marketing distribution fee to LifePoint anticipated to be approximately $5 million over two and one-half years.

In the industrial workplace market, the Company will utilize multiple distribution strategies. For large employers that currently perform on-site testing, or which, with the introduction of the IMPACT Test System, will now consider implementing on-site testing, the Company will use a direct key accounts strategy. The same approach will be used for large service providers. For smaller service providers and companies, health and safety distributors will be used. Finally, the Company continues to have discussions with a potential large corporate partner, which may result in an exclusive agreement or co-marketing agreement in a specific market niche.

The emergency medical market will be the focus of the Company's direct sales effort. Less than 1,000 hospitals perform more than 90% of the drug testing done on overdose patients. More importantly, it is most likely that products that will be developed for the IMPACT Test System will be used in medical markets, and this focus will help the Company leverage both its research and development efforts, as well as its sales and marketing efforts. The Company will develop its own direct sales department for medical marketing no earlier than the end of 2001, with FDA clearance for the products anticipated during the first quarter of 2002.

LifePoint's revenues will be driven by sale of its disposable cassettes. A small cassette (approximately 3"x5"x1") is designed to accommodate a variety of immunoassay and chemistry analytes for all simultaneous testing requirements. A collection tip and sample tubing will be connected to the cassette, which will contain all the reagents for up to ten assays. Once its systems are installed, the cassette sales should provide a continued, high margin revenue source for the Company based on the number of tests performed by its end user customers.

The Company's proposed medical diagnostic products will be subject to government regulation in the United States and other countries for use in certain markets.

The United States Food and Drug Administration ("FDA") regulates the introduction, manufacturing, labeling, record keeping and advertising for all medical devices in the United States. There are two principal methods by which FDA clearance may be obtained to market medical device products such as the Company's proposed screening and diagnostic test kits: 1) Pre-market Approval (PMA) and 2) Pre-market Notification (510(k)). PMA's represent the highest level of regulatory scrutiny applied to medical devices. Most medical devices, however, receive pre-market review through the 510(k) process. . One method is to seek FDA clearance through a pre-market notification filing under Section 510(k) ("510(k)") of the Food, Drug and Cosmetics Act. Applicants under the 510(k) procedure must prove that the device for which clearance is sought is "substantially equivalent" to devices on the market prior to the Medical Device Amendments of 1976 or devices cleared thereafter pursuant to the 510(k) procedure. In some cases, data from clinical studies must be included in the 510(k) application. The review period for a 510(k) application is supposed to be 90 days from the date of filing the application. The FDA is currently taking approximately 89 77 days of review time and 102 days average total elapsed time (including "on-hold" time) to clearance according to FDA year 2000 Annual Report (CDRH).to the Health Industry Management Association Management believes that the Company's product will be reviewed under the 510(k) protocol and that it will take approximately 100 days for clearance. The Company will initially market its first product in the United States for non-medical purposess, such as law enforcement agencies' testing and safety sensitive testing by industrial companies, and in Europe where no FDA clearance is required, but intends to make a FDA 510(k) submission in the fourth quarter of 2001.

In addition, regulations implementing the Clinical Laboratory Improvement Amendments of 1988 (the "CLIA") promulgated by the United States Department of Health and Human Services (the "HHS") and the Health Care Financing Administration on February 28, 1992, which were to become effective September 1, 1992, would require that all employment drug testing, including on-site testing, be processed by a federally approved laboratory. On August 28, 1992, the HHS announced that the application of the CLIA to workplace testing would not go into effect on September 1, 1992 because of comments made on the final regulations. The comments raised questions about, among other things, whether bringing employee drug testing under the CLIA might have an unintended chilling effect on efforts to encourage drug-free workplace programs. As reported in the January 19, 1993 Federal Register, the final decision on the regulations has been delayed until further investigation would be completed. Such decision has not been made as of the date hereof.

If the regulations are not adopted, on-site drug testing in the workplace will continue to be exempt from the CLIA. Also, management believes LifePoint's product has been designed such that it will be exemptwaived from CLIA regulation, even if the regulations are adoapted in the current form..

In November 2000, the FDA published draft guidance for over-the-counter (OTC) screening tests for drugs of abuse. In this document the FDA announced its intention to be consistent in its regulation of drugs of abuse screening tests used in the home, workplace, insurance, and sports settings. The FDA would, however, continue to defer oversight for law enforcement applications. This draft guidance was published for comment purposes only and is not currently in effect.

There can be no assurance that the FDA or any foreign governmental agency will grant approval for the sale of the Company's products for routine screening and diagnostic applications or that the length of time the approval process will require will not be extensive.

The cost associated with the filing of applications with the FDA and of research and development activities to support such applications, including clinical trials, can be significant. There can be no assurance that the costs of the Company's research and development activities will not exceed that which is budgeted. In addition, there can be no assurance that any of the Company's proposed products will ever obtain the necessary FDA or foreign regulatory clearances for commercialization.

The Company has not generated any revenues to date because its products are still in the developmental stage. If the products are developed, the Company will compete with many of the companies of varying size that already exist or may be founded in the future. Substantially all of the current tests available use either urine or blood as a specimen to test for drugs of abuse or use breath or saliva to test for alcohol.

Based on its knowledge of the marketplace, management believes that there are no products currently available that both test simultaneously for drugs of abuse and alcohol and provide quantitative, blood-equivalent "under the influence" information for the drugs of abuse on-site.

Existing testing for the presence of drugs of abuse and alcohol include traditional centralized laboratory testing services and on-site testing products.

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 on-site drug tests have been introduced, but they generally do not provide enough sensitivity for drug of abuse testing, and because they are not quantitative, these tests do not provide evidentiary results. Additionally, all on-site tests that are not instrument-based are generally not legally defensible.

Although management is not aware of any current competitors with respect to simultaneous testing for drugs of abuse and alcohol in saliva, management anticipates that the Company will face competition from at least eight major companies that provide urine substance abuse testing products: (1) OnTrak by Roche Diagnostics, a division of Hoffman LaRoche, Inc.; (2) CEDIA clone enzyme donor immunoassay manufactured by Microgenics Corporation; (3) enzyme-multiplied immunoassay technique (EMIT) manufactured and distributed by Syva Company, a division of Dade Behring Inc.; (4) a fluorescence polarization immunoassay (FPIA) manufactured by Abbott Laboratories, Inc. ("Abbott"); (5) radioimmunoassay (RIA) manufactured and distributed by Diagnostic Products Corp. ("DPC") and others; (6) thin layer chromatography (TLC) manufactured and distributed by Marion Laboratories, Inc. ("Marion") and BioSite, Inc. ("BioSite"); , Editek, Inc. ("Editek"), Hycor Biomedical, Inc. ("Hycor"); Princeton Biotech, Inc. ("Princeton"); and BioSite Inc. ("BioSite"). Almost all of these companies (i.e., Syva, Marion, Abbott, Roche, Editek, Hycor, Princeton and BioSite) have substantially greater financial resources available to them than does the Company to develop and to market their products.

Alcohol testing has usually been done on breath at a laboratory collection site, with some testing being done on blood. Recent usage has begun with manual on-site saliva-based alcohol tests. As with drug tests, all on-site tests that are not instrument-based are generally not legally defensible.

The Company's market research to date has indicated a greater market potential for a saliva sample portable testing instrument for use in detecting drugs of abuse by law enforcement agencies, industrial companies with safety sensitive positions, hospitals and other medical facilities than for a urine sample instrument. However, because of the blood-equivalent, current status result, the use of this product in other potential markets that require a longer "lifestyle" result, such as pre-employment testing, may be limited.

Type/Sample	Menu	Advantages	Disadvantages
Immunoassay Card Based System (Lateral Flow Membranes) Urine, Saliva	NIDA-5 Benzodiazepine Barbiturates Ecstasy Tri-cyclic antidepressants	No instrument required 5-20 min results Limited menu Screens drug classes	High cost per test Moderately complex method Confirmation required Urine: 2-5 day drug use Sensitivity poor for saliva based testing Saliva absorbent pad collection slow and variable Subjective visual interpretation
Flow Immunosensor Saliva	NIDA-5 Alcohol Benzodiazipine* Barbiturates* Ecstasy* *In development	Very easy to use Rapid results in less than 5 min Non-invasive specimen collection "Under the Influence" Quantitative results Simultaneous drug and alcohol tests High sensitivity - equivalent to lab	Requires Instrument Results reflect only use in last 24 hours

In July 1999, Avitar announced that it had commenced shipping of the first oral screening test for cocaine, opiates and marijuana. In 2001, AnSys announced the introduction of a similar product that tests for drugs of abuse. This type of technology (lateral flow membranes) used by Avitar and AnSys (and other companies developing similar products) is less sensitive than the flow immunosensor technology and does not provide quantitative results, but only qualitative, yes/no answers. The results, therefore, cannot be evidentiary (used in court). LifePoint believes this type of technology is not sensitive enough to detect certain drugs at levels that are found in saliva, nor will the non-instrumented systems be court defensible in law enforcement and industrial markets.

Even if the lateral flow membrane technologies used in these on-site products had increased sensitivity, such as may be enhanced by the use of instrumented optical systems, LifePoint believes that these products will not be evidential in law enforcement nor useful in medical emergencies because they are not quantitative. In addition, the absorbent collection method used in the Avitar and similar products have technical limitations. The collection can be very slow, and it can be difficult to get the specimen off the pad for testing. Other products either in trials or potentially under development include products by OraSure Technologies, Inc. ("OraSure") and Cozart Bioscience, Ltd. ("Cozart"), but all have the same technological limitations as outlined above.

There can be no assurance that one or more of Avitar, AnSys, OraSure or Cozart will not develop a more competitive system.

Type/Sample	Menu	Advantages	Disadvantages
Immunoassay Urine, Saliva	NIDA-5 Barbiturates Benzodiazepine Methadone Propoxophene Tri-cyclic antidepressants	Moderately complex method Good accuracy Current screening standard	Limited range of tests 20-45 minutes for results 2-5 day drug use
Thin Layer Chromatography (Toxi-Lab) Urine	Above, plus Analgesics Stimulants Tranquilizers Hypnotics	Large menu No significant instrumentation required	Highly complex method 60 minutes for results 2-5 day drug use Low sensitivity
GC or GC/MS Serum, Urine	Same as Thin Layer	Large menu Quantitative results (overdose vs. therapeutic ranges) Gold Standard	Highly complex method Expensive instrumentation ($60to $75K or more) Negative results - 2 hours Positive results - 2 to 24 hours High sensitivity
HPLC (Remedi) Serum	Same as Thin Layer	Moderately complex method Quantitative results	Expensive instrumentation ($40K or more) Less than 100 installed in U.S. 60 minutes for results High sensitivity

Most commercial reference laboratories and other laboratory testing sites use immunoassay systems for performing initial drug screens on urine. In the federally regulated segment of the industrial market, a Gas Chromatograph/Mass Spectrophotometer (GC/MS) confirmation will then be done on positive specimens if the customer requires confirmation of results (about 50% of customers request confirmation). The immunoassay system reagents generally cost the laboratory an average of $6.32 per NIDA-5 panel. However, the average price of the service to the end user in the United States is $45 per NIDA-5 panel through a TPA.

In March 2000, OraSure announced the introduction of the Intercept System, a lab-based system for measuring drugs of abuse in saliva. The sample is collected on-site using an absorbent collection device. The collected sample is sent to a laboratory for testing by immunoassay, and the results are returned within 48 hours.

Alcohol testing is usually performed by instrumented breath analysis at a site where the testing equipment is available. These sites usually include commercial laboratory collection sites, police stations, jails and emergency departments in hospitals. Blood specimens may also be drawn at these sites for later testing at a laboratory. Additionally, there are several manual on-site testing products that can provide alcohol results from saliva, although these technologies generally do not provide the quantitative capability currently required by the courts for both the law enforcement and industrial markets.

Type/Sample	Advantages	Disadvantages
Breath testing devices/ Breath	Portable models easy to use, designed for field use Simple computer operation with some data storage	Alcohol testing only Portable models screening only - not evidentiary Usually requires calibration with cumbersome simulator and solutions or gas Requires extensive training Expensive ($5,000 - $8,000) if DOT approved for evidentiary
GC or GC/MS Serum, Breath	Large menu Quantitative results (overdose vs. therapeutic ranges)	Expensive instrumentation Takes more than 1 hour for results Highly complex method
Alcohol breath tubes Breath	Easy to use Inexpensive No instrumentation	Cannot provide results below .05 as required by Department of Transportation Very difficult to read Semi-quantitative results - screening only No hard copy of results
Membrane based card system (Lateral Flow Membranes) Saliva	Fairly easy to use No instrumentation Quantitative results 3 minutes for results	Can be difficult to interpret No hard copy results for legal documentation Screening only - not evidentiary Operator exposed to saliva sample
Enzyme Method/ Saliva	Very easy to use Rapid results in less than 5 min Non-invasive specimen collection "Under the Influence" Quantitative hardcopy result Simultaneous drug and alcohol tests High sensitivity - equivalent to lab	Requires instrument Five minutes for results

If the Company successfully completes the development of its saliva sample testing method, as to which there can be no assurance, the Company may not have the financial resources to compete successfully with other companies that have greater financial resources available to them. In addition, the Company's delay in bringing a drugs of abuse and alcohol testing product to market may adversely affect its future marketing efforts because of the name recognition gained by competitors actively marketing a product during this interim period.

Copies of the agreements and any amendments thereto hereinafter mentioned in this section are filed (by incorporation by reference) as exhibits to this Report and are incorporated herein by this reference.

In April 1999, the Company and the USN completed negotiations for an expansion of the ten-year license agreement (the "License Agreement") originally granted to SAT in 1992 and transferred to the Company in 1997. The original License Agreement covered the exclusive use by the Company of the USN's technology for testing saliva for drugs of abuse. The new terms expand the field-of-use from drugs of abuse and anabolic steroids on urine samples to include all possible diagnostic uses for saliva. In addition, the royalty rate was reduced to 3% on the technology-related portion of the disposable cassette sales and 1% on instrument sales from the previous 10% on all LifePoint product sales. The minimum royalty payment has been reduced to $50,000 in 2001 (anticipated first year of product sales) and $100,000 a year thereafter versus the previous $100,000 per year. The Company is further developing the USN-developed technology for application in its own proprietary test system. See the section "Patents and Technology" under this caption "Business."

On April 16, 1992, SAT entered into a 12-month cooperative research agreement ("CRDA") with the Naval Research Laboratory section of the USN (the "NRL") to further develop the licensed technology of the "Flow Immunosensor".

Pursuant to an agreement dated as of January 1, 1993 by and between SAT and the Company, SAT assigned to the Company all of its rights under the CRDA. The purpose of the CRDA was to develop the prototype instruments based on the Flow Immunosensor Method and Apparatus Technology. Pursuant to the CRDA, each party retains title to any patent obtained by such party in the performance of work under the CRDA. The NRL had the right of first election to file a patent application in the United States on joint inventions made in the performance of work under the CRDA. The Company, as assignee, had the right of first election to file a patent application on such joint inventions in all other countries.

Pursuant to an amendment dated May 1993 to the CRDA, the NRL waived such right of first election with respect to the lyophilization process for the freeze-drying of immunoassay chemicals, provided that SAT filed an approved patent application on such process within three months from the date of execution of the amendment. The approved patent application was filed on July 16, 1993 and issued as U.S. Patent No. 5,354,654 "Lyophilized Ligand-Receptor Complexes for Assays and Sensors" on October 11, 1994. SAT assigned the patent to the Company. See the section "Patents and Technology" under this caption "Business."

As of May 31, 2001, the Company employed 38 permanent employees and 22 temporary employees of whom 49 were directly involved in its research, development and manufacturing programs. Additional personnel will be required to complete the manufacturing and marketing of the product.

The Company maintains its principal executive offices and manufacturing space in Ontario, California and laboratory facilities in Rancho Cucamonga, California. The corporate offices and manufacturing facility, which consist of approximately 31,000 square feet, is leased at $226,000 per year pursuant to a lease that expires July 31, 2005. The laboratory facility, which consists of approximately 10,000 square feet, is leased at $72,000 per year pursuant to a lease that expires March 31, 2002 with options to extend the lease until July 31, 2005.

On June 18, 2001, Global Consultants, LLC d/b/a Global Capital instituted an action in the Superior Court of California, San Bernardino County, against the Company, Linda H. Masterson, its Chairman, President and Chief Executive Officer, and certain unknown parties seeking damages aggregating $4.5 million, plus interest and punitive damages for the non-issuance and termination of common stock purchase warrants for an aggregate 392,275 shares of Common Stock. Plaintiff asserts its claim under a financial services agreement dated July 9, 1998 between the plaintiff and the Company, alleging that it performed all of its obligations thereunder. The Company and Ms. Masterson have engaged counsel and intend to defend this action vigorously, believing that the plaintiff's causes of actions are without merit and there are several affirmative defenses which may be asserted, including fraud in the inducement. The defendants believe that Global Consultants entered the agreement knowing that it violated of the terms of the agreement. Because counsel for the defendants has just received the complaint, it cannot render any opinion on this action at this time.

Not Applicable.

From June 25, 1998 to April 18, 2000, the Common Stock was reported on the OTC Bulletin Board of the National Securities Dealers, Inc. ("NASD") under the symbol "LFPT." On April 19, 2000, the Common Stock began trading on The American Stock Exchange ("AMEX") and the symbol was changed to "LFP." The quarterly high bid and low asked prices as quoted by the NASD's OTC Bulletin Board for the fiscal year ended March 31, 2000 and the high and low sales prices as quoted by the AMEX for the fiscal year ended March 31, 2001 are as follows:

The foregoing quotations of the NASD's OTC Bulletin Board reflected inter-dealer prices, without retail mark-up, mark-down or commission, and may not have represented actual transactions.

As of March 31, 2001, there were approximately 340 holders of record of the Common Stock and, based upon requests for copies in connection with the 2000 Annual Meeting of Stockholders, the Company believes that there are approximately 6,700 beneficial owners of the Common Stock.

The Board of Directors has not declared any dividends on the Common Stock and, in view of the continuing losses, the prohibitions of the Series B Preferred Stock and the Series C Preferred Stock and the Company's cash requirements, the Board has no current intention to pay any such dividends.

During the quarter ended March 31, 2001, the Company sold the following securities without registering them under the Securities Act:

1. Private Placement

1. On March 29, 2001, the Company sold an aggregate of 75,000 shares of a newly designated series of the Company's Preferred Stock, $.001 par value (the "Preferred Stock"), designated the Series B 20% Cumulative Convertible Preferred Stock (the "Series B Preferred Stock"). Each share of the Series B Preferred Stock is convertible into ten shares of the Common Stock. The Series B Preferred Stock is senior to any other series of the Preferred Stock hereafter designated and the Common Stock with respect to dividends, upon redemption and upon liquidation, except as may be consented to by the holders of at least 66.67% of the then outstanding shares of the Series B Preferred Stock. The Series B Preferred Stock provides for a cumulative annual dividend on each outstanding share at a rate of 20% per share paid annually in shares of the Series B Preferred Stock for the first three years outstanding, thereafter paid at a rate of 6% annually payable, at the Company's option, in cash or shares of the Common Stock.

The Company also issued to each of the three investors a Common Stock purchase warrant expiring March 28, 2006 (the "Investor Warrant") to purchase 75,000 shares of the Common Stock at $5.60 per share. Accordingly, three Investor Warrants were issued to purchase an aggregate of 225,000 shares of the Common Stock.

2. There were no underwriters for this private placement. The Company sold the shares of the Series B Preferred Stock to three entities who were "accredited investors" as such term is defined in Rule 501(a) of Regulation D under the Securities Act.
3. The Preferred Stock was offered at $40.00 per share, so that the total offering price was $3,000,000.
4. The Company claims that the sales were exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof, the sales constituting a transaction by an issuer not involving any public offering. The purchasers were all accredited investors, each of which gave an investment representation.
5. As indicated above in (a) each share of the Series B Preferred Stock is convertible into ten shares of the Common Stock and the Investor Warrants are exercisable at $5.60 per share.
6. Not applicable.

The following tables set forth selected financial data of LifePoint for the five fiscal years ended March 31, 2001, 2000, 1999, 1998 and 1997 and cumulative from October 8, 1992 (inception) to March 31, 2001. This selected financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Financial Statements and related notes thereto included elsewhere in this Report.

The Company is a development stage enterprise with no earnings history. Since its inception, the Company has devoted substantially all of its resources to research and development and has experienced an ongoing deficiency in working capital. The Company does not anticipate generating revenue from product sales until the third quarter of 2001 at the earliest. There can be no assurance as to when the Company will achieve profitability, if at all.

Because the Company has not produced any revenues as a result of its being a development stage company, it has been dependent on the net proceeds derived from six private placements pursuant to Regulation D under the Securities Act to fund its operations. The succeeding three paragraphs describe the private placements from Fiscal 1999, 2000 and 2001.

On July 23 and August 26, 1998, the Company closed as to the sales of an aggregate of 1,025,000 shares of Common Stock at $1.00 per share and the Company realized $1,025,000 in gross proceeds. There were no underwriting discounts or commissions paid related to the private placement. However, a Warrant expiring December 13, 2003 to purchase 50,000 shares of Common Stock at $1.08 was granted to an unaffiliated person for his assistance in completing $500,000 of this offering.

On January 21, 1999, the Company closed as to the sale of 600,000 shares of the Series A Preferred Stock at $10.00 per share and the Company realized $6,000,000 in gross proceeds. Finders' fees were paid to various consultants and bankers for their assistance in helping the Company to complete this private placement consisting of an aggregate of $592,078 in cash fees and Warrants expiring January 20, 2004 to purchase an aggregate of 404,725 shares of the Common Stock (net of a cancellation) at $2.41 per share.

On February 29 and March 14, 2000, the Company closed as to sales at $5,000 per Unit of an aggregate of 1,840 units, each unit consisting of 2,500 shares of the Company's Common Stock and Investor Warrant expiring February 28 or March 13, 2005 to purchase 2,500 shares of Common Stock at $3.00 per share. The Investor Warrants may not be exercised prior to September 14, 2000 and the shares included in the Units are restricted securities for at least one year. The Company realized $9,200,000 in gross proceeds. Finders' fees were paid to various consultants and bankers for their assistance in helping the Company to complete this private placement consisting of an aggregate of $604,706 in cash fees and Finder's Warrants expiring March 13, 2005 to purchase an aggregate of 273,075 shares of the Common Stock at $3.00 per share.

As a result of the $9,200,000 in gross proceeds realized in the Company's fourth private placement which was closed in February and March 2000, management believed, as the Company had previously announced, that the Company had sufficient funds to complete the commercialization of its testing product and bring the same to market. This expectation has proven to be correct. However, as the Company had also previously reported, the Company also required additional funds to bridge the gap between the time the Impact Test System was first brought to market and the time the resultant revenues from sales of such product resulted in profitability. As reported in Item 1 to this Report, in June 2001, the Company realized approximately $11,000,000 in gross proceeds from the sale of 313.721 Units, each Unit consisting of 1,000 shares of the Series C Preferred Stock and a Series C Warrant to purchase 10,000 shares of the Common Stock. The Company had previously realized $3,000,000 in gross proceeds from the sale of 75,000 shares of the then designated Series B Preferred Stock; however, $3,000,000 of the new proceeds had to be used to redeem such shares. As a result, management believes that the net proceeds from the two offerings will be sufficient to enable the Company to reach the period when the Company can reasonably expect to achieve profitability. However, if there are delays in the Company meeting its timetable, the Company may require additional funding. In addition, because 50% of the proceeds from the offering are held in escrow against the achievement by the Company of certain designated milestones, the Company could have to refund some or all of these proceeds held in escrow.

As a safe guard should such possibility occur, the Company is seeking to sell, on or prior to mid-September, up to an additional 114 Units on the same basis as described in the preceding paragraph. If successful, the Company would realize additional gross proceeds of approximately $2,000,000 to 4,000,000. However, until the Company closes the selling of these additional units, there is always the risk that the potential investors may not be receptive to making an investment, particularly in the Company, at the time management desires, especially because of the general decline in stock market prices which has occurred since the beginning of 2000 and continuing in the first and second quarters of 2001.

Management believes that, with the net proceeds from the private placement described in the preceding paragraph, the Company has sufficient funds to complete commercialization, generate field trials and pilot studies, initiate marketing and reach profitability, expected to occur five quarters post product introduction. There can be no assurance that management's estimate as to costs and timing will be correct. Any delays may further increase the Company's costs.

The Company has entered into a strategic partnering agreement with CMI, Inc. ("CMI") to distribute the Company's products exclusively to the law enforcement market. As part of this agreement, CMI will make payments of approximately $5 million to LifePoint over a two and one-half year period. Additionally, the Company continues to pursue additional strategic partnering in the industrial market and is in discussions with a large potential partner. Several large pharmaceutical and diagnostic corporations have also expressed their initial interest in partnering with the Company. Management anticipates that an additional partnering agreement may be completed.

Management has investigated the possibility of an underwritten public offering and has received expressions of interest from several well-known firms, but only on a post-revenue basis. However, because the market currently is not generally receptive to public offerings, there can be no assurance that stock market conditions later in 2001 or 2002 will be receptive to a public offering by the Company, especially in view of the volatility of the market generally in 2000 and the first quarter of 2001. In addition, competitive conditions in the substance abuse testing industry at that time may make the Company less attractive to potential public investors. See the section "Competition" under the caption "Business."

Having successfully consummated six private placements pursuant to Regulation D under the Securities Act since November 1997, the Company may seek to raise any additional financing through this method. As with a public offering, there can be no assurance that potential investors would be receptive to a private placement by the Company when the Company seeks to sell, either because of general stock market conditions or conditions generally in the substance abuse testing industry. There can be no assurance that the Company will be successful in securing additional financing, whether through a capital leasing firm, a strategic partner, a public offering or a private placement.

If all of the Common Stock purchase warrants that were outstanding on March 31, 2001 were subsequently exercised (8,286,993 shares), the Company would realize $20,086,732 in gross proceeds. If all of the options pursuant to the Company's two Stock Option Plans to purchase an aggregate of 1,897,988 shares outstanding on March 31, 2001 were subsequently exercised, the Company would realize $5,163,895 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 March 31, 2001. Accordingly, management believes that the Company cannot rely on these exercises as a source of financing.

 Operating Cash Flows

Net cash used for operations during fiscal 2001 amounted to $6,952,000 as compared to $3,857,000 and $2,096,000 in fiscal 2000 and 1999, respectively. The cash used by operating activities in fiscal 2001 increased by $3,095,000 from fiscal 2000, which was the result of increased staffing, facilities and related expenses associated with the commercialization of the IMPACT Test System. Net cash used for operations during fiscal 2000 amounted to $3,857,000 as compared to $2,096,000 in fiscal 1999. The cash used by operating activities in fiscal 2000 increased by $1,761,000 from fiscal 1999, which was the result of increased staffing and related expenses associated with the final development phase of the IMPACT Test System.

During fiscal 2001, 2000 and 1999, net cash used by investing activities was $747,000, $105,000 and $24,000, respectively. The increase in fiscal 2001 over fiscal 2000 of $642,000 was as a result of leasehold improvements to the manufacturing facility in Ontario and the addition of furniture and equipment to that facility.

Net cash provided by financing activities amounted to $4,443,000 during fiscal 2001 related to the fifth private placement of the Series B Preferred Stock with gross proceeds of $3,000,000 and proceeds from the exercise of warrants and options of $1,580,000 and net payments against capital leases of $242,000.

Net cash provided by financing activities amounted to $8,649,000 during fiscal 2000 related to the fourth private placement of units of Common Stock and Investor Warrants with net proceeds approximating $8,577,000 and proceeds from the exercise of warrants and options of $121,000.

Net cash provided by financing activities amounted to $6,320,000 during fiscal 1999 primarily related to the second private placement of 1,025,000 shares of the Common Stock with net proceeds approximating $1,019,000 and net proceeds of $5,280,000 from the sale of 600,000 shares of the Company's Series A Preferred Stock

During fiscal 2001, the Company continued as a development stage enterprise with no revenues. Research and development expenses in fiscal 2001 were $5,180,000 as compared to $2,448,000 in fiscal 2000, or an increase of $2,732,000 or 112%. The increase in fiscal 2001 was a result of the Company's transition into the commercialization phase of product development. Staffing levels in product development increased 53% in fiscal 2001 and facilities expenses increased 189% due to the addition of the manufacturing facilities in Ontario. Selling, general and administrative expenses were $2,152,000 in fiscal 2001 as compared to $1,518,000 in fiscal 2000, or an increase of $634,000 or 42% as a result of an increase in staffing of 120% and accelerating pre-marketing and lobbying efforts. As of March 31, 2001, the Company did not anticipate generating revenues from product sales until the third quarter of 2001 at the earliest. Accordingly, management anticipated that operating losses would continue for at least a nine-month period.

The net loss for fiscal 2001 was $7,163,000 as compared to $3,950,000 for fiscal 2000. The increase of $3,213,000 or 81% was primarily the result of the increase in product development and commercialization expenses noted above.

From inception on October 8, 1992 to March 31, 2001, the Company has spent $14,466,000 on research and development and $7,737,000 on selling, general and administrative expenses. Management fees paid to SAT aggregated an additional $2,090,000 during such period, although none were paid after June 30, 1997.

During fiscal 2000, the Company continued as a development stage enterprise with no revenues. Research and development expenses in fiscal 2000 were $2,448,000 as compared to $1,118,000 in fiscal 1999, or an increase of $1,330,000 or 119%. The increase in fiscal 2000 was a result of the Company's transition into the final stages of development. Staffing levels in product development increased 80% in fiscal 2000 along with related development expenses. Selling, general and administrative expenses were $1,518,000 in fiscal 2000 as compared to $1,483,000 in fiscal 1999, or an increase of $35,000 or 2.4%. As of March 31, 2000, the Company did not anticipate generating revenues from product sales until the first quarter of 2001 at the earliest. Accordingly, management anticipated that operating losses would continue for at least a nine-month period thereafter.

The net loss for fiscal 2000 was $3,950,000 as compared to $2,697,000 for fiscal 1999. The increase of $1,253,000 or 46.5% was primarily the result of the increase in product development expenses noted above.

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

This "Management's Discussion and Analysis of Financial Condition and Results of Operations" contains forward-looking statements that are subject to a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those anticipated by the statements made above are the following:

As indicated in the section "Liquidity and Cash Resources" under this caption "Management's Discussion and Analysis of Financial Condition and Results of Operations," the Company has not achieved profitability or earned any revenues from the sales of its products. As of March 31, 2001, the Company had an accumulated deficit of $25,482,625. Prior to achieving profitability, LifePoint expects to incur significant losses as it continues to incur manufacturing build-up expenses, expenses to commercialize the product, general and administrative expenses, and significantly increased sales and marketing expenses. No assurance can be given that the Company will ever be profitable or, if it does achieve profitability, that it will sustain or increase profitability.

LifePoint's transition from a development stage company to a commercial company may strain its managerial, operational and financial resources. If LifePoint's products achieve market acceptance, the Company will need to increase its number of employees, significantly increase its manufacturing capability and enhance its operating systems and practices. There can be no assurance that the Company will be able to effectively do so or otherwise manage its future growth.

As indicated in "Business-Competition," management believes that saliva sample testing is unique in that, to its knowledge, no company is currently offering a blood-equivalent substance abuse detection method using saliva samples as a specimen on an "on-site" basis. However, as noted therein, competition in the substance abuse testing industry is very competitive and is expected to remain so in the future. LifePoint's competitors range from development stage companies to major domestic and international companies, including eight major pharmaceutical companies. Many of LifePoint's competitors have significant financial resources, established market positions, longstanding relationships with customers and greater name recognition, technical, marketing, sales, manufacturing, distribution and other resources than that of the Company. LifePoint cannot give assurance that it will be able to compete successfully with those companies. However, management believes that the partnering agreement for marketing to the law enforcement market provides it with advantages in the law enforcement market. In addition, none of the major competitors is currently using saliva as its test medium and no competitor is currently offering an on-site test that simultaneously tests for drugs of abuse and alcohol. However, LifePoint recognizes that these potential product advantages could be offered by a major competitor in the future.

Not Applicable.

Please see Item 14 of this Report for financial statements and supplementary data.

Not Applicable.

The information required by Part III to this Report (Items 10, 11, 12 and 13) will be incorporated by reference from the Company's definitive proxy statement to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, on or before July 29, 2001 relating to the Company's Annual Meeting of Stockholders. If such definitive proxy statement is not so filed, the information required by Part III to this Report will be reported in an Amendment to this Report filed on or before July 29, 2001.

The following table contains certain information relating to the directors and executive officers of the Company as of May 31, 2001:

Each director of the Company is elected to serve until the next Annual Meeting of Stockholders or until his or her successor is elected and shall have qualified. Each director listed above was reelected at the Annual Meeting of Stockholders held on August 25, 2000. Each officer of the Company is elected by the Board of Directors to serve at the discretion of the Board.

The last Annual Meeting of Stockholders was held on August 25, 2000. The current Board intends to call the next Annual Meeting of Stockholders for September 7, 2001.

Linda H. Masterson has over 26 years industry experience and over 20 years experience in marketing, sales and business development in the medical diagnostics, healthcare and biotechnology fields. She was elected a director of SAT on September 26, 1995. Effective May 13, 1996, she became the President and Chief Operating Officer of SAT. On May 31, 1996, she was elected a director of the Company and, on July 31, 1996, the President and Chief Operating Officer of the Company. Effective November 19, 1996, she relinquished her duties as the Chief Operating Officer of SAT in order to devote more time to supervising the development program of the Company and the operations of the then Alcohol Products and BioTox Divisions of SAT. On May 23, 1997, she resigned as the President of SAT in order to become the Chief Executive Officer of the Company (formally designated as such on May 26, 1997). On November 4, 1997, she resigned as a director of SAT, thereby terminating her last position with the former parent of the Company. Until May 13, 1996 when she became an employee of SAT, she was employed as the Executive Vice President of Cholestech, Inc., a start-up diagnostic company, for which she developed and restructured the company's business strategy. In November 1993, Ms. Masterson founded Masterson & Associates, a company of which she was the President and owner until she joined Cholestech, Inc. in May 1994, which was engaged in the business of providing advice to start-up companies, including the preparation of technology and market assessments and the preparation of strategic and five-year business plans for biotech, medical device, pharmaceutical and software applications companies. From April 1992 to November 1993, Ms. Masterson was employed as the Vice President of Marketing and Sales of BioStar, Inc., a start-up biotech company focused on the commercialization of a new detection technology applicable to both immunoassay and hybridization based systems. From 1989 to 1992, she was employed as Senior Vice President of Marketing, Sales and Business Development by Gen-Probe, Inc., a specialized genetic probe biotechnology company focused on infectious diseases, cancer and therapeutics. Prior to 1989, Ms. Masterson was employed for 12 years in various domestic and international marketing and sales positions at Johnson & Johnson, Inc., Baxter International Inc. and Warner Lambert Co. Ms. Masterson has a BS in Medical Technology from the University of Rhode Island, an MS in Microbiology/Biochemistry from the University of Maryland and attended the Executive Advanced Management Program at the Wharton School of Business at the University of Pennsylvania.

Thomas J. Foley has over 25 years' experience in the medical diagnostic industry. He was elected to his officership in the Company effective March 9, 1998. From November 1997 to March 1998, he was a consultant to various companies. From November 1994 to November 1997, he served as the Executive Vice President of Business and Product Development at HiChem/Elan Diagnostics ("HiChem"), where he managed research and development, regulatory affairs (including FDA submissions), strategic and business planning, technology assessment for acquisitions, and manufacturing operations. Prior to joining HiChem in November 1994, Dr. Foley was Vice President of Research and Development at Hycor Biomedical, Inc. ("Hycor"), where he was responsible for research and development of all products, including drugs of abuse products, over an eight-year period from May 1986 to November 1994. Prior to Hycor, Dr. Foley was Vice President of Research and Development at Gilford Instruments from 1983 to 1986 and Worthington Diagnostics from 1981 to 1983. Prior to Worthington Diagnostics, Dr. Foley worked at Beckman Instruments, Inc. and was the chemistry product development manager for the Astra, one of Beckman's most successful product lines. Dr. Foley has a Ph.D. in Biochemistry from Trinity College, Dublin.

Michele A. Clark became an employee of LifePoint on April 12, 1999 and was elected as the Controller and appointed as the Chief Accounting Officer on April 16, 1999. Ms. Clark has over twenty-five years of accounting and finance experience in manufacturing and high tech companies. Ms. Clark was most recently the Controller at Auto-Graphics, Inc., a software development company, where she managed all accounting, finance, human resource, and administrative functions within the company. Additionally, she was responsible for all SEC filings and shareholder relations. Prior to Auto-Graphics, Ms. Clark was Controller at Typecraft, Inc., a commercial lithographer, where she was responsible for all accounting, finance, and human resource functions. Prior to Typecraft, Ms. Clark served as accounting manager for three retail companies with multiple locations. Ms. Clark graduated Cum Laude with a B.S. in Accounting from University of La Verne.

Lawrence A. Reynolds has more than 20 years of marketing and sales experience in senior management positions in the biomedical field. He became an employee of the Company on January 17,2000 and was elected as its Vice President, Marketing and Sales on January 21,2000.He served as Vice President, New Business Development and Strategic Planning for Microgenics Corporation, a manufacturer of point of care diagnostic products, from January to June in 1999 until its divestiture to Sybron Corporation. From February 1997 to December 1998,he served as Vice President, International Marketing of Abaxis, Inc., a manufacturer of point of care diagnostic products. From April 1996 to February 1997, he served as managing principal of Lar Business Consulting which provided consulting services to point of care diagnostic and biomedical client companies. From 1977 to 1996,he held various managerial positions first with Syva Company (""Syva'') and, after Syva's acquisition in 1995,its acquiror Behring Diagnostic, Inc. Syva is one of the leading providers of devices which test for drugs of abuse using urine as the specimen. Mr. Reynolds holds a B.S. in Chemistry and Mathematics from Haughton College and an M.S. in Laboratory Business Administration from Georgia State University.

Donald Fletcher has over 25 years of directly related experience in the medical diagnostic, including over 23 years experience in manufacturing and operations with extensive experience in product scale-up and transfer, and product development team management. Market. Mr. Fletcher was most recently Vice President, Operations of Sigma Diagnostics, a division of Sigma Aldrich Corporation, where he was responsible for manufacturing 1,500 medical products including both reagent kits and instrument systems. He also guided the new product development and product transfer of a new immunoassay test system. Prior to Sigma Diagnostics, Mr. Fletcher was Vice President, Manufacturing and an Officer of Diamedix Corporation, a start-up immunodiagnosic manufacturer, where he developed and scaled-up manufacturing for an instrument manufacturing department. Prior to Diamedix, Mr. Fletcher was employed by Beckman Coulter, Inc. in a variety of project management, plant management and manufacturing positions. Mr. Fletcher has a BA in Biological Sciences with a minor in chemistry from California State University, San Jose, California.

James Canfield brings 20 years of sales and marketing experience, including extensive medical diagnostic expertise. Mr. Canfield has a proven track record of developing creative sales strategies for the establishment of diagnostics in both non-traditional markets and new, emerging markets. Most recently, Mr. Canfield was Vice President of Sales & Marketing at Fitability Systems, a provider of on-line interview and personality assessment systems for use in conjunction with on-line recruiting. Previous to Fitability Systems, Mr. Canfield was Vice President of Sales at Headhunter.net, the second largest job listing service in the United States, where he developed a new direct sales business model that directly resulted in an 18% revenue increase per month and played a crucial role in taking the company public in August of 1999. Prior to Headhunter.net, Mr. Canfield held several senior marketing and sales positions at IDEXX Laboratories, the market leader in veterinary diagnostic products and services. While at IDEXX, Mr. Canfield was instrumental in the rapid growth of the organization and dramatically increased market share, which more than doubled revenues. Earlier in his career, Mr. Canfield held various general management, and senior operations and sales positions at Baxter Healthcare. Mr. Canfield worked at Abbott Laboratories prior to Baxter, and held positions of increasing sales responsibility. Mr. Canfield received a Bachelor of Science in Industrial Technology from Southern Illinois University.

Charles J. Casamento was elected as a director of the Company on June 16, 2000. Mr. Casamento has extensive experience in marketing, business development and executive management in pharmaceutical, biotechnology and medical products companies. From November 1999 to date, he has been serving as the Chairman, President and Chief Executive Officer of Questcor Pharmaceuticals, Inc. ("Questcor"), a specialty pharmaceutical company focusing on serving the acute care and critical care hospital markets. From June 1993 to November 1999, he served as the Chairman, President and Chief Executive Officer of RiboGene, Inc., a therapeutics company which merged with another company to form Questcor in November 1999. From March 1989 to May 1993, he served as the President and Chief Executive Officer of Interneuron Pharmaceuticals, a biopharmaceutical company of which he was a co-founder. From December 1970 to March 1989, he held management positions with Genzyme Corporation, Sandoz, Inc., Hoffman-La Roche, Inc., Johnson & Johnson and American Hospital Supply Corporation, all in the pharmaceutical area of their businesses. Mr. Casamento received his B.S. in Pharmacy from Fordham University and his M.B.A. from Iona College and is a licensed pharmacist.

Peter S. Gold was elected as a director of the Company on December 5, 1997. He retired in 1988 as Chairman and Chief Executive Officer of Price Pfister, Inc., the largest manufacturer of faucets in the world. Mr. Gold did a leveraged buyout and purchased the company in 1983; he subsequently took the company public in 1987; and sold the company in 1988. Price Pfister is now owned by Black & Decker. Mr. Gold is a Director Emeritus of The Home Depot, Inc. and has major investments in commercial real estate in various parts of the United States. Mr. Gold is Chairman of the Board of Trustees of Pitzer College (Claremont College), Claremont, CA, and a member of the Board of Trustees of the City of Hope. Mr. Gold received a Doctor of Humane Letters from Pitzer College, Claremont, CA, and received a law degree at Southwestern University, Los Angeles, CA.

Paul Sandler was elected as a director of the Company on December 5, 1997. He is a Board Certified pediatric nephrologist at the Arizona Kidney Disease & Hypertension Center in Phoenix. Additionally, Dr. Sandler is the Medical Director at Walter Boswell Memorial Hospital, the Phoenix Artificial Kidney Center, and South Phoenix Dialysis Center, the South Mountain Dialysis Services, and Phoenix Memorial Hospital PPG. Dr. Sandler was a fellow at Albert Einstein College of Medicine in New York City, and received his post-graduate training at Kings County Hospital, New York City. Dr. Sandler received his MD at the State University of New York, and received his BA from Emory University.

Stan Yakatan was elected as a director of the Company on June 16, 2000. During the past ten years, he has dedicated his career to helping establish new companies in conjunction with venture capital firms throughout the world on a project assignment basis, particularly in medical device, biotechnology, biopharmaceutical and hi-technology companies. Mr. Yakatan also has extensive experience in sales, marketing and business development and as a senior manager in a variety of diagnostic, biotechnology and pharmaceutical companies. From May 1999 to date, he has been serving as the Chairman, President and Chief Executive Officer of Katan Associates which furnishes advisory services to its clients on strategic planning, marketing, business development and other matters and assists its clients in obtaining financing. Since July 1994, he has served as a consultant to Medical Science Partners, an international healthcare venture fund, and a member of the investment committee of BioCapital, also a healthcare venture fund. From May 1996 to May 1999, he served as the Chairman, President and Chief Executive Officer of Quantum Biotechnologies, which develops products to the research products molecular biology market. From September 1994 to December 1995, he served as the President and Chief Executive Officer of CryoSurge, a medical device development stage company. From July 1969 to July 1994, he advanced from a sales representative to managerial positions to executive officerships with Sandoz, Inc., New England Nuclear, E.I. Dupont de Nemours & Co., ICN Pharmaceuticals Inc., New Brunswick Scientific, Inc., Unisyn Technologies, Inc., Proteine Performance and Cystar, Inc. Mr. Yakatan received his MBA from the Wharton School of Business of the University of Pennsylvania.

None

Based solely on a review of Forms 3 and 4 furnished to LifePoint under Rule 16a-3(e) promulgated under the Exchange Act, with respect to fiscal 2001, LifePoint is not aware of any director or officer of LifePoint who failed to file on a timely basis, as disclosed in such forms, reports required by Section 16(a) of the Exchange Act during fiscal 2001.

As of March 31, 2001, Jonathan J. Pallin and the General Conference Corporation of Seventh-day Adventists (the "Seventh-day Adventists") were the only beneficial owners of 10% or more of the Common Stock. Both Mr. Pallin and the Seventh-day Adventists have advised LifePoint that they made timely filings with respect to their transactions in fiscal 2001.

A definitive Proxy Statement will be filed with the Securities and Exchange Commission ("the Commission") pursuant to Regulation 14A within 120 days after the close of the Company's most recent calendar year and, accordingly, Item 9 is incorporated by reference to said definitive Proxy Statement. The Proxy Statement will include information covering this Item under the captions "Proposal Two: Election of Directors" and "Management."

A definitive Proxy Statement will be filed with the Securities and Exchange Commission ("the Commission") pursuant to Regulation 14A within 120 days after the close of the Company's most recent calendar year and, accordingly, Item 9 is incorporated by reference to said definitive Proxy Statement. The Proxy Statement will include information covering this Item under the captions "Proposal Two: Election of Directors" and "Management."

A definitive Proxy Statement will be filed with the Securities and Exchange Commission ("the Commission") pursuant to Regulation 14A within 120 days after the close of the Company's most recent calendar year and, accordingly, Item 9 is incorporated by reference to said definitive Proxy Statement. The Proxy Statement will include information covering this Item under the captions "Proposal Two: Election of Directors" and "Management."

(a)(1) Financial Statements:

The LifePoint financial statements appear in a separate section of this Annual Report on Form

10-K commencing on the pages referenced below:

Financial Statement Schedules are omitted as they are not required, are inapplicable, or the information is included in the financial statement or notes thereon.

The following reports on Form 8-K have been filed during the last quarter of the period covered by this Form 10-K Report to the date of this report.

1. On March 26, 2001, the Company filed an 8-K Report with the SEC containing a Letter to Stockholders updating the status of the Company, its products and its marketing efforts.
2. On May 30, 2001, the Company filed an 8-K Report with the SEC containing a Letter to Stockholders updating the status of the Company, its products and its marketing efforts.
3. On June 25, 2001, the Company filed an 8-K Report with the SEC containing a press release announcing the closing of an $11,000,000 equity funding.

All of the following exhibits designated with a footnote reference are incorporated herein by reference to a prior registration statement filed under the Securities Act or a periodic report filed by the Company or SAT pursuant to Section 13 or 15(d) of the Exchange Act. If no footnote reference is made, the exhibit is filed with this Report.

Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on July 3, 2001.

By: /s/ Linda H. Masterson

Linda H. Masterson

President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Company and in the capacities indicated on July 3, 2001.

Signature Title

/s/ Linda H. Masterson Principal Executive Officer and a Director

Linda H. Masterson

/s/ Michele A. Clark Principal Accounting Officer

Michele A. Clark

/s/ Charles J. Casamento Director

Charles Casamento

/s/ Peter S. Gold Director

Peter S. Gold

/s/ Paul Sandler Director

Paul Sandler

/s/ Stanley Yakatan Director

Stanley Yakatan

The Board of Directors

LifePoint, Inc.

We have audited the accompanying balance sheets of LifePoint, Inc. (a development stage enterprise) (the Company) as of March 31, 2001 and 2000, and the related statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended March 31, 2001 and for the period October 8, 1992 (inception) through March 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements for the period October 8, 1992 (inception) through March 31, 1995 were audited by other auditors whose report dated May 26, 1995 expressed an unqualified opinion on those statements. The financial statements for the period October 8, 1992 (inception) through March 31, 1995 include total costs and expenses and a net loss of $4,497,000 and $4,850,000, respectively. Our opinion on the statements of operations and cash flows for the period October 8, 1992 (inception) through March 31, 2000, insofar as it relates to amounts for prior periods through March 31, 1995, is based solely on the report of other auditors.

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

In our opinion, based on our audits and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of LifePoint, Inc. at March 31, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2001 and the period from October 8, 1992 (inception) through March 31, 2001, in conformity with accounting principles generally accepted in the United States.

Riverside, California

May 17, 2001, except Note 7 as to which the date is June 29, 2001

The Board of Directors and Shareholders

LifePoint, Inc.

Rancho Cucamonga, California

We have audited the accompanying statements of operations, stockholders' (deficit) equity and cash flows for the period from October 8, 1992 (inception) through March 31, 1995 of LifePoint, Inc. (a Development Stage Enterprise). These statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

In our opinion, the statements referred to above present fairly, in all material respects, the results of operations and cash flows of LifePoint, Inc. for period from October 8, 1992 (inception) through March 31, 1995, in conformity with generally accepted accounting principles.

WOLINETZ, LAFAZAN, & COMPANY, P.C.

Rockville Centre, New York

May 26, 1995

See Accompanying Notes

															Cumulative From
							Years Ended March 31								October 8, 1992
															(Inception) to
							2001		2000		1999				March 31, 2001
Operating Activities
Net loss							$ (7,162,529)		$ (3,949,784)		$ (2,696,713)				$ (25,482,625)
Adjustments to reconcile net loss to net
			cash used by operating activities:
			Depreciation and amortization				255,435		99,693		142,387				1,274,207
			Consulting expense				-		-		361,160				361,160
			Loss on disposal of property and
				equipment			-		-		-				237,976
			Loss on marketable securities				-		-		-				627,512
			Amortization of bond discount				-		-		-				(4,855)
			Changes in operating assets and liabilities:
				Change in prepaid expenses and other
				current assets			(278,236)		(66,751)		204,268				(256,468)
				Change in other assets			(220,466)		(10,555)		(18,130)				(253,487)
				Change in accounts payable			446,430		43,638		111,687				775,691
				Change in accrued expenses			6,982		27,021		(200,795)				(83,916)
Net cash used by operating activities							(6,952,384)		(3,856,738)		(2,096,136)				(22,804,805)
Investing Activities
Sale of marketable securities							-		-		-				3,285,625
Purchase of marketable securities							-		-		-				(3,908,281)
Purchases of property and equipment							(709,813)		(90,825)		(6,786)				(1,404,201)
Proceeds from sale of property/equipment, net							-		-		-				80,828
Additional patent costs							(36,698)		(13,893)		(17,685)				(107,515)
Net cash used by investing activities							(746,511)		(104,718)		(24,471)				(2,053,544)
Financing Activities
Sales of common stock							-		9,200,000		1,025,000				20,446,226
Expenses of common stock offering							-		(604,706)		(5,736)				(2,286,292)
Sales of preferred stock							3,000,000		-		6,000,000				9,000,000
Expenses of preferred stock offering							-		(18,374)		(720,077)				(738,451)
Exercise of stock options							114,146		14,752		20,598				149,496
Exercise of warrants							1,570,815		104,100		-				1,674,915
Payments of loan to parent							-		-		-				(1,917,057)
Proceeds of loan by parent							-		-		-				1,634,762
Proceeds of loan payable - parent							-		-		-				4,715,067
Payment of loan payable - parent							-		-		-				(1,299,782)
Proceeds of capital leases							-		-		-				101,572
Payments of capital leases							(241,796)		(47,124)		-				(394,213)
Proceeds of brokerage loan payable							-		-		-				2,674,683
Payments of brokerage loan payable							-		-		-				(2,674,683)
Net cash provided by financing activities							4,443,165		8,648,648		6,319,785				31,086,243
Increase (decrease) in cash and cash
			equivalents				(3,255,730)		4,687,192		4,199,178				6,227,894
Cash and cash equivalents at beginning
			of period				9,483,624		4,796,432		597,254				-
Cash and cash equivalents at end of period							$ 6,227,894		$ 9,483,624		$ 4,796,432				$ 6,227,894
Supplemental Disclosure of
	Cash Information:
Cash paid for interest						$ 78,447			$ 27,514		$ -			$ 298,007
Noncash operating activities:
	Value of common stock for
		consulting services				$ -			$ -		$ 53,340			$ 203,340
Noncash investing activities:
	Value of assets transferred to lessor
		in lieu of payment on capital leases				$ -			$ -		$ -			$ 71,405
Noncash financing activities:
	Value of common stock issued and
		additional paid-in capital for the
		transfer of assets from Parent				$ -			$ -		$ -			$ 781,060
	Value of common stock issued to
		Parent and additional paid-in capital
		for the forgiveness of debt				$ -			$ -		$ -			$ 3,160,502
	Value of common stock warrants issued
		for consulting services				$ -			$ -		$ 187,500			$ 187,500
	Value of common stock issued and
		additional paid-in capital issued as
		dividends on preferred conversion				$ -			$ 547,246		$ 4,864			$ 552,110
	Value of common stock warrants issued
		for preferred stock offering				$ -			$ -		$ 133,559			$ 133,559
	Value of preferred stock converted to
		common stock				$ -			$ 11,154		$ 846			$ 12,000
	Value of common stock warrants converted
		to common stock in exchange for note				$ 860,000			$ 1,060,000		$ -			$ 1,920,000
	Value of common stock options converted
		to common stock in exchange for note				$ 151,989			$ 56,875		$ -			$ 208,864
	Value of common stock surrendered as
		payment on note				$ 106,992			$ -		$ -			$ 106,992