LIFEPOINT INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

FOR THE FISCAL YEAR ENDED MARCH 31, 1998

Commission File No. 000-23721

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

DELAWARE 33-0539168
(State or other jurisdiction of (I.R.S. Employer
Incorporation organization) I.D. Number)

10400 TRADEMARK STREET
RANCHO CUCAMONGA, CALIFORNIA 91730
(Address of principal executive offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE:
(909) 466-8047

SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:
None

SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:
Common Stock, $.001 par value

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports, and (2) has been subject to such filing
requirements for the past 90 days: Yes [X] No[ ].

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [ ]

As of May 29, 1998, there were 10,797,206 shares of the Common Stock
outstanding.

The Registrant has only one class of voting stock, the Common Stock, $.001 par
value. As of May 29, 1998, the aggregate market value of the Common Stock held
by non-affiliates was $2,160,950. Because there were no market prices for the
LifePoint Common Stock reported at May 29, 1998, the sales price per share
(i.e., $.50) in the October to December 1997 private placement was used for
valuation purposes.
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PART I

ITEM 1. BUSINESS

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") is subject are the risks that it will not obtain
the substantial financing necessary to complete the development of its products
and, accordingly, not develop any revenue source; that it will not secure the
additional personnel required first to complete the development program and, if
that is successful, later to implement the manufacturing process, especially in
its current location; that it will not complete the product development program
on a timely or successful basis and that the costs will be higher than
projected; that, during the period before March 2000 when LifePoint's management
currently believes that its saliva based drugs of abuse and alcohol testing
product will be submitted for United States governmental approval, competitors,
with greater financial resources, will have produced and offered for sale a
saliva based competitive product; and that, because of the delays, 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 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.

GENERAL

LifePoint was incorporated on October 8, 1992 under the laws of the
State of Delaware as a wholly owned subsidiary of Substance Abuse Technologies,
Inc. ("SAT"). The Common Stock, $.01 par value (the "SAT Common Stock"), of SAT
was then traded on the American Stock Exchange. Effective as of January 1, 1993,
SAT sublicensed or transferred to LifePoint certain rights or assets to develop
drug testing products in exchange for 3,500,000 shares of LifePoint's Common
Stock, $.001 par value (the "LifePoint Common Stock"). In October and November
1993, LifePoint had a public offering of the LifePoint Common Stock in which an
aggregate of 1,721,900 shares was sold. As of September 30, 1997, SAT owned
5,575,306 shares of the LifePoint Common Stock or 76.4% of the 7,297,206 shares
of the LifePoint Common Stock then outstanding. From its inception until October
31, 1997, LifePoint was a subsidiary of SAT or otherwise under its control. SAT
ceased providing advances to LifePoint in August 1997 as a result of its
inability to secure financing for its own programs. On September 10, 1997, SAT
filed a petition under Chapter 11 of the Federal Bankruptcy Code. LifePoint
temporarily suspended its product development activities on September 19, 1997,
but did not file for bankruptcy. On October 29, 1997, the controlling
stockholder interest in LifePoint was sold to Meadow Lane Partners, LLC ("Meadow
Lane"), then an unaffiliated party, for $250,000 and operations were resumed.
LifePoint is now completely independent from SAT. See the section "Certain
Relationships with SAT" under this caption "Business."

LifePoint has not produced any revenues through March 31, 1998 because
its products are still in the developmental stage. LifePoint is developing
proprietary systems that will test for substance abuse, specifically the
following five commonly used drugs of abuse: cocaine, opiates (heroin, morphine
and codeine), phencyclidine hydrochloride (PCP), amphetamines (including
methamphetamines), and tetrahydrocannabinol (THC, marijuana) (collectively the
"Drugs of Abuse"). As indicated below, LifePoint's first efforts were to develop
a device to test for the Drugs of Abuse using urine as the test specimen;
however, based on its review of the potential market in 1995, LifePoint decided
to develop a saliva specimen testing product first. In late 1996, it expanded
the development program to also test for the presence of alcohol.

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In January 1992, the United States Navy (the "USN") and SAT signed a
ten-year license agreement (the License Agreement") covering the exclusive use
by SAT of the USN's technology for the five Drugs of Abuse and any other drugs
that might be added to the National Institute of Drug Abuse ("NIDA") list of
drugs of abuse. By an amendment dated March 15, 1994, the scope of the License
Agreement was broadened to permit SAT to use the technology for testing for
methadone, benzodiazapines, barbiturates, propoxyphene, tricyclic
antidepressants and anabolic steroids. Except as set forth in the two preceding
sentences, SAT under the License Agreement could not use the USN technology to
test for other substances. By an amendment dated June 16, 1995, the term of the
exclusive right under the License Agreement was extended to terminate ten years
from June 27, 1995 and SAT had a nonexclusive right to use the technology
thereafter for the balance of the patent term, unless the License Agreement was
terminated sooner because of SAT's default. By letter dated May 15, 1995, the
USN notified SAT that, because the expiration date of the USN patent had been
extended to February 23, 2010 under the GATT/WTO treaty, the expiration date of
the License Agreement was extended to February 23, 2010. LifePoint's line of
products under development was initially based on its sublicense dated September
23, 1993 (the "Sublicense") from SAT for Drugs of Abuse detection utilizing the
USN patent for flow immunosensor technology. However, with the sale of the SAT
majority stockholder interest in LifePoint, the license agreement with the USN
was transferred directly to LifePoint from SAT and the Sublicense between SAT
and LifePoint was cancelled. On March 3, 1998, the notification period in the
Federal Register was completed and the USN has agreed in principle to expand the
license to a worldwide, exclusive license for human diagnostic testing on
saliva. LifePoint is further developing the USN-developed technology for
application in its own proprietary test system.

LifePoint had received six approvals from the Food and Drug
Administration (the "FDA") covering its Model 9000 Flow Immunoassay System and
the attendant assays for each of the five Drugs of Abuse listed above, using
urine as the test specimen. However, additional development work is required
before the urine based testing product can be marketed. As indicated above,
LifePoint, based on its review of then current market conditions, decided in
1995 to defer completion of the urine product until it can complete the assays
for a saliva based test system.

Until the saliva based test system is submitted to the FDA and
marketing has commenced, no revenues from product sales are likely to be
produced. LifePoint conducted an internal feasibility study on the product that
was completed in November 1996. Based on the results of the feasibility study,
LifePoint proceeded to the next stage of development. Assuming subsequent
success in the remainder of the development program, LifePoint currently expects
to submit its five-panel screening assay to the FDA in March 2000 at the
earliest, but there can be no assurance that such submission will occur by such
date or that the product will be successfully developed. SAT commissioned an
unaffiliated consulting firm in June 1997 to review the product. The consultant
confirmed LifePoint management's belief that the contemplated product could be
developed and that once developed there was a significant market therefor,
especially with the added alcohol testing capability. However, the consultant
estimated that it may take several months longer and a higher cost than had been
estimated by LifePoint's management to bring the product to market as indicated
in the section "Need for Financing" under this caption "Business". Once the
product is submitted to the FDA, LifePoint will be able to market it in the
United States for non-medical purposes, such as law enforcement testing and
safety sensitive testing, and in Europe where no FDA clearance is required.
LifePoint will be able to commence marketing of the product in medical markets
when FDA clearance is obtained, which is anticipated to occur approximately
three to five months after submission if such approval is obtained. There can be
no assurance as to when LifePoint will submit such assay to the FDA, if at all,
as to when the FDA will give its clearance and as to when marketing in either
medical or non-medical markets will commence. Management recognizes that,
although FDA clearance is not required for use of drug testing for non-medical
purposes, such as law enforcement testing and industrial safety sensitive
testing, FDA clearance of the product will assist LifePoint's marketing in the
United States to such customers. A definitive marketing plan has not been
finalized or implemented. See the section "Marketing and Distribution" under
this caption "Business."

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It is anticipated that LifePoint's saliva based Drugs of Abuse and
alcohol test will be evidentiary in the law enforcement market. In addition, it
is expected that LifePoint's tests will be performed on a non-evidentiary basis
in the industrial marketplace. If a Drug of Abuse is detected in the screening
test, 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 evidentiary test. LifePoint's
marketing analysis has indicated a greater market potential for a saliva sample
portable testing instrument for Drugs of Abuse by law enforcement agencies,
occupational health clinics, hospitals and other medical facilities than a urine
sample instrument. However, the use of this product in other potential markets
that are testing for transportation "lifestyle," such as pre-employment testing,
may be limited with the initial product. Currently, to LifePoint's knowledge, no
competitor is currently offering a saliva sample testing product on an "on site"
basis. However, management has been advised that two or more companies may have
such product under development. There can be no assurance that a competitor will
not begin to offer such a product in the future, whether before or after
LifePoint completes its research and development. See the section "Competition"
under this caption "Business." There also can be no assurance that the product
will be developed for use in the manner contemplated in this section.

NEED FOR FINANCING

As indicated in the preceding section, LifePoint temporarily suspended
its product development activities on September 19, 1997 because of SAT's
cessation in August 1997 of providing financing to LifePoint and SAT's
subsequent filing for bankruptcy protection on September 10, 1997. LifePoint was
able to resume such activities on October 27, 1997 as a result of a loan by
Meadow Lane which was repaid from the proceeds from a private placement
conducted by LifePoint pursuant to Regulation D under the Securities Act of
1933, as amended (the "Securities Act"). On November 21, 1997, LifePoint closed
as to the sale of 1,690,000 shares of the LifePoint Common Stock and, on
December 10, 1997, LifePoint closed as to the sale of 1,510,000 shares of the
LifePoint Common Stock. The aggregate of 3,200,000 shares was sold at $.50 per
share and LifePoint realized $1,600,000 in gross proceeds. There were no
underwriting discounts or commissions allowed or paid pursuant to the private
placement, although a finder's fee of $160,000 was paid to Jonathan J. Pallin
who was a member of Meadow Lane (see Item 12 to this Report) and who, on October
31, 1997, was elected as the Chairman of the Board and a director of LifePoint.
LifePoint's management currently estimates that the net proceeds from this
private placement will enable LifePoint to continue its operations, at the
current reduced level, until July 1998. Management has been actively pursuing
during 1998 on a parallel basis the alternative methods of financing described
in the second, third and fourth succeeding paragraphs. However, because
management recognizes that it may take beyond July to implement one of these
financing possibilities, management will, if necessary, implement a private
placement of $1,000,000 to $2,000,000 in an effort to enable LifePoint
financially to bridge the period until one of these financing programs can be
successfully implemented. There can, of course, be no assurance that LifePoint
will obtain the bridge financing or, as indicated below, the major funding to
complete its research and development program. Absent a successful consummation
of this bridge financing, LifePoint will have to suspend operations as it did in
September 1997.

The latest estimate which LifePoint's management has is that, to
complete the development of a saliva based Drugs of Abuse and alcohol testing
product, will require an incremental cost of $16,000,000 and that the product is
not expected to be launched until late in the first quarter of 2000. Such
estimates as to amount and dates (including the estimated date in the last
sentence of this paragraph) are based on the assumption that at least $6,000,000
in financing will be obtained in the next few months. This contrasts with SAT's
previous and publicly announced incremental costs for LifePoint of $16,000,000
to $18,000,000 and a launch date of the first quarter of 1999 at the earliest.
(Note: these estimates were prior to the suspension of product development
efforts and the subsequent reduced product development effort over the last
eight months.) As indicated in the preceding section, the outside consultant's
report in June 1997 confirmed LifePoint management's opinion that the product
was developable and had market potential, especially with the added feature of
the device also testing for alcohol. As indicated below, LifePoint management
believes

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that this report will be of assistance in its attempt to secure financing for
LifePoint, especially because no prototype of the product is expected to be
available until July 1999 at the earliest.

LifePoint's management has been pursuing parallel paths for financing:
venture capital, strategic partnering, and/or a private placement for all or
part of the required funding. Management continues to search for a venture
capital investor to fund the balance of the development program, believing that
such an investor or investors would be the most likely source of financing.
Management has identified companies which are likely candidates for such an
investment based on an analysis of their investment history and has conducted
preliminary discussions with several potential investors, and has progressed
into the "due diligence" stage with at least one potential investor. Management
recognizes that many prospective venture capital investors prefer to invest in a
privately-owned company with an initial public offering as the investor's exit
strategy, rather than in a publicly-owned company such as LifePoint; however,
the initial responses to LifePoint's solicitation have suggested to management
that this problem may be overcome.

LifePoint's management has also been exploring the possibility of
obtaining a strategic partner for LifePoint. To this end, the Company has an
agreement with Burrill & Company ("Burrill"), a San Francisco-based merchant
bank focused exclusively on servicing life science companies. Burrill assists
its portfolio companies in maximizing their value through various strategic
partnering relationships. Burrill was founded by G. Stephen Burrill, an
internationally recognized financial, business, and management advisor to the
life sciences industry. The team is augmented by the Burrill's Business Advisory
Board which includes a group of former chief executives of major pharmaceutical,
medical, and diagnostic companies. Burrill had been engaged to introduce
LifePoint to potential partners with an on-going interest in saliva-based
diagnostics or point-of-care diagnostics and which might be otherwise interested
in partnering with or acquiring LifePoint at an early stage. Management still
believes that obtaining one of the major pharmaceutical or medical companies to
assist in the product development at this stage of development risks giving
confidential data to potential competitors that would not be fully protected by
confidentiality agreements. Management also believes that a potential marketing
partner could be obtained on more acceptable terms when there is a working
prototype for the instrument and the disposables and certain preliminary
clinical data are obtained. It is currently anticipated that the prototype will
be completed by July 1999 at the earliest and that, at that stage of
development, the greater part of the estimated development and manufacturing
build-out expenses would already have been incurred, making it less beneficial
to obtain a development partner at that time. Despite these reservations,
management believes that the consultant's report in June 1997 may resolve the
concerns of these major companies as to there being no prototype currently
available and that LifePoint may have to assume the risks of disclosing
confidential data rather than not secure adequate financing. LifePoint's
management will pursue strategic partnering, but does not currently rate
LifePoint's chances of succeeding in a timely manner as high as those with
venture capital investors or some other equity investor.

LifePoint has also engaged the services of The Kriegsman Group, founded
by Steven Kriegsman, a Los Angeles-based investment banker focused on obtaining
private financing for young medical, biotech, and pharmaceutical companies. The
Kriegsman Group is focusing on implementing a private placement for $7,000,000
to $10,000,00 in equity from individuals or institutions for LifePoint. Ambient
Capital Group, Inc., also a Los Angeles-based investment banker, will act as
co-agent with The Kriegsman Group in such offering.

Management has also pursued the possibility of an underwritten public
offering and has received expressions of interest from several well-known small
national and large regional firms. This route has been put on hold by management
as taking too long to complete the required transaction in a timely manner;
however, it remains an alternative to be pursued following a private financing
for the initial financing requirement.

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There can be no assurance that LifePoint will be successful in securing
financing, whether through a venture capital investor, a strategic partner, a
private placement or otherwise. See the section "Liquidity and Capital
Resources" in Item 7 to this Report.

DRUG TESTING PRODUCTS

(1) URINE SAMPLE TESTING. LifePoint's urine Drugs of Abuse testing
system can be divided into two parts. The first part is the instrument into
which the sample is placed. The second part consists of the replaceable columns
that will test for the five Drugs of Abuse.

FLOW IMMUNOASSAY SYSTEM. LifePoint's initial instrument system was the
Model 9000, which received marketing clearance from the FDA. See the section
"Government Regulation" under this caption "Business." Resembling a personal
computer, the Model 9000 features one-button operation that permits low cost use
of the system by non-technical personnel. The Model 9000 incorporates a
LifePoint developed laser-excited fluorescence system that will enhance
detection of Drugs of Abuse. The Model 9000 will provide an analysis of Drugs of
Abuse present in the urine sample, if any are so present. All five Drugs of
Abuse or any combination thereof can be selected for testing. Testing on a urine
sample by the Model 9000 is anticipated to take approximately 20 minutes per
drug selected.

DRUG ASSAYS FOR THE FLOW IMMUNOSENSOR SYSTEM. LifePoint had been
designing disposable drug assay columns to be utilized in connection with the
Model 9000. Each flow through column, approximately one inch long by one-half
inch wide, will test for one Drug of Abuse (the "Target Drug"). The five
separate columns each contain antibodies specific for the Target Drug.

The life of each column is estimated at between 50 to 75 tests. This
will depend specifically on such factors as (i) the number of samples containing
the Target Drug; (ii) the amount of the Target Drug present; and (iii) the
specific Drug of Abuse targeted for testing. The Model 9000 will inform the
operator, who does not have to be highly skilled, when and which column to
replace.

As indicated in the section "General" under this caption "Business,"
LifePoint intends to first complete its development of the saliva sample testing
product described below prior to undertaking further development efforts with
respect to the urine sample testing product. Accordingly, the urine sample
testing product is not currently marketable.

(2) SALIVA SAMPLE TESTING. Research is being conducted by LifePoint,
using the flow immunosensor technology, of testing for Drugs of Abuse and
alcohol from saliva samples and for submission to the FDA for approval to use
saliva as a testing specimen. This research utilizes much of the development
work done for LifePoint's urine Drugs of Abuse testing system. See the section
"Government Regulation" under this caption "Business" for information as to
obtaining FDA clearance. Management anticipates that the earliest that the
saliva testing system and drugs assays for all five Drugs of Abuse and alcohol
will be ready for submission to the FDA is in March 2000. There can be no
assurance that LifePoint will meet such timetable.

IMMUNOSENSOR ANALYZER. LifePoint anticipates manufacturing a small
portable device in conjunction with the flow immunosensor technology. When used
with the drug assays described below, LifePoint expects that this unit will
provide portable, flexible and non-invasive detection capability when used with
saliva samples. It is expected that the assay time will be under five minutes
per sample. There can be, however, no assurance that the Company will be able to
develop and market this product. See the section "Research and Development"
under this caption "Business."

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DRUG ASSAYS FOR IMMUNOSENSOR ANALYZER. LifePoint intends to develop
disposable assay cartridges for use with its desktop model using saliva samples.
After the sample has been collected, it will be automatically transferred to an
assay cartridge containing up to ten target analytes (Drugs of Abuse and
alcohol) in one panel, read by the instrument, and the results printed. The
disposable cartridge will be thrown away after use. Assay time is expected to be
less than five minutes per sample. LifePoint plans to continue its research and
development efforts for the drug assays concurrently with the instrument. There
can be no assurance that LifePoint will be able to develop and market the assay
cartridges. See the section "Research and Development" under this caption
"Business."

MANUFACTURING

Whenever LifePoint commences manufacturing, LifePoint will be required
in the United States to follow current Good Manufacturing Practices ("GMP") as
prescribed by the FDA. See the section "Government Regulation" under this
caption "Business." There can be no assurance that LifePoint will be able to
bring its plant into compliance and/or cause its third party manufacturers to
comply with GMP. LifePoint's future dependence on third parties for the
manufacture and supply of product components could have a material adverse
effect on LifePoint's profit margins and its ability to deliver its products on
a timely and competitive basis.

MARKETING AND DISTRIBUTION

Although LifePoint had engaged the services of a consultant to
undertake a marketing survey in 1995, because of the delays in the development
of its products due to the decision to have a test using a saliva sample, a
definitive marketing program has not been finalized or implemented. LifePoint
will be looking to employ a Vice President, Marketing to begin developing such a
program and to advise on the research and development program. LifePoint had
engaged such an officer; however, because of SAT's failure to fund (see the
section "General" under this caption "Business"), her services were terminated
as an employee, although she continues to furnish services as a consultant on a
project by project basis.

GOVERNMENT REGULATION

LifePoint's proposed screening and diagnostic products will be subject
to significant government regulation in the United States and other countries.
In order to conduct clinical tests, manufacture and market products for human
diagnostic use, LifePoint must comply with mandatory procedures and safety
standards established by the FDA and comparable foreign regulatory agencies.
Typically, such standards require that products be approved by the FDA or
comparable foreign regulatory agencies as appropriate, as safe and as effective
for their intended use prior to being marketed.

The 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 in the
United States medical device products such as LifePoint's proposed screening and
diagnostic test kits. 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 approval is sought is "substantially equivalent" to devices on the
market prior to the Medical Device Amendments of 1976 or devices approved
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 was supposed to be 90 days from the date of filing the
application. However, the FDA has recently been taking significantly longer in
approving other companies' products.

If the 510(k) procedure is not available, then pre-market approval (the
"PMA") must be obtained from the FDA. Under the PMA procedure, the applicant
must obtain an Investigational Device Exemption (the "IDE") before beginning the
substantial clinical testing which is required to determine the safety,

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efficacy and potential hazards of the product. Safety and efficacy must be
established through extensive clinical studies, which are conducted after the
FDA's acceptance of the IDE application. On completion of all of the
requirements for the IDE and once the results are evaluated, a PMA application
is submitted to the FDA. The review period under a PMA application is generally
180 days from the date of filing, but the application is not automatically
deemed cleared if not rejected during that period. The FDA may grant marketing
clearance, request additional data about the product's safety and efficacy or
deny the application if it determines that the product does not meet the
regulatory approval criteria. In addition, the preparation of a PMA application
is significantly more complex and time consuming than the 510(k) procedure and
the FDA's review of a PMA is more extensive than that required for a 510(k)
application. Based on its discussions with the FDA, LifePoint's management
believes that the 510(k) procedure will be followed.

There can be no assurance that any agency will grant approval for the
sale of LifePoint'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 cost of
LifePoint's research and development activities will not exceed that which is
budgeted, nor that any of LifePoint's proposed products will ever obtain the
necessary FDA or foreign regulatory clearances for commercialization.

Pursuant to applications filed by LifePoint, to date, LifePoint has
received approval to manufacture and market the Model 9000 and five drug assays
- - the assay which detects in urine samples the presence of cocaine (and its
metabolite benzoylecgonine), the assay which detects the presence of opiates
(including heroin, codeine and morphine), the assay which detects amphetamines,
the assay which detects phencyclidine hydrochloride (PCP) and the assay which
detects tetrahydrocannabinoids (THC, marijuana). However, as indicated in the
section "Drug Testing Products" under this caption "Business," further
development work is necessary before the product can be marketed and, because of
the decision to complete development of a saliva sample testing product prior to
completing the development work with respect to the urine sample testing
product, no such manufacture or marketing has commenced.
See also the section "General" under this caption "Business."

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, 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 will be
delayed until further investigation is completed and has not been made as of the
date hereof. LifePoint believes that these regulations will not be made
effective because (a) the increased costs and burdensome procedures imposed by
the CLIA will significantly reduce the volume of drug tests conducted, which is
in direct conflict with the government's long-standing war on drugs, (b)
workplace testing is forensic in nature (i.e., for the purpose of determining
whether an individual is using illegal drugs) and not for medical purposes
(i.e., to make a health assessment for diagnostic or treatment purposes) as was
the original intent of the CLIA and (c) inclusion of employment drug testing may
be a direct violation of the Federal Administrative Procedures Act under Title 5
of the United States Code and the United States Constitution. If the regulations
are not adopted, on-site drug testing in the workplace will continue to be
exempt from the CLIA. Although LifePoint has access to a forensic laboratory,
the LifePoint management believes that the consequences of adoption of the
regulations would add to a potential customer's costs and, accordingly, this

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could have a material adverse impact upon LifePoint's business with respect to
employment testing in the private sector.

RESEARCH AND DEVELOPMENT

During the fiscal years ended March 31, 1998 ("fiscal 1998"), 1997
("fiscal 1997"), and 1996 ("fiscal 1996"), LifePoint spent approximately
$1,052,000, $1,735,000, and $949,000, respectively, on development of the saliva
drug testing technology. From October 8, 1992 (inception) to March 31, 1998,
LifePoint has spent approximately $5,719,000 on development of the drug testing
technology. See the section "Need for Financing" under this caption "Business"
for information as to the estimated expenses to complete the development
project.

PATENTS AND TECHNOLOGY

In addition to its rights under the USN patent license (see the section
"General" under this caption "Business"), LifePoint has rights under the
following patents:

(1) U.S. Patent No. 5,183,740, "Flow Immunosensor Method and
Apparatus," issued on February 2, 1993; and

(2) U.S. Patent No. 5,354,654, "Lyophilized Ligand-Receptor
Complexes for Assay and Sensors" issued on October 11, 1994.

LifePoint is in the process of filing patent(s) for a saliva aspiration
system used for diagnostic purposes. LifePoint believes that this patent will
provide broad patent protection for its unique saliva collection system that has
significant advantages over the currently accepted method of absorption for
saliva collection. It is uncertain whether and when this patent may issue.

LifePoint previously had rights to use Patent No. 5,066,859,
"Hematocrit and Oxygen Saturation Blood Analyzer," issued on November 19, 1992,
but the assignment agreement dated January 16, 1992 between LifePoint and
Maurice N. Karkur and James C. Velnosky was terminated on November 7, 1996.
LifePoint's management does not consider termination of rights to use this
patent material to the future development and marketing of its products.

The expiration date of the USN patent is February 23, 2010, while the
terms of the other patents are 17 years from the respective dates of issuance,
subject to renewal. Termination of the Licensing Agreement for the USN patent,
which would occur only on LifePoint's default, would end LifePoint's rights to
develop drug testing products under the patent. Termination of the other patents
or licenses to use the same 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 LifePoint's proposed immunoassay sensor, which may be
competitive with those of LifePoint. The scope and validity of these patents are
presently unknown. LifePoint is not aware of any patents covering an immunoassay
sensor similar to LifePoint's. Companies which have or may obtain patents
relating to products or processes competitive with those of LifePoint could
bring legal actions against LifePoint claiming damages and seeking to enjoin it
from manufacturing, licensing and marketing the affected product. To date, no
claims have been made against LifePoint for infringement of any patents.
However, marketing of LifePoint'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 would be costly and LifePoint's business
would be

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adversely affected, even if LifePoint were to prevail. No assurance can be given
that LifePoint 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 LifePoint 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,
LifePoint include both process patents and product patents.

LifePoint 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 LifePoint. Lyophilization
patent applications have been filed in Canada, certain European countries and
Japan.

The patent laws of foreign countries may differ from those of the
United States as to the patentability of LifePoint's products and processes and,
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 LifePoint's inventions
or that, if issued, the patents will be of substantial protection or commercial
benefit to LifePoint.

Certain inventions of LifePoint may prove to be unpatentable or
LifePoint may conclude that it would be more advisable to retain a patentable
invention as a trade secret. In either case, LifePoint 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 LifePoint have executed, and project sponsors and manufacturers will be
required to execute, agreements to maintain the confidentiality of LifePoint'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 LifePoint. There
can be no assurance that such sponsors and consultants will not develop similar
or superior technology independently and to the extent that such persons apply
technical information independently developed by them to projects undertaken by
LifePoint, disputes may arise as to the proprietary rights to such information.

COMPETITION

LifePoint has not received any revenues because its products are still
in the developmental stage. If the products are developed, LifePoint will
compete with many of the companies of varying size that already exist or may be
founded in the future which utilize urine samples as a specimen of testing for
drugs or breath or saliva testing for alcohol. The competition in the alcohol
testing area is generally restricted to small manufacturing organizations such
as Intoximeter, Inc., and LifeLock, Inc. In the drug testing arena, LifePoint
will face competition from at least eight major pharmaceutical companies
providing substance abuse screening methods: (1) enzyme-multiplied immunoassay
technique (EMIT) manufactured and distributed by Syva, a division of Dade
International; (2) radioimmunoassay (RIA) manufactured and distributed by
Diagnostic Products Corp. ("DPC") and others; (3) thin layer chromatography
(TLC) manufactured and distributed by Marion Laboratories, Inc. ("Marion"); (4)
a fluorescence polarization immunoassay (FPIA) manufactured by Abbott
Laboratories, Inc. ("Abbott"); and (5) other immunoassay tests provided by
Hoffman La Roche, Inc. ("Roche"), Editek, Inc. ("Editek"); Hycor Biomedical,
Inc. ("Hycor"); Princeton Biotech, Inc. ("Princeton"); and BioSite Inc.
("BioSite"). Almost all of these companies (i.e., Syva, Roche, Marion, Abbott,
Editek, Hycor, Princeton and BioSite) have substantially greater financial
resources available to them than does LifePoint to develop and to market their
products.

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Management believes that saliva sample testing is unique in that, to
management's knowledge, no company is currently offering a substance abuse
detection method using saliva samples as a specimen on an "on-site" basis.
However, LifePoint has been advised that such a product may be under development
by two or more companies and, accordingly, there can be no assurance that such a
product will not be offered by a competitor. In addition, even if no such
product is developed, LifePoint anticipates, as indicated above, competition
from other substance abuse detection methods such as Syva's EMIT, Roche's RIA,
Marion's TLC, Abbott's FPIA methods, and other immunoassay tests provided by
Editek, Hycor, Princeton and BioSite. LifePoint'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,
safety sensitive industries, hospitals and other medical facilities than a urine
sample instrument. However, because of the blood equivalent, current status
result, the use of this product in other potential markets which require a
"lifestyle" result may be limited.

If LifePoint successfully develops first its saliva sample testing
method and second its urine sample testing method, as to neither of which there
can be any assurance, it is not certain whether LifePoint will have the
financial resources to compete successfully with other companies which have
greater financial resources available to them. In addition, LifePoint'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.

MATERIAL CONTRACTS

Copies of all of the agreements hereinafter referenced in this section
have been filed (by incorporation by reference) as exhibits to this Report and
are incorporated by this reference.

(a) LICENSE AND SUBLICENSE AGREEMENTS

With the sale of SAT's majority owned position in LifePoint, the USN
also agreed to transfer its License Agreement with SAT directly to LifePoint. An
amendment dated November 12, 1997 to the License Agreement was executed to
modify the up-front $100,000 annual minimum payment so that it will be paid in
several payments over the year. The amendment also included a onetime payment of
$10,000 in satisfaction of any outstanding debt due to the USN from SAT.
LifePoint has assumed all of SAT's rights and undertaken all of SAT's
obligations under the License Agreement.

The License Agreement initially provided that the USN shall be paid a
royalty equal to six percent of the Net Selling Price (as defined in the License
Agreement) for each Royalty-Bearing Product (as defined in the License
Agreement) made, used or sold by SAT or its sublicensees in the Licensed
Territory with minimum annual royalty payments of $180,000 for 1993, $375,000
for 1994, $600,000 for 1995 and $1,000,000 for 1996 and each calendar year
thereafter throughout the term of the License Agreement. The License Agreement
provides that the USN shall approve all sublicenses and, in accordance with such
provision, the Sublicense was approved by the USN on September 24, 1993. As a
result of the USN agreeing to the assignment of the License Agreement to
LifePoint as described in the preceding paragraph, the Sublicense was canceled.
The aforementioned minimum annual royalties were amended November 28, 1994 as
follows: the minimum annual royalty for 1995 was reduced to $375,000 and for
1996 it was reduced to $600,000. In June 1995, the License Agreement with the
USN was renegotiated and amended to provide for minimum annual royalties of
$100,000 per year commencing October 1, 1995 and terminating September 30, 2005.
Additional royalties will be paid pursuant to a schedule based upon sales of
products. By letter dated May 15, 1995, the USN notified SAT that, because the
expiration date of the USN patent had been extended to February 23, 2010 under
the GATT/WTO treaty, the expiration date of the License Agreement was extended
to February 23, 2010. The terms of the Agreement are in the process of being
negotiated to include a worldwide license for diagnostic testing of all analytes
in saliva.

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(b) CRDA

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 licensing technology of the "Flow Immunosensor".

Pursuant to an agreement dated as of January 1, 1993 by and between SAT
and LifePoint, SAT assigned to LifePoint all of its rights under the CRDA. The
purpose of the CRDA is to develop the prototype instruments based on the Flow
Immunosensor Method and Apparatus Technology. See the section "Research and
Development" under this caption "Business." Pursuant to the CRDA, each party may
retain title to any patent obtained by such party in the performance of work
under the CRDA. The NRL has 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 and LifePoint, as assignee, has 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. The patent has been
assigned to LifePoint by SAT. See the section "Patents and Technology" under
this caption "Business."

(c) MANAGEMENT AGREEMENT

On April 1, 1993, LifePoint and SAT entered into a formal Management
Agreement pursuant to which SAT's fee for management and administrative services
to LifePoint was to be computed at ten percent of LifePoint's annual net sales,
with a minimum annual fee of $300,000. In July 1993, LifePoint and SAT entered
into an amended Management Agreement, effective retroactively to April 1, 1993,
pursuant to which the fee for management and administrative services provided to
LifePoint by SAT was a fixed annual fee of $420,000, plus three percent of
LifePoint's annual gross sales. Because LifePoint has no sales to date, it had
always paid the minimum fee under the Management Agreement. The term of the
amended agreement was five years that commenced April 1, 1993. Given the related
industry experience of SAT management, the immediate availability of SAT
personnel and belief of the management of LifePoint that the terms offered by
SAT were fair and reasonable, LifePoint did not investigate alternative
management services providers. The fee charged by SAT for its management
services was determined arbitrarily by its Board of Directors after taking into
consideration the anticipated SAT resources required to provide such services to
LifePoint, both in terms of employee time and allocated overhead costs. The
arbitrary formula used by SAT to determine the fee was 50% of the sum of SAT's
executive, accounting and clerical salaries, fringe benefits and related
expenses. In March of 1997, the Management Agreement was again amended to
provide for a percentage of time and services agreement whereby the costs of
certain SAT employees and facilities were allocated to LifePoint based on a
percentage of usage. As the activity of LifePoint had been increasing, there had
been a tremendous increase in time required by SAT employees and expanded use of
leased space to satisfy LifePoint's needs. The services provided to LifePoint by
SAT pursuant to the Management Agreement included management, administrative,
accounting and other financial services and advice, including, without
limitation, the services then performed by the Treasurer of LifePoint (who was
also the Treasurer of SAT), for which he was not directly compensated by
LifePoint; services relating to LifePoint's financial and banking relationships;
services relating to the preparation of financial statements, budgets, forecasts
and cash flow projections; cash management advice; and other miscellaneous
services and advice. The management fee was discontinued after June 30, 1997
because no services were being provided after that date.

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CERTAIN RELATIONSHIPS WITH SAT

From October 1992 until January 1993, SAT conducted LifePoint's
business operations. Effective as of January 1, 1993, SAT transferred to
LifePoint all of its drug testing assets, including cash amounting to $11,626
and hard assets valued at their carrying value of $437,060 and intellectual
property rights associated with the drug testing operations for 3,500,000 shares
of the LifePoint Common Stock. SAT also granted LifePoint the Sublicense with
respect to the USN technology.

As of September 30, 1997, 76.4% of the outstanding shares of the
LifePoint Common Stock was held by SAT. James C. Witham was the Chairman of the
Board, the Chief Executive Officer and a director of LifePoint from its
incorporation until May 31, 1996 and was also the Chairman of the Board, the
President, the Chief Executive Officer and a director of SAT from its
incorporation until April 18, 1996. Karen B. Laustsen was a director of
LifePoint from its incorporation until May 28, 1996 and was an Executive Vice
President and a director of SAT from its incorporation until April 18, 1996.
From LifePoint's incorporation until July 3, 1996, Gary S. Wolff was the
Treasurer, the Chief Financial Officer, the Chief Accounting Officer and a
director of LifePoint and, from SAT's incorporation to July 3, 1996, was the
Treasurer, the Chief Financial Officer and the Chief Accounting Officer of SAT
and, prior to September 26, 1995, was also a director of SAT. Glenn A.
Bergenfield and William DiTuro, also directors of LifePoint until November 15,
1995, were directors of SAT prior to September 26, 1995. Michael J. Witham was a
director of LifePoint and a Vice President of SAT prior to September 26, 1995.
On May 31, 1996, Robert M. Stutman, the Chairman of the Board, the Chief
Executive Officer and a director of SAT since April 18, 1996, Linda H.
Masterson, the President of SAT from May 13, 1996 to May 23, 1997, a director of
SAT from September 26, 1995 to November 4, 1997 and, from May 13, 1996 to
November 14, 1996, Chief Operating Officer of SAT, and Michael S. McCord, then a
consultant to the SAT Board of Directors, were elected directors of LifePoint,
with Mr. Stutman also being elected as Chairman of the Board of LifePoint and,
effective August 1, 1996, Ms. Masterson as the President of LifePoint. On
October 22, 1996, Mr. McCord was elected as a director of SAT. All of the
foregoing persons except Messrs. Bergenfield, DiTuro and McCord were or are
employees of SAT and all were or are securityholders of SAT.

As a result of the sale by SAT to Meadow Lane of the controlling
stockholder interest in LifePoint and their relationship to SAT, on October 31,
1997, Robert M Stutman and Michael S. McCord resigned as directors of LifePoint,
with Mr. Stutman also resigning as its Chairman of the Board. Messrs. Stutman
and McCord are directors of SAT, with Mr. Stutman also serving as SAT's Chairman
of the Board and Chief Executive Officer. At the same meeting, Jonathan J.
Pallin who, through Meadow Lane, is the beneficial owner of 4,325,306 shares of
the Common Stock or 40.1% of the outstanding shares as of May 29, 1998, was
elected as the Chairman of the Board and a director of LifePoint. Since October
16, 1997, Mr. Pallin had been serving as a financial consultant to LifePoint. In
addition, Robert Muccini resigned as the Vice President, Finance, the Treasurer,
the Chief Financial Officer and the Chief Accounting Officer of LifePoint
because he held comparable positions with SAT. No person has been appointed as
yet to replace Mr. Muccini. Linda H. Masterson, the President, the Chief
Executive Officer and a director of LifePoint, resigned on November 4, 1997 as a
director of SAT, thereby severing the final interlocking relationship between
LifePoint and SAT. For the first time in its corporate existence, LifePoint has
sole responsibility for its administrative and financial operations, with
independent directors and executive officers and no management service
arrangements with SAT.

SAT had filed Registration Statement on Form S-4, File No. 333-4790,
under the Securities Act pursuant to which (1) SAT was to solicit the consents
of the holders (the "LifePoint Minority Stockholders") of 1,721,900 shares (the
"Minority LifePoint Common Stock") of the LifePoint Common Stock to the merger
of LifePoint with and into a wholly-owned subsidiary of SAT (the "LifePoint
Merger") and (2), if the

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LifePoint Merger was consummated, SAT would issue to the LifePoint Minority
Stockholders an aggregate of 2,789,478 shares of the SAT Common Stock in
exchange for their shares of the Minority LifePoint Common Stock or 1.62 shares
of the SAT Common Stock for each share of the Minority LifePoint Common Stock.
In addition, upon consummation of the LifePoint Merger, SAT was to issue to the
holders Common Stock purchase warrants to purchase shares of the SAT Common
Stock in lieu of their Common Stock purchase warrants to purchase shares of the
LifePoint Common Stock on the same basis as the foregoing exchange offer and was
to issue to the LifePoint Minority Stockholders rights to receive a portion of
the Special Payment (as such term was defined in the foregoing Registration
Statement). As a result of SAT's bankruptcy and its subsequent sale of its
shares of the LifePoint Common Stock to Meadow Lane, this SAT proposal to take
LifePoint private has been abandoned.

NO LOANS FROM LIFEPOINT TO SAT OUTSTANDING

During the fiscal year ended March 31, 1995, LifePoint made short-term
loans to SAT in the amount of $488,519. At March 31, 1996, as a result of
payments by SAT, the notes receivable from SAT to LifePoint were in the amount
of $282,295. The SAT notes were secured by a pledge of SAT's shares of the
LifePoint Common Stock. The notes became due on December 31, 1995, which
maturity date was first extended to June 30, 1996 and then to the earlier of (1)
five business days after the date the proposal for the LifePoint Merger was
rejected or (2) the effective date of the LifePoint Merger, and bore interest at
the rate of 8% per annum. The loans carried interest rates not in excess of
those available to LifePoint on short-term money market investments. SAT repaid
the indebtedness to LifePoint in the quarter ended September 30, 1996. The
pledge of SAT's shares of the LifePoint Common Stock was released.

LOANS FROM SAT TO LIFEPOINT

SAT had authorized loans to LifePoint not to exceed $2,000,000. The
loans bore interest at the rate of 8% per annum and were to become due on the
earlier of (1) five business days after the date the proposal to consent to the
LifePoint Merger was rejected or (2) the effective date of the LifePoint Merger.
On May 23, 1997, the SAT Board and, on May 26, 1997, the LifePoint Board
authorized the capitalization of $2,210,250 in indebtedness owned by LifePoint
to SAT as of April 30, 1997, which amount included interest, in consideration of
the issuance by LifePoint to SAT of 1,768,202 shares of the LifePoint Common
Stock. These shares are included in the 2,075,306 shares described later in this
paragraph. The Boards had also authorized the additional investment by SAT of
$2,500,000 in exchange for 2,000,000 shares of the LifePoint Common Stock on the
same basis of one share of the LifePoint Common Stock for each $1.25 of
investment. On May 26, 1997, the Board of Directors of LifePoint authorized the
issuance of additional shares of the LifePoint Common Stock to SAT on the basis
of a share of the LifePoint Common Stock for each $1.25 of indebtedness owed by
LifePoint to SAT. As a result of SAT's inability to obtain its own financing,
SAT notified LifePoint in July 1997 that it would cease advances to LifePoint in
August 1997. Based on SAT's advice that the amount of indebtedness owed by the
Company to SAT was $2,594,133, all of which SAT agreed to treat as a capital
contribution, LifePoint authorized the issuance to SAT of 2,075,306 shares of
the LifePoint Common Stock, which were issued as of June 30, 1997 and prior to
the sale of the LifePoint Common Stock held by SAT to Meadow Lane. Subsequent to
the sale, SAT advised LifePoint that the amount of indebtedness was $3,426,994.
As such, the forgiveness of the remaining indebtedness to SAT of $832,861 was
reflected as additional paid in capital as of September 30, 1997. Recognizing
that had SAT correctly reported LifePoint's indebtedness to SAT, an additional
666,289 shares of the LifePoint Common Stock would have been issued to SAT and
then sold to Meadow Lane, LifePoint's Board, on January 8, 1998, authorized the
issuance to Meadow Lane of a Common Stock purchase warrant expiring January 7,
2003 (the "Meadow Lane Warrant") to purchase 666,289 shares of the LifePoint
Common Stock at $.50 per share. The Board concluded that, as a result of
structuring the transaction in this manner, Meadow Lane would receive what it
thought it was buying, i.e., all of SAT's shares in LifePoint, and LifePoint,
not SAT, would receive $383,144.50 if the Meadow Lane warrant was exercised.

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TRANSFER OF ASSETS FROM SAT TO LIFEPOINT

Included in the indebtedness that was converted to additional paid in
capital as noted above was $344,663 relating to the purchase of various fixed
assets from SAT at the Rancho Cucamonga, California premises. Certain of these
assets, as well as other assets already owned by LifePoint, were not required
for the ongoing operations of LifePoint and were subsequently sold for gross
proceeds of approximately $126,000. The resulting loss on sale of assets of
approximately $179,000, including sales expenses, is reflected in other income
(expense) on the Statement of Operations in Item 8 to this Report.

EMPLOYEES

As of May 29, 1998, LifePoint employed 13 employees, of whom 11 were
directly involved in its research and development program. Additional personnel
will be required to complete the development project and, if the project is
completed successfully, to manufacture the product. Prior to October 31, 1997,
LifePoint was dependent on SAT for fulfilling its accounting and other financial
requirements. Since that date LifePoint has used a local accounting firm to
prepare its financial statements. LifePoint will have to add its own internal
accounting and financial staff and, after financing is obtained, engage the
services first of a Chief Accounting Officer and subsequently a Chief Financial
Officer.

As of March 31, 1997, LifePoint utilized the services of 16 employees
of SAT, for which LifePoint paid their full compensation, to conduct LifePoint's
research and development program. As a result of the decision by SAT's Board of
Directors in May and June 1997 to explore the feasibility of separating the
interlocking relationships between SAT and LifePoint, these employees were
transferred to the LifePoint payroll effective August 25, 1997.

IMPACT OF THE YEAR 2000 ISSUE

The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any computer
programs that have date-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a system failure
or miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities.

Based on a recent assessment, LifePoint determined that all of the
software currently in use on its computer system will properly utilize dates
beyond December 31, 1999.

ITEM 2. PROPERTIES

LifePoint maintains its principal executive offices, manufacturing
space and laboratory facilities in Rancho Cucamonga, California. The premises,
which consist of approximately 10,000 square feet, are pursuant to a lease that
expires September 30, 1998. At that time, the premises will be rented on a
month-to-month basis. LifePoint may consider relocating to Orange County,
California, however, where it may be more likely to attract more experienced
medical diagnostic and other qualified personnel. Management believes that
additional space will be required when and if manufacturing commences of the
drug and alcohol testing product.

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ITEM 3. LEGAL MATTERS

LifePoint is not a party to any material litigation and is not aware of
any pending litigation or contemplated proceedings by any governmental authority
that could have a material adverse effect on LifePoint's business, results of
operations or financial condition.

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

Not Applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

MARKET DATA

The LifePoint Common Stock was traded on the Pacific Exchange, Inc.
(the "Pacific Exchange") under the symbol "U.S.D.P" until May 12, 1997 (see the
section "Exchange Listing" under this caption "Market for Registrant's Common
Equity and Related Shareholder Matters"). The quarterly high and low sales
prices for the LifePoint Common Stock as reported by the Pacific Exchange are
set forth below during the periods indicated:

QUARTER ENDED HIGH LOW
------------- --------- ---------

FISCAL 1996
June 30, 1995 ................... $ 5.50 $ 2.50

September 30, 1995 .............. 4.75 2.50

December 31, 1995 ............... 4.50 2.625

March 31, 1996 .................. 4.50 3.00

FISCAL 1997
June 30, 1996 ................... $ 4.25 $ 3.50

September 30, 1996 .............. 3.75 2.375

December 31, 1996 ............... 2.875 .75

March 31, 1997 .................. * *

*According to the National Quotation Bureau, Inc., there were no sales
reported during the quarter ended March 31, 1997 and the high bid and low asked
prices were $1.875 and $2.00, respectively. These quotations reflected
inter-dealer prices, without retail mark-up, markdown or commission, and may not
have represented actual transactions. On May 12, 1997, the last day on which
there was a reported market price, the closing sales price was $1.6875 per
share.

EXCHANGE LISTING

By letter dated February 3, 1997, the Pacific Exchange advised
LifePoint that the Equity Listing Committee of the Exchange would meet on March
4, 1997 to review LifePoint's listing status and decide if continued listing on
the Exchange was appropriate. Among the Exchange's Tier II Securities
maintenance requirements for continued listing is that a company have tangible
net assets of at least $500,000 or a net worth of at least $2,000,000. As of
December 31, 1996, LifePoint met neither criterion - its liabilities exceeded
tangible assets by $815,617 and it had a stockholders' deficit of $775,000. In
response to LifePoint's request on February 7, 1997, the Equity Listing
Committee granted a compliance extension until May 6, 1997 (later postponed to
May 12, 1997) in order to permit the consent solicitation for the LifePoint

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Merger to proceed or, if the LifePoint Merger was not approved, for the
LifePoint Board of Directors to consider what action was appropriate with
respect to continuance of the listing. On May 12, 1997, the Equity Listing
Committee rejected LifePoint's request and the LifePoint Common Stock was
suspended from trading on the Pacific Exchange effective May 13, 1997, which
action LifePoint appealed. On September 11, 1997, LifePoint withdrew its appeal
of the Pacific Exchange's action. Effective October 28, 1997, the Securities and
Exchange Commission granted the Pacific Exchange's application to delist and
deregister the LifePoint Common Stock under Section 12(b) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").

FUTURE TRADING

Effective February 4, 1998, LifePoint registered the LifePoint Common
Stock under Section 12(g) of the Exchange Act. On February 13, 1998, a
broker-dealer filed a Rule 15c2-11 notice with the National Association of
Securities Dealers, Inc. (the "NASD") to initiate quotations with respect to the
LifePoint Common Stock. LifePoint is seeking to have the LifePoint Common Stock
quoted on the NASD's OTC Bulletin Board. Based on its latest reported financial
statements, LifePoint does not currently meet the entry requirements for the
Nasdaq system or any major national securities exchange. LifePoint has filed for
an exemption to permit secondary trading (i.e., by its stockholders) in the
State of New York and, as a result of its listing in a Standard and Poor's
Manual, believes such trading is permitted in at least 34 additional states.

If quotations with respect to the LifePoint Common Stock are resumed
and, if at that time the bid price is below $5.00 per share (which it was
consistently between the quarter ended June 30, 1995 and May 12, 1997), the
security would become subject to Rule 15g-9 promulgated under the Exchange Act,
which Rule imposes additional sales practices requirements on a broker-dealer
which sells Rule 15g-9 securities to persons other than the broker-dealer's
established customers and institutional accredited investors (as such term is
defined in Rule 501(a) under the Securities Act). For transactions covered under
Rule 15g-9, the broker-dealer must make a suitability determination of the
purchaser and receive the purchaser's written agreement to the transaction prior
to the sale. In addition, broker-dealers, particularly if they are market makers
in the LifePoint Common Stock, have to comply with the disclosure requirements
of Rules 15g-2, 15g-3, 15g-4, 15g-5 and 15g-6 under the Exchange Act unless the
transaction is exempt under Rule 15g-1. Consequently, Rule 15g-9 and these other
Rules may adversely affect the ability of broker-dealers to sell or to make
markets in the LifePoint Common Stock.

HOLDERS

As of May 29, 1998, there were 113 holders of record and, as of
February 28, 1998, there were 272 non-objecting beneficial owners of stock.

DIVIDENDS

LifePoint's Board of Directors has not declared any dividends on the
LifePoint Common Stock through March 31, 1998, and, in view of the continuing
losses and its cash requirements, the Board has no current intention to pay any
such dividends.

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ITEM 6. SELECTED FINANCIAL DATA

The following tables set forth selected financial data of LifePoint for
the five fiscal years ended March 31, 1998, 1997, 1996, 1995 and 1994 and
cumulative from October 8, 1992 (inception) to March 31, 1998. 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.

Cumulative From
October 8, 1992
(Inception)
Years Ended March 31, to
1998 1997 1996 1995 1994 March 31, 1998
----------- ----------- ----------- ----------- ----------- ---------------

Selected Statement of
Operations Data:
Revenues ....................... $ -- $ -- $ -- $ -- $ -- $ --
Costs and Expenses:
Selling, General and
Administrative ............. 672,998 268,668 318,510 475,400 604,185 2,584,548
Research and
Development ................ 1,052,233 1,735,449 949,439 1,261,219 728,272 5,719,101
Depreciation and
Amortization ............... 217,034 143,634 143,969 162,871 92,245 776,692
Interest Expense -
Parent ..................... 34,530 23,095 -- 3,319 31,639 95,790
Management Fees -
Parent ..................... 409,838 420,000 420,000 420,000 420,000 2,089,838
Interest Expense ............. 956 5,822 71,882 40,640 -- 119,300
----------- ----------- ----------- ----------- ----------- ------------
Total Costs and
Expenses ............. 2,387,589 2,596,668 1,903,800 2,363,449 1,876,341 11,385,269
----------- ----------- ----------- ----------- ----------- ------------
Loss from Operations ........... (2,387,589) (2,596,668) (1,903,800) (2,363,449) (1,876,341) (11,385,269)
Other Income (Expense) ......... (164,701) (33,905) 262,995 31,232 (383,951) (288,330)
----------- ----------- ----------- ----------- ----------- ------------
Net Loss ............... $(2,552,290) $(2,630,573) $(1,640,805) $(2,332,217) $(2,260,292) $(11,673,599)
=========== =========== =========== =========== =========== ============
Earnings per Common Share
- -basic:
Weighted Average Common
Shares Outstanding ......... 8,032,231 5,221,900 5,221,900 5,221,900 4,342,458
=========== =========== =========== =========== ===========
Net Loss per Common Share
-basic ..................... $ (.32) $ (.50) $ (.31) $ (.45) $ (.52)
=========== =========== =========== =========== ===========
Earnings per Common Share,
Assuming Dilution:
Weighted Average Common
Shares ..................... 8,863,276 5,221,900 5,221,900 5,221,900 4,342,458
=========== =========== =========== =========== ===========
Net Loss per Common Share,
Assuming Dilution .......... $ (.29) $ (.50) $ (.31) $ (.45) $ (.52)
=========== =========== =========== =========== ===========

March 31,
1998 1997 1996 1995 1994
---------- ----------- ---------- ---------- ----------

Selected Balance Sheet Data:
Working Capital (Deficit) $ 409,951 $(1,996,218) $ 536,880 $2,089,323 $4,360,362
========== =========== ========== ========== ==========
Total Assets $1,073,284 $ 595,947 $1,175,390 $4,444,105 $5,268,820
========== =========== ========== ========== ==========
Stockholders' Equity (Deficit) $ 735,831 $(1,573,686) $1,056,887 $2,697,692 $5,029,909
========== =========== ========== ========== ==========

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

LifePoint is a development stage enterprise with no earnings history.
During fiscal 1998, LifePoint had outstanding loans payable to SAT to fund
continuing research and development. These advances were evidenced by notes due
after the results of the consent solicitation for the proposed LifePoint Merger
were to be known and bore interest at the rate of 8% per annum. On May 23, 1997,
the SAT Board and, on May 26, 1997, the LifePoint Board authorized the
capitalization of $2,210,250 in indebtedness owned by LifePoint to

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SAT as of April 30, 1997, which amount included interest, in consideration of
the issuance by LifePoint to SAT of 1,768,202 shares of the LifePoint Common
Stock. These shares are included in the 2,075,306 shares described later in this
paragraph. The Boards had also authorized the additional investment by SAT of
$2,500,000 in exchange for 2,000,000 shares of the LifePoint Common Stock on the
same basis of one share of stock for each $1.25 of investment. As a result of
SAT's inability to obtain its own financing, SAT notified LifePoint in July that
it would cease advances to LifePoint in August 1997. Based on SAT's advice that
the amount of indebtedness owed by LifePoint to SAT was $2,594,133, all of which
SAT agreed to treat as a capital contribution, LifePoint authorized the issuance
to SAT of 2,075,306 shares of the LifePoint Common Stock, which were issued as
of June 30, 1997 and prior to the sale of the LifePoint Common Stock held by SAT
to Meadow Lane. Subsequent to the sale, SAT advised LifePoint that the amount of
indebtedness was $3,426,994. As such, the forgiveness of the remaining
indebtedness to SAT of $832,861 was reflected as additional paid in capital as
of September 30, 1997. (For information as to an adjustment which LifePoint made
for Meadow Lane as a result of SAT's error, see the section "Loans from SAT to
LifePoint" in Item 1 to this Report.)

Included in the indebtedness that was converted to additional paid-in
capital as noted above was $344,663 related to the purchase of various fixed
assets from SAT at the Rancho Cucamonga, California premises. Certain of these
assets, as well as other assets already owned by LifePoint, were not required
for the ongoing operations of LifePoint and were subsequently sold for gross
proceeds of approximately $126,000. The resulting loss on sale of assets of
approximately $179,000, including sales expenses, is reflected in other income
(expense) on the statement of operations.

Meadow Lane, the purchaser of the LifePoint Common Stock, also loaned
money to LifePoint to allow LifePoint to recommence product development on
October 27, 1997. During the third quarter of fiscal 1997, LifePoint repaid the
loans from the net proceeds of a private placement pursuant to Regulation D
under the Securities Act. In such offering, LifePoint sold 3,200,000 shares of
the LifePoint Common Stock at $0.50 per share or an aggregate purchase price of
$1,600,000. The net proceeds of the private placement totaled approximately
$1,434,000 after the payment of capital formation costs of approximately
$166,000, including $160,000 in the form of a finders fee to Jonathan J. Pallin
who is a member of Meadow Lane and who, on October 31, 1997 was elected Chairman
of the Board and a director of LifePoint. Capital formation costs of
approximately $166,000 have been reflected as a reduction in additional paid-in
capital in December 31, 1997; however, of this amount, approximately $66,000 was
paid subsequent to quarter end.

The latest estimate which LifePoint's management has is that, to
complete the development of a saliva based drug and alcohol testing product,
will require an incremental cost of $16,000,000 and that the product is not
expected to be launched until the first quarter of 2000. Such estimates as to
amount and dates (including the estimated date in the last sentence of this
paragraph) are based on the assumption that at least $6,000,000 in financing
will be obtained in the next few months. This contrasts with SAT's previous and
publicly announced incremental costs for LifePoint of $16,000,000 to $18,000,000
and a launch date of the first quarter of 1999 at the earliest. (Note: these
estimates were prior to the suspension of product development efforts and the
subsequent reduced product development effort over the last eight months.) An
outside consultant's report in June 1997 confirmed LifePoint's management's
opinion that the product was developable and had market potential, especially
with the added feature of the device also testing for alcohol. Management
believes that this report will be of assistance in its attempt to secure
financing for LifePoint, especially because no prototype of the product is
currently expected to be available until July 1999 at the earliest.

LifePoint's management has been pursuing parallel paths for financing:
venture capital, strategic partnering, and/or a private placement for all or
part of the required funding. Management continues to search for a venture
capital investor to fund the balance of the development program, believing that
such an investor or investors would be the most likely source of financing.
Management has identified companies which are likely candidates for such an
investment based on an analysis of their investment history and has

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conducted preliminary discussions with several potential investors and has
progressed into the "due diligence" stage with at least one potential investor.
Management recognizes that many prospective venture capital investors prefer to
invest in a privately-owned company with an initial public offering as the
investor's exit strategy, rather than in a publicly-owned company such as
LifePoint; however, the initial responses to LifePoint's solicitation have
suggested to management that this problem may be overcome.

LifePoint's management has also been exploring the possibility of
obtaining a strategic partner for LifePoint. To this end, the Company has an
agreement with Burrill & Company, a San Francisco-based merchant bank focused
exclusively on servicing life science companies. Burrill assists its portfolio
companies in maximizing their value through various strategic partnering
relationships. Burrill has been engaged to introduce LifePoint to potential
partners with on-going interest in saliva-based diagnostics or point-of-care
diagnostics and which might be otherwise interested in partnering with or
acquiring LifePoint at an early stage. Management still believes that obtaining
one of the major pharmaceutical or medical companies to assist in the product
development at this stage of development risks giving confidential data to
potential competitors that would not be fully protected by confidentiality
agreements. Management also believes that a potential marketing partner could be
obtained on more acceptable terms when there is a working prototype for the
instrument and the disposables and certain preliminary clinical data are
obtained. It is anticipated that the prototype will be completed by July 1999 at
the earliest and that, at that stage of development, the greater part of the
estimated development and manufacturing build-out expenses would already have
been incurred, making it less beneficial to obtain a development partner at that
time. Despite these reservations, management believes that the consultant's
report in June 1997 may resolve the concerns of these major companies as to
there being no prototype currently available and that LifePoint may have to
assume the risks of disclosing confidential data rather than not secure adequate
financing. LifePoint's management will pursue strategic partnering, but does not
currently rate LifePoint's chances of succeeding in a timely manner as high as
those with venture capital investors or some other equity investor.

LifePoint has also engaged the services of The Kriegsman Group, a Los
Angeles-based independent investment banker focused on obtaining private
financing for young medical, biotech, and pharmaceutical companies. The
Kriegsman Group is focusing on implementing a private placement for $7,000,000
to $10,000,000 in equity from individuals or institutions for LifePoint. Ambient
Capital, Inc., also a Los Angeles-based investment banker, will act as co-agent
with The Kriegsman Group in any such offering.

Management has also pursued the possibility of an underwritten public
offering and has received expressions of interest from several well-known small
national and large regional firms. This route has been put on hold by management
as taking too long to complete the required transaction in a timely manner;
however, it remains a very viable alternative to be pursued following a private
financing for the initial financing requirement.

Management believes that, as the result of private placement described
above, LifePoint has sufficient capital to keep it going until July 1998.
However, because management recognizes that it may take beyond July to implement
one of these financing possibilities, management will, if necessary, implement a
private placement of $1,000,000 to $2,000,000 in an effort to enable LifePoint
financially to bridge the period until one of the long-term financing programs
can be successfully implemented. There can, of course, be no assurance that
LifePoint will obtain the bridge financing or, as indicated below, the major
funding to complete its research and development program. Absent a successfully
consummation of this bridge financing, LifePoint will have to suspend operations
as it did in September 1997. Unless the long term financing is obtained,
LifePoint will have to abandon the product development program and, accordingly,
have no product or service to become an operating entity. There can be no
assurance that such long-term funding will be obtained or, if available, as to
when.

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OPERATING CASH FLOWS

Cash used for operations during fiscal 1998 amounted to $2,322,000 as
compared to $2,119,000 in 1997, which was primarily the result of the net loss
of $2,552,000 in 1998 as compared to a net loss of $2,631,000 in 1997, as well
as the timing of payments of operating expenses near year end.

INVESTING CASH FLOWS

During fiscal 1998, net cash provided by investing activities was
generated from the sale of property and equipment. Cash used by investing
activities of $52,500 during fiscal 1997 was for purchases of property and
equipment.

FINANCING CASH FLOWS

Cash provided by financing activities amount to $2,900,000 during
fiscal 1998. Financing cash flows were provided by loans from SAT of $1,465,000
and the private placement described above with net proceeds approximately
$1,434,000.

Cash provided by financing activities amounted to $1,922,000 during
fiscal 1997. Financing cash flows were provided by loans from SAT of $1,668,000
and net repayment of loans from SAT in the amount of $282,000.

RESULTS OF OPERATIONS

Fiscal 1998 vs. Fiscal 1997

During fiscal 1998, LifePoint continued as a development stage
enterprise with no revenues. Selling, general and administrative expenses were
$673,000 in fiscal 1998 as compared to $269,000 in fiscal 1997, or an increase
of $404,000 or 150.2%. Management fees paid to SAT were $410,000 in fiscal 1998
as compared to $420,000 in fiscal 1997, a decrease of $10,000 or 2.4%. During
fiscal 1998, the management fees were based on the proportional costs for shared
resources and personnel. However, during the second quarter of fiscal 1998, the
management fee was discontinued because services were no longer provided by SAT.
Overall, selling, general and administrative expenses and management fees were
$1,083,000 in fiscal 1998 versus $689,000 in fiscal 1997, and increased based on
actual incurred expenses rather than a previously negotiated fee. Research and
development expenditures totaled $1,052,000 in fiscal 1998 as compared to
$1,735,000 in fiscal 1997 or a decrease of $683,000 or 39.4%. The decrease was
primarily the result of the temporary suspension and subsequent reduced
expenditures for product development efforts by LifePoint, due to a cessation of
funding by its former parent SAT. For a description of the services rendered
under the management agreement relating to these fees, see the section "Material
Contracts - Management Agreement" in Item 1 to this Report. As of March 31,
1998, LifePoint did not anticipate generating revenues from product sales during
the fiscal year ending March 31, 1999 and not until after submission of the
drugs of abuse/alcohol testing product to the FDA in March 2000 at the earliest.
Accordingly, management anticipated that operating losses would continue for at
least a 24-month period.

The net loss for fiscal 1998 was $2,552,000 as compared to $2,631,000
for fiscal 1997. The decrease of $79,000 or 2.8% was primarily the result of a
suspension and subsequent reduction in the product development expenditures due
to a cessation of funding by LifePoint's former parent SAT.

Fiscal 1997 vs. Fiscal 1996

During fiscal 1997, LifePoint continued as a development stage
enterprise with no revenues. Selling, general and administrative expenses were
$269,000 in fiscal 1997 as compared to $319,000 in fiscal 1996 or

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a decrease of $50,000 or 15.7%, primarily the result of lower travel, utility
and telephone expenses. Research and development expenditures totaled $1,735,000
in fiscal 1997 as compared to $949,000 in fiscal 1996 or an increase of $786,000
or 82.8%. The increase was primarily the result of expanded people requirements
to bring the saliva testing to the next phase of development. Costs included
those for engineering and chemist consulting time, as well as those for
additional LifePoint full time employees. Management fees paid to SAT were
$420,000 in both fiscal 1997 and fiscal 1996. For a description of the services
rendered under the management agreement relating to these fees, see the section
"Material Contracts - Management Agreement" in Item 1 to this Report.

The net loss for fiscal 1997 was $2,631,000 as compared to $1,641,000
for fiscal 1996. The increase of $990,000 or 60.3% was primarily the result of
additional people requirements. The costs include expenses for engineering and
chemists consulting time and additional employees.

INFLATION

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

FORWARD LOOKING STATEMENTS

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 Revenues" in this Item
7 to this Report, LifePoint's management estimates an incremental cost of
$16,000,000 to complete the development of a saliva-based drug and alcohol
testing product and that it will require additional funding not later than July
1998 to continue operations. Unless this financing is obtained and the product
development program successfully completed (which is not anticipated until the
first quarter of 2000 at the earliest), LifePoint will continue without revenues
from a product or service and, accordingly, will have to cease operating.
Although management is pursuing these financial routes: venture capital
investors, a strategic partner and private placement, there can be no assurance
that any financing will be consummated.

As indicated in the section "Employees" in Item 1 to this Report, as of
April 30, 1998, LifePoint employed 12 employees, of whom 10 were directly
involved in its research and development program. Management estimates that it
will require approximately 24 scientists and engineers to complete this project
and, if the product is successfully developed, approximately 24 persons to
commence manufacturing thereof. There can be no assurance that such personnel
will be available when LifePoint requires them, especially at its current
location in Ranch Cucamonga, California. Management anticipates that it may have
to move to a different location in California where such personnel may be more
readily available, which move will add to LifePoint's costs. There can be no
assurance that LifePoint will be any more successful in such new location in
obtaining such personnel.

Although, as indicated in the sections "General" and "Need for
Financing" in Item 1 to this Report, an independent consultant in June 1997
confirmed management's belief that LifePoint's saliva-based drugs of abuse and
alcohol testing products could be developed and that once developed there would
be a significant market therefor, there are certain risks in any research and
development program that the product will not ultimately be developed, that it
will be developed later than anticipated, that the estimated costs will be
higher than projected and that the market may be smaller then anticipated when
the product is ultimately marketed. Such consultant estimated a cost of
$18,400,000 as compared with management's estimate of $16,000,000 and a later
availability date than the one management then projected.

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Also, as indicated in the sections "General" and "Competition" in Item
1 to this Report, management believes that saliva sample testing is unique in
that, to its knowledge, no company is currently offering a substance abuse
detection method using saliva samples as a specimen on an "on-site" basis.
However, as noted therein, LifePoint has been advised that such a product may be
under development by two or more companies and, accordingly, there can be no
assurance that such a product will not be offered by a competitor.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

ITEM 9. CHANGES IN ACCOUNTANTS AND ACCOUNTING AND FINANCIAL DISCLOSURE

Not Applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

DIRECTORS AND EXECUTIVE OFFICERS

The following table contains certain information relating to the
directors and executive officers of LifePoint as of May 29, 1998:

NAME AGE POSITION
------------------- --- ----------------------------------------

Linda H. Masterson 47 Chief Executive Officer and President,
and a Director
Thomas J. Foley 58 Vice President, Research and Development
William B. Benken 50 Vice President, Operations
Jonathan J. Pallin 48 Chairman of the Board and a Director
Peter S. Gold 73 Director
Paul Sandler 58 Director

Each director is elected to serve until the next Annual Meeting of
Stockholders or until his or her successor is elected and shall have qualified.
Of the directors named in the above table, none was elected by the stockholders
of LifePoint, all being elected by the Board to fill a vacancy. Each officer of
LifePoint is elected by the Board of Directors to serve at the discretion of the
Board.

The last Annual Meeting of Stockholders was held on September 22, 1994.
Because of SAT's share ownership permitting SAT to elect all directors and in
order to preserve LifePoint's limited cash resources for use in product
development and pending resolution of the then proposed LifePoint Merger, the
prior Board of Directors, consisting of SAT officers and/or directors, did not
call for an Annual Meeting of Stockholders. The current Board has called the
next Annual Meeting of Stockholders for August 13, 1998.

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BUSINESS HISTORY

Linda H. Masterson has had substantial 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 LifePoint and, on July 31,
1996, President and Chief Operating Officer of LifePoint. Effective November 19,
1996, she relinquished her duties as Chief Operating Officer of SAT in order to
devote more time to supervising the development program of LifePoint and the
operations of the 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 LifePoint (formerly 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 LifePoint. 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 LifePoint 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. ("Beckman") and was
the 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.

William B. Benken has over 25 years of management experience directing
teams in development, engineering and manufacturing operations in the
pharmaceutical, medical device, diagnostic, and related technology driven
industries. He was elected as a Vice President of LifePoint on May 26, 1997. Mr.
Benken specializes in transitioning new products through the development phase
and setting up manufacturing operations. Prior to joining LifePoint, from
November 1996 to May 1997, Mr. Benken was Director of Operations, Medical
Technology, for Chiralt Corp. From May 1992 to November 1996, he was Chemical
Manufacturing Manager, Diagnostic/Scientific Instruments for Beckman
Instruments, Inc., a Fortune 500 manufacturer of clinical analyzers, diagnostic
reagents, bio-consumables, and state of the art scientific instrumentation
supporting the Human Genome Project. From 1986 to 1989, Mr. Benken was

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Director of Manufacturing Engineering and Manufacturing Operations at Medstone
International, Inc. ("Medstone"), a startup company in Irvine, CA. Medstone was
the first U.S. manufacturer to receive FDA PMA approval to manufacture and
market lithotriptors for non-invasive treatment of kidney stones. Prior to
joining Medstone, Mr. Benken was Engineering Manager at Brunswick Technetics,
membrane division of Brunswick Corporation, where he directed development,
scale-up and commercialization of state of the art, asymmetric microporous
permeable membrane filtration products used for point of use sterilization for
pharmaceuticals and in other critical, high purity applications. Mr. Benken has
a Masters in Engineering from California State Polytechnic University, Pomona,
and a BS in Chemistry and Chemical Engineering from City College of CUNY.

Jonathan J. Pallin was elected Chairman of the Board and a director of
LifePoint on October 31, 1997. He has over 22 years experience in the financial
markets as an institutional fixed income broker, financial consultant, and
served in an investment banking advisory role. Mr. Pallin served as Senior Vice
President, Retail Brokerage for PaineWebber Incorporated from January 1991 to
July 1993, as a Senior Vice President Investments, Retail Brokerage for Baraban
Securities Incorporated from July 1993 to May 1996 and as a Vice President,
Retail Brokerage for Sutro & Co. Incorporated from May 1996 to October 1997. Mr.
Pallin has an MBA from Arizona State University with a major emphasis on
Accounting, and a BS from Long Island University (Southampton) in Business and
Psychology.

Peter S. Gold was elected as a director of LifePoint on December 5,
1997. He retired 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 LifePoint 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.

FAMILY RELATIONSHIPS

Jonathan J. Pallin and Paul Sandler are brothers-in-law. There are no
other family relationships between the officers and directors of LifePoint.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

As indicated in Item 5 to this Report, (1) effective October 28, 1997,
the Securities and Exchange granted the Pacific Exchange's application to delist
and deregister the LifePoint Common Stock under Section 12(b) of the Exchange
Act and (2) effective February 4, 1998, LifePoint registered the LifePoint
Common Stock under Section 12(g) of the Exchange Act.

LifePoint has called to the attention of its directors and executive
officers their obligation to comply with Section 16(a) of the Exchange Act and,
at their request, has caused to be filed late for the following directors and
executive officers of LifePoint: (1) a Form 3 for each of (a) Peter S. Gold, a
director; (b) Paul

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Sandler, a director; (c) Joseph R. Shaya, a director from December 5, 1997 to
March 20, 1998; and (d) Thomas J. Foley, its Vice President, Research and
Development; and (2) a Form 5 for each of (a) Linda H. Masterson, its President,
its Chief Executive Officer and a director; (b) Jonathan J. Pallin, its Chairman
of the Board and a director; and (c) William B. Benken, its Vice President,
Operations. Based on a review with Messrs. Gold, Sandler, Shaya and Foley, none
of them would have been required to file a Form 4 because each did not have an
acquisition or disposition of securities of LifePoint subsequent to February 4,
1998 (the date the Form 3 should have been timely filed).

Because, prior to the filing of the Forms 3 and 5 to which reference is
made in the preceding paragraph, LifePoint did not receive any copies of Forms
3, 4 and 5 for the period prior to February 4, 1998, LifePoint asked each of the
named persons in the preceding paragraph to consider whether he or she had an
obligation to file pursuant to Section 16(a) of the Exchange Act prior thereto.
Each of Messrs. Gold, Sandler, Shaya and Foley advised LifePoint that he had
become a director or an executive officer subsequent to October 28, 1997 and,
accordingly, had no obligation to file under Section 16(a) of the Exchange Act
until February 4, 1998. Each of Ms. Masterson and Messrs. Pallin and Benken has
requested LifePoint to cause the filing of a Form 5 for him or her.

LifePoint has implemented, with the cooperation of its directors, its
executive officers and its counsel, a program to attempt to ensure in the future
timely compliance with Section 16(a) of the Exchange Act.

Up until the sale of its majority position in LifePoint to Meadow Lane
on October 29, 1997, SAT was the only beneficial owner of 10% or more of the
LifePoint Common Stock and SAT has informed LifePoint that, except for the
acquisition of the shares as described in the section "Loans From SAT To
LifePoint" in Item 1 to this Report and the sale of its majority position
through the Bankruptcy Court proceedings, there were no other transactions
during fiscal 1997. LifePoint is not aware of any Form 4 filed by SAT.

As of May 29, 1998, Jonathan J. Pallin and Herman S. Sandler as the
sole members of Meadow Lane, were the only beneficial owners of 10% or more of
the LifePoint Common Stock, and they have informed LifePoint that they have not
completed any transactions other than the original purchase of the shares in
October 1997 and the receipt of the Meadow Lane Warrant in January 1998. As
indicated in the two preceding paragraphs, Mr. Pallin has filed with respect to
these transactions and his election as a director on October 31, 1997. At Mr.
Sandler's request, LifePoint is causing to be filed a Form 3 for him.

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table provides certain summary information concerning
compensation paid or accrued by LifePoint during fiscal 1998, fiscal 1997 and
fiscal 1996 to any person who served as Chief Executive Officer during fiscal
1998 and to each other executive officer whose total annual salary and bonus
exceeded $100,000 during any such year.

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ANNUAL COMPENSATION
--------------------------------------- LONG TERM COMPENSATION
OTHER ----------------------
ANNUAL SECURITIES ALL
COMPEN- UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS SATION OPTIONS COMPENSATION
- --------------------------- ---- ------ ----- ------ ------- ------------

Robert M. Stutman
Chief Executive Officer 1998 $ 0(2)
and Chairman(1) 1997 0(2)
1996 0(2)

Linda H. Masterson 1998 125,249(4) 700,000
Chief Executive Officer 1997 0(5)
and President(3) 1996 0(5)

Stephen J. Kline 1998 20,131(7) 150,000(8)
Vice President, Research 1997 125,000 50,000(8)
And Development(6) 1996 117,000 10,000(8)

(1) Mr. Stutman served as Chief Executive Officer of LifePoint from May 31, 1996
until May 26, 1997 and as Chairman of the Board of LifePoint from May 31, 1996
to October 31, 1997.

(2) Mr. Stutman's salary was paid entirely by SAT and, to the extent his
services were on behalf of LifePoint, this was reflected in SAT's management fee
to LifePoint.

(3) Ms. Masterson was elected President of LifePoint effective August 1, 1996
and designated as its Chief Executive Officer on May 26, 1997.

(4) The amount shown in the table does not reflect $33,654 paid by SAT to Ms.
Masterson for the period April 1 to June 1, 1997 nor $19,384.62 in deferred
salary which will be paid only if LifePoint obtains long-term financing.
Effective August 11, 1997, LifePoint directly paid all compensation for Ms.
Masterson.

(5) Ms. Masterson became an employee of SAT on May 13, 1996 and all compensation
paid to her for fiscal 1997 was paid by SAT. To the extent any such services
were on behalf of LifePoint, this was reflected in SAT's management fee to
LifePoint.

(6) Mr. Kline resigned on September 12, 1997.

(7) The amount shown in the table does not reflect $50,000 paid by SAT to Mr.
Kline during fiscal 1998.

(8) These options were cancelled upon his resignation. See Note (6) to this
table.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

On August 14, 1997, LifePoint's Board of Directors adopted, subject to
stockholder approval, the LifePoint, Inc. 1997 Stock Option Plan (the "Stock
Option Plan") providing for the granting of options to purchase up to 1,000,000
shares of the LifePoint Common Stock to employees (including officers) persons
who also serve as directors and consultants of LifePoint. On June 5, 1998, the
Board increased the number of shares subject to the Stock Option Plan to
2,000,000, again subject to stockholder approval. The options to be granted may
either be incentive stock options as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") to be granted to employees or
nonqualified stock options to be granted to employees, directors or consultants.
A copy of the Stock Option Plan is filed as an exhibit to this Report and is
incorporated herein by this reference. As of March 31, 1998, options to purchase
an aggregate of 950,000 shares of the LifePoint Common Stock had been granted to
employees (including officers). Options granted

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to date under the Stock Option Plan have all been incentive stock options and
have generally become exercisable as to one-quarter of the shares subject
thereto on the first anniversary date of the date of grant and as to 1/36th of
the remaining shares on such calendar day each month thereafter for a period of
36 months, although certain options will become exercisable upon the achievement
of certain goals. As of May 29, 1998, none of the options had become
exercisable. Stockholder approval, as required by the Code for incentive stock
options, will be sought at the next Annual Meeting of Stockholders now scheduled
for August 13, 1998. The Stock Option Plan, including all outstanding options,
will terminate if such approval is not obtained, which is not deemed likely in
view of the current stock ownership. See the table in Item 12 to this Report.

LifePoint has never granted any stock appreciation rights.

The following table shows the number of shares made subject to a stock
option and a Common Stock purchase warrant granted during fiscal 1998 to Linda
H. Masterson, the sole executive officer of LifePoint (i.e., its Chief Executive
Officer) whose compensation exceeded $100,000 in that fiscal year. No stock
options or Common Stock purchase warrants were ever granted to Robert M. Stutman
who served as Chief Executive Officer of LifePoint for part of fiscal 1998 (see
the section "Summary Compensation Table" in this Item 11 to this Report).
Options granted to Steven J. Kline as shown in the Summary Compensation Table
were cancelled as indicated in Note (8) to that table.
He was never granted any Common Stock purchase warrant.

- -----------------------------------------------------------------------------------------------------------------------
Individual Grants to
Linda H. Masterson
- -------------------------------------------------------------------- -------------------------------------------------
Potential Realizable Value Alternative To
At Assumed Annual Rates Of (f) And (g):
Stock Price Appreciation For Grant Date
Option Term Value
- -------------------------------------------------------------------- ------------------------------- ----------------
Percent
Number Of Of Total
Securities Options/SARs
Underlying Granted To Exercise Of
Options/SARs Employees In Base Price Grant Date
Granted (#) Fiscal Year ($/Sh) Expiration Date 5% ($) 10% ($) Present Value $
(b) (c) (d) (e) (f) (g) (h)
- -----------------------------------------------------------------------------------------------------------------------

300,000 31.6% $.50(1) 8/13/07 244,344 389,061 $150,000(2)
- -----------------------------------------------------------------------------------------------------------------------
400,000 42.1% $.50 10/26/02 255,256 322,102 $200,000(2)
- -----------------------------------------------------------------------------------------------------------------------

(1) Reduced from $1.25 to $.50 per share on December 5, 1997. See the section
"Report on Repricing of Options/SAR" in this Item 11 to this Report.

(2) Because there were no market prices for the LifePoint Common Stock reported
on the respective date of grant, the sales price per share (i.e., $.50) in the
October to December 1997 private placement was used for valuation purposes.

AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES

There were no stock options exercised during fiscal 1998 and, as
indicated in the preceding section, LifePoint has never granted any stock
appreciation rights.

The following table shows the fiscal year-end option values for Linda
H. Masterson, the sole executive officer whose compensation for fiscal 1998
exceeded $100,000 as reported in the Summary Compensation Table in this Item 11
to this Report. The options reported for the other officer in such table

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have been terminated and Robert M. Stutman, a former Chief Executive Officer,
never received any options or Common Stock purchase warrants.

CEO'S FY-END OPTION VALUES
----------------------------------------------------------------------
Number of Securities Underlying Value of Unexercised In-The-Money
Unexercised Options At Fiscal Options At Fiscal Year End ($)
Year-End Exercisable/Unexercisable
(#) Exercisable/Unexercisable
----------------------------------------------------------------------

200,000/500,000 $100,000/$250,000(1)
----------------------------------------------------------------------

(1) Because there were no market prices for the LifePoint Common Stock reported
at March 31, 1998, the sales price per share (i.e., $.50) in the October to
December 1997 private placement was used for valuation purposes.

REPORT ON REPRICING OF OPTIONS/SARS

On August 14, 1997, options to purchase an aggregate of 467,500 shares
of the LifePoint Common Stock were granted to LifePoint employees at an exercise
price of $1.25, which reflected the value of LifePoint Common Stock when trading
was suspended on May 12, 1997. A private placement was initiated and completed
during November and December 1997 and, on December 5, 1997, the Board of
Directors re-priced the options to the then current value of $0.50 per share,
which was the purchase price in the private placement. See the sections "Market
Data" and "Future Trading" in Item 5 to this Report.

OTHER COMPENSATION

LifePoint currently has no pension plan in effect and has in effect no
restricted stock plan, no stock appreciation rights nor any other long-term
incentive plan under which grants or allocations may be made in fiscal 1998 or
thereafter.

DIRECTOR COMPENSATION

LifePoint currently does not compensate the Board of Directors for
their services as directors to the Company. See Item 13 for information as to a
compensation arrangement with Jonathan J. Pallin for his services as Chairman of
the Board.

EMPLOYMENT AND SEVERANCE AGREEMENTS

There are no employment agreements currently in effect in LifePoint.

Pursuant to a Severance Agreement dated as of October 27, 1997 (the
"Masterson Severance Agreement") between LifePoint and Linda H. Masterson, a
copy of which is filed as an exhibit to this Report and is incorporated herein
by this reference, LifePoint has agreed to pay Ms. Masterson for her services as
Chief Executive Officer and President of LifePoint a base salary of $165,000;
provided, however, such amount shall be $120,000 from October 27, 1997 to the
date at least $5,000,000 in long term financing is obtained, at which time or
upon her termination the difference shall be paid to her. The Masterson
Severance Agreement also provides for the grant of (1) a stock option under the
Stock Option Plan to purchase 150,000 shares of the LifePoint Common Stock at
$.50 per share, the option to become immediately exercisable as to all shares
subject thereto in the event she is terminated without cause, LifePoint is
acquired or sold without the Board's approval, the corporate headquarters are
moved outside the State of California, the positions of Chief Executive Officer
or President are eliminated or her duties are

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substantially changed; (2) stock options to purchase 150,000 shares of the
LifePoint Common Stock, an option to purchase 75,000 shares to be granted upon
completion of the working plant project and an option to purchase 75,000 shares
to be granted upon product release into the first targeted market; and (3)
Common Stock purchase warrants to purchase 400,000 shares of the LifePoint Stock
at $.50 per shares, a warrant to purchase 200,000 shares which was granted upon
the purchase of SAT's shares by Meadow Lane and a warrant to purchase 200,000
shares to be granted at the completion of the long term financing of at least
$5,000,000. The options have all been granted. In the event that Ms. Masterson
is terminated without cause (as defined in the Masterson Severance Agreement),
she shall be paid severance pay in a lump sum amount equal to her annual base
salary that would have been paid to her had she not been terminated during the
period between the date of termination and October 27, 2001.

Pursuant to a Severance Agreement dated as of October 24, 1997 (the
"Benken Severance Agreement") between LifePoint and William B. Benken, a copy of
which is filed as an exhibit to this Report and is incorporated herein by this
reference, LifePoint has agreed to pay Mr. Benken for his services a base salary
of $110,000; provided, however, such amount shall be $99,000 from October 27,
1997 to the date at least $5,000,000 in long term financing is obtained, at
which time or upon his termination the difference shall be paid to him. The
Benken Severance Agreement also provides for the grant of (1) a stock option
under the Stock Option Plan to purchase 150,000 shares of the LifePoint Common
Stock at $.50 per share, the option to become immediately exercisable as to all
shares subject thereto in the event he is terminated without cause, LifePoint is
acquired or sold without the Board's approval, the manufacturing facility is
relocated more than 100 miles from its current location, the position of Vice
President, Operations is eliminated or his duties are substantially changed, and
(2) stock options to purchase 100,000 shares of the LifePoint Common Stock at
$.50 per share, an option as to 50,000 shares to be granted upon the completion
of the working pilot plant and an option as to 50,000 shares to granted upon
product release into the first targeted market. The options have all been
granted. In the event that Mr. Benken is terminated without cause (as defined in
the Benken Severance Agreement), he shall be paid severance pay in a lump sum
amount equal to one year's base salary that would have been paid to him had he
had not been terminated during the period from the date of termination to
October 27, 2001.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Because LifePoint was a majority-owned subsidiary of SAT during fiscal
1998 and, accordingly, LifePoint's employees participated in the benefit plans
of SAT, there was no Compensation Committee in LifePoint. On December 5, 1997,
after the sale by SAT of its majority interest in LifePoint, the LifePoint Board
appointed Peter S. Gold, Paul Sandler and Joseph R. Shaya, the three then
non-employee, non-officer directors as members of the Compensation Committee,
with Dr. Sandler as the Chairman. Mr. Shaya subsequently resigned as a director,
for personal reasons, effective March 20, 1998.

BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

During fiscal 1998, all decisions as to executive compensation for
LifePoint were made by the SAT Board of Directors or Compensation Committee as
part of SAT's compensation planning for officers of SAT and its subsidiaries and
because all financing for LifePoint came from SAT. As indicated in the preceding
section, there was no Compensation Committee in LifePoint during fiscal 1998.

PERFORMANCE GRAPH

Because market activity in the LifePoint Common Stock was so limited
during fiscal 1998 and 1997 (see Item 5 to this Report), which was undoubtedly
influenced by SAT's proposal to take LifePoint private first announced in
February 1996 and the uncertainty as to LifePoint's survival as a development
stage enterprise because of SAT's inability to fund, LifePoint's management has
concluded that a performance graph as required by Item 402(1) of Regulation S-K
under the Securities Act would be misleading and,

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31
accordingly, inappropriate for this Report. LifePoint's management also noted
that such a graph would not be required for a "small business issuer" under
Regulation S-B and that LifePoint would qualify as a "small business issue"
except for its prior ownership by SAT.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of May 29, 1998, certain information
with respect to (1) any person who beneficially owned more than 5% of the
LifePoint Common Stock, (2) each director of LifePoint, (3) the Chief Executive
Officer of LifePoint; and (5) all directors and executive officers as a group.
Each beneficial owner who is a natural person has advised LifePoint that he or
she has sole voting and investment power as to the shares of the LifePoint
Common Stock, except that until a warrant or option is exercised, there is no
voting right.

NUMBER OF SHARES PERCENTAGE OF
NAME AND ADDRESS OF COMMON STOCK COMMON STOCK
OF BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED (1)
--------------------------- ------------------ ----------------------

Jonathan J. Pallin (2)
10400 Trademark Street
Rancho Cucamonga, CA 91730 4,841,593(3) 42.8%

Herman Sandler
2 World Trade Center, 104th Floor
New York, NY 10048 1,700,000(4) 15.1%

Peter S. Gold (5)
16027 Ventura Blvd., Suite 601
Encino, CA 91436 900,000 8.2%

Paul Sandler (5)
33 West Hatcher Road
Phoenix, AZ 85021 200,000 1.9%

Linda H. Masterson (7)
10400 Trademark Street
Rancho Cucamonga, CA 91730 200,000(8) 1.8%

All directors and executive
officers as a group (six persons) 6,141,595(9) 52.4%

(1) The percentages computed in this column of the table are based upon
10,797,206 shares of the LifePoint Common Stock outstanding on May 29, 1998.
Effect is given, pursuant to Rule 13d-3(l)(i) under the Exchange Act, to shares
issuable upon the exercise of the LifePoint Common Stock purchase warrants and
stock options currently exercisable or exercisable within 60 days of May 15,
1998.

(2) Chairman of the Board and a director of LifePoint since October 31,
1997.

(3) The shares reported in the table reflect 4,325,306 shares of the
5,575,306 shares acquired by Meadow Lane from SAT (see section "Certain
Relationships with SAT" in Item 1 to this Report) and 516,289 shares of the
666,289 shares issuable upon the exercise of the Meadow Lane Warrant.

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(4) The shares reported in the table reflect (1) 1,250,000 shares of the
5,575,306 shares acquired by Meadow Lane from SAT; (2) 150,000 shares of the
666,289 shares issuable upon the exercise of the Meadow Lane Warrant; and (3)
300,000 shares issuable upon the exercise of a Common Stock purchase warrant
expiring November 4, 2002 exercisable at $.50 per share.

(5) A director of LifePoint since December 5, 1997.

(6) The shares reported in the table include an aggregate of 200,000 shares
issuable upon the exercise of the two Common Stock purchase warrants expiring
November 4, 2002, one for 100,000 shares exercisable at $.50 per share and the
other exercisable at $1.00 per share.

(7) A director of LifePoint since May 31, 1996; effective August 1, 1996,
its President; and, effective May 23, 1997, its Chief Executive Officer. She
served as a director of SAT from September 26, 1996 to November 4, 1997 and as
its President from May 13, 1996 to May 23, 1997.

(8) The shares reported in this table reflect 200,000 shares issuable upon
the exercise of a Common Stock purchase warrant expiring October 26, 2002 at
$.05 per share. The shares reported in the table do not include an additional
200,000 shares of the LifePoint Common Stock subject to such warrant because it
does not become exercisable as to such shares until LifePoint has realized at
least $5,000,000 in additional financing.

(9) The shares reported in the table include those issuable upon the
exercise of the Common Stock purchase warrants described in Notes (3) and (8) to
the table.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See the sections "Material Contracts," "Certain Relationships with SAT"
and "Loans from LifePoint to SAT" in Item 1 to this Report for information as to
transactions between LifePoint and SAT, its major stockholder, during fiscal
1998.

See the section "Employment and Severance Agreements" in Item 11 to
this Report for information relating to the severance agreements with Linda H.
Masterson, the President, the Chief Executive Officer and a director of
LifePoint, and William B. Benken, the Vice President, Operations of LifePoint.

As indicated in the section "Financing" in Item 1 to this Report,
Jonathan J. Pallin, the Chairman of the Board and director of LifePoint,
received a finder's fee of $160,000 for a private placement, which fee was
authorized prior to his being elected to such positions. On April 28, 1998, the
Board authorized the following compensation arrangement for Mr. Pallin for his
services on a daily basis as Chairman of the Board of LifePoint: (1) a fee of
$10,000 per month for a one-year period commencing April 1, 1998 and (2) a bonus
of $75,000 if LifePoint obtains cash financing of $5,000,000 to $6,900,000; (b)
$100,000 if LifePoint obtains cash financing of $7,000,000 to $9,900,000; and
(c) $125,000 if LifePoint obtains cash financing of over 10,000,000, subject to
certain limitations.

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PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

(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:

PAGE
----

Report of Ernst & Young LLP F-1
Report of Wolinetz, Gottlieb & Lafazan, P.C. F-2
Balance Sheets as of March 31, 1998 and 1997 F-3
Statements of Operations for the years ended March 31, 1998,
1997 and 1996 and for the Period from October 8, 1992
(inception) to March 31, 1998 F-4
Statements of Stockholders' (Deficit) Equity for the years
ended March 31, 1998, 1997 and 1996 and for the Period
from October 8, 1992 (inception) to March 31, 1998 F-5
Statements of Cash Flows for the years ended March 31, 1998,
1997 and 1996 and for the Period from October 8, 1992
(inception) to March 31, 1998 F-6
Notes to Financial Statements F-8

(2) FINANCIAL STATEMENT SCHEDULES

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

(3) EXHIBITS

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.

EXHIBIT
NUMBER EXHIBITS
------- ------------------------------------------------------------------

2(b) - Agreement and Plan of Merger dated as of April 23, 1996 by
and among SAT, U.S. Drug Acquisition Corp. and LifePoint.(1)

2(b)(1) - Agreement and Plan of Merger dated as of February 17, 1997
by and among SAT, U.S. Drug Acquisition Corp. and LifePoint.(2)

3(a) - Copy of Certificate of Incorporation of LifePoint as filed
in Delaware on October 8, 1992.(3)

3(a)(1) - Copy of Amendment to the Certificate of Incorporation as
filed in Delaware on October 13, 1992.(3)

3(a)(2) - Copy of Amendment to Certificate of Incorporation filed in
Delaware on February 25, 1998

3(b) - Copy of By-Laws of LifePoint.(3)

10(a) - Copy of License Agreement dated January 24, 1992 by and
Between the USN and USAT. (Confidential Treatment Requested
for Exhibit.)(3)

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34

EXHIBIT
NUMBER EXHIBITS
------- ------------------------------------------------------------------

10(a)(1) - Copy of Amendment dated March 15, 1994 to License Agreement
filed as Exhibit 10(a) hereto.(1)

10(a)(2) - Copy of Amendment dated June 16, 1995 to License Agreement
filed as Exhibit 10(a) hereto.(1)

10(a)(3) - Copy of Letter dated May 15, 1995 from the USN to SAT.(1)

10(b) - Copy of Assignment dated as of January 1, 1993 between U.S.
Drug and USAT of Licensing Agreement filed as Exhibit 10(a)
hereto.(3)

10(b)(1) - Copy of Amended Sublicense Agreement dated September 23,
1993 superseding the Assignment filed as Exhibit 10(b)
hereto.(1)

10(a)(4) - Copy of Fifth Modification dated November 12, 1997 to License
Agreement filed as Exhibit 10(a) hereto.(4)

10(b)(2) - Copy of Approval dated September 24, 1993 by the USN of
Amended Sublicense Agreement filed as Exhibit 10(b) hereto.(1)

10(c) - Copy of Cooperative Research Agreement (the "CRDA
Agreement") dated April 16, 1992 by and between Naval
Research Laboratory Section, United States Department of the
Navy, and SAT.(3)

10(d) - Copy of Management Agreement dated April 1, 1993 by and
between LifePoint and SAT.(3)

10(d)(1) - Copy of Amendment dated July 20, 1993 to Management Services
Filed as Exhibit 10(d) hereto.(3)

10(e) - Copy of Lease expiring January 31, 1997 by and between Rancho
Cucamonga Business Park (now The Realty Trust) as landlord and SAT as
Tenant(5)

10(e)(1) - Copy of Lease Modification Agreement to Lease filed as Exhibit 10(e)
hereto.(4)

10(e)(2) - Copy of Sub-Lease Agreement dated as of January 1, 1993 by
and between SAT as sub-landlord and LifePoint as subtenant.(3)

10(e)(3) - Copy of Third Amendment dated January 2, 1997 to Lease filed as
Exhibit 10(e) hereto.(6)

10(e)(4) - Copy of Fourth Amendment dated November 3, 1997 to Lease filed as
Exhibit 10(e) hereto.(4)

10(f) - Form of Warrant Agreement by and between LifePoint and Baraban
Securities, Incorporated.(3)

10(f)(1) - Form of Common Stock purchase warrant expiring October 13, 1998 of
LifePoint.(3)

10(g) - Copy of LifePoint's 1994 Stock Option/Stock Issuance Plan.(7)

10(g)(1) - Form of Stock Option expiring October 2, 2004 of LifePoint.(7)

10(g)(2) - Copy of LifePoint's 1997 Stock Option Plan.

10(g)(3) - Form of Stock Option used under Plan filed as Exhibit 10(g)(2).

10(h) - Copy of Employment Agreement dated March 1, 1993 between
Doug Allen, SAT and LifePoint.(1)

10(i) - Copy of Employment Agreement dated September , 1992 between
Clifford D. Bennett and LifePoint. (1)

10(j) - Copy of Severance Agreement dated as of October 27, 1997
between LifePoint and Linda H. Masterson.

10(k) - Copy of Severance Agreement dated as of October 24, 1997
between LifePoint and William B. Benken.

23(a) - Consent of Independent Auditors.

23(b) - Consent of Independent Certified Public Accountants.

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35
(1) Filed as an exhibit to LifePoint's Annual Report on Form 10-K for the
fiscal year ended March 31, 1996.

(2) Filed as an exhibit to LifePoint's Annual Report on Form 10-K for the
fiscal year ended March 31, 1997.

(3) Filed as an exhibit to LifePoint's Registration Statement on Form SB-2,
File No. 33-61786, and incorporated herein by this reference.

(4) Filed as an exhibit to LifePoint's Quarterly Report on Form 10-K for
the quarter ended September 30, 1997 and incorporated herein by this
reference.

(5) Filed as an exhibit to SAT's Annual on Form 10-K for the fiscal year
ended March 31, 1996 and incorporated herein by this reference.

(6) Filed as an exhibit to SAT's Annual Report on Form 10-K for the fiscal
year ended March 31, 1997 and incorporated herein by this reference.

(7) Filed as an exhibit to SAT's Registration Statement on Form S-8, File
No. 33-89346.

(b) REPORTS ON FORM 8-K

There were no Reports on Form 8-K filed during the quarter ended March
31, 1998.

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36
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) the Securities
Exchange Act of 1934, LifePoint has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on June 4, 1998.

LIFEPOINT, INC.
(Registrant)

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 LifePoint and
in the capacities indicated on June 4, 1998.

Signature Title

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

Position Vacant Principal Financial and Accounting Officer

/s/ Peter S. Gold Director
- -------------------------
Peter S. Gold

/s/ Jonathan J. Pallin Director
- -------------------------
Jonathan J. Pallin

/s/ Paul Sandler Director
- -------------------------
Paul Sandler

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37
REPORT OF INDEPENDENT AUDITORS

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, 1998 and 1997, and
the related statements of operations, stockholders' (deficit) equity, and cash
flows for each of the three years in the period ended March 31, 1998, and for
the period October 8, 1992 (inception) through March 31, 1998. 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 from operations and a net loss of $4,497,000
and $4,850,000, respectively. Our opinion on the statements of operations,
stockholders' (deficit) equity, and cash flows for the period October 8, 1992
(inception) through March 31, 1998, 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits 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, 1998 and 1997,
and the results of its operations and its cash flows for each of the three years
in the period ended March 31, 1998 and the period from October 8, 1992
(inception) through March 31, 1998, in conformity with generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming that
LifePoint, Inc. will continue as a going concern. As more fully described in
Note 2, the Company has incurred recurring operating losses and will require
additional capital to continue the research, development and ultimate
manufacture and marketing of its product and to fund its working capital
requirements for the next 12 months. The aforementioned conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2. The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the outcome of this
uncertainty.

/s/ Ernst & Young LLP

Riverside, California
May 13, 1998

F-1
38
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors and Shareholders
LifePoint, Inc.
(f/k/a U.S. Drug Testing, Inc.)
Rancho Cucamonga, California

We have audited the accompanying statements of operations, stockholders'
(deficit) equity and cash flows for the period October 8, 1992 (inception)
through March 31, 1995 of LifePoint, Inc. (a Development State Enterprise).
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 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 disclosure 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 financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of LifePoint,
Inc. for the period October 8, 1992 (inception) through March 31, 1995, in
conformity with generally accepted accounting principles.

/s/ Wolinetz, Gottlieb & Lafazan P.C.
WOLINETZ, GOTTLIEB & LAFAZAN, P.C.

Rockville Centre, New York
May 26, 1995

F-2
39
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

BALANCE SHEETS

MARCH 31
1998 1997
------------ -----------

ASSETS

Current assets:
Cash and cash equivalents ................................................ $ 597,254 $ -
Prepaid expenses and other current assets ................................ 150,150 49,996
------------ -----------
Total current assets ............................................. 747,404 49,996
Property and equipment, net ................................................ 286,188 505,799
Patents and other assets, net .............................................. 39,692 40,152
------------ -----------
$ 1,073,284 $ 595,947
============ ===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

Current liabilities:
Cash overdraft ........................................................... $ - $ 119,514
Accounts payable ......................................................... 119,577 216,687
Accrued expenses ......................................................... 217,876 16,340
Current portion of capital lease obligations ............................. - 25,494
Note payable - parent .................................................... - 1,668,179
------------ -----------
Total current liabilities ........................................ 337,453 2,046,214
Capital lease obligations .................................................. - 123,419
------------ -----------
337,453 2,169,633
Commitments and contingencies (Note 7)
Stockholders' (deficit) equity:
Common stock, $.001 par value; 50,000,000 shares authorized,
10,497,206 and 5,221,900 shares issued and outstanding at March 31,
1998 and 1997, respectively ............................................ 10,497 5,222
Additional paid-in capital ............................................... 12,398,933 7,542,401
Deficit accumulated in the development stage ............................. (11,673,599) (9,121,309)
------------ -----------
Total stockholders' (deficit) equity ............................ 735,831 (1,573,686)
------------ -----------
$ 1,073,284 $ 595,947
============ ===========

See Accompanying Notes.

F-3
40
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENTS OF OPERATIONS

CUMULATIVE
FROM
OCTOBER 8,
1992
YEARS ENDED MARCH 31 (INCEPTION) TO
--------------------------------------------- MARCH 31
1998 1997 1996 1998
----------- ----------- ----------- ------------

Revenues $ - $ - $ - $ -
Costs and expenses:
Selling, general and administrative
expenses ................................ 672,998 268,668 318,510 2,584,548
Research and development .................. 1,052,233 1,735,449 949,439 5,719,101
Depreciation and amortization ............. 217,034 143,634 143,969 776,692
Interest expense-parent ................... 34,530 23,095 - 95,790
Management fees-parent .................... 409,838 420,000 420,000 2,089,838
Interest expense .......................... 956 5,822 71,882 119,300
----------- ----------- ----------- ------------
Total costs and expenses from operations .. 2,387,589 2,596,668 1,903,800 11,385,269
----------- ----------- ----------- ------------
Loss from operations ........................ (2,387,589) (2,596,668) (1,903,800) (11,385,269)
Other income (expense):
Interest income ........................... 13,895 - 104,787 449,516
Loss on disposal of property and
equipment .............................. (178,596) (33,905) - (212,501)
Gain (loss) on sale of marketable
securities ............................. - - 76,441 (627,512)
Interest income-parent .................... - - 81,767 102,167
----------- ----------- ----------- ------------
Total other income (expense) ......... (164,701) (33,905) 262,995 (288,330)
----------- ----------- ----------- ------------
Net loss .................................... $(2,552,290) $(2,630,573) $(1,640,805) $(11,673,599)
=========== =========== =========== ============
Earnings per common share-basic:
Weighted average common shares
outstanding ............................. 8,032,231 5,221,900 5,221,900
=========== =========== ===========
Net loss per common share-basic ........... $ (.32) $ (.50) $ (.31)
=========== =========== ===========
Earnings per common share, assuming
dilution:
Weighted average common shares
outstanding ............................. 8,863,276 5,221,900 5,221,900
=========== =========== ===========
Net loss per common share,
assuming dilution ....................... $ (.29) $ (.50) $ (.31)
=========== =========== ===========

See Accompanying Notes.

F-4
41
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
FOR THE PERIOD OCTOBER 8, 1992 (INCEPTION) TO MARCH 31, 1998

DEFICIT
ACCUMULATED
ADDITIONAL IN THE
COMMON PAID-IN DEVELOPMENT
STOCK CAPITAL STAGE TOTAL
------- ----------- ------------ -----------

Balance at October 8, 1992 ......................... $ - $ - $ - $ -
Issuance of 3,500,000 shares of common
stock for value of assets transferred from
parent ......................................... 3,500 445,186 - 448,686
Net loss for the period ended March 31, 1993 ..... - - (257,422) (257,422)
------- ----------- ------------ -----------
Balance at April 1, 1993 ........................... 3,500 445,186 (257,422) 191,264
Sale of 1,721,900 shares of common stock in
connection with initial public offering, net
of offering costs of $1,510,663 ............... 1,722 7,097,215 - 7,098,937
Net loss for the year ended March 31, 1994 ....... - - (2,260,292) (2,260,292)
------- ----------- ------------ -----------
Balance at March 31, 1994 .......................... 5,222 7,542,401 (2,517,714) 5,029,909
Net loss for the year ended March 31, 1995 ....... - - (2,332,217) (2,332,217)
------- ----------- ------------ -----------
Balance at March 31, 1995 .......................... 5,222 7,542,401 (4,849,931) 2,697,692
Net loss for the year ended March 31, 1996 ....... - - (1,640,805) (1,640,805)
------- ----------- ------------ -----------
Balance at March 31, 1996 .......................... 5,222 7,542,401 (6,490,736) 1,056,887
Net loss for the year ended March 31, 1997 ....... - - (2,630,573) (2,630,573)
------- ----------- ------------ -----------
Balance at March 31, 1997 .......................... 5,222 7,542,401 (9,121,309) (1,573,686)
Issuance of 2,075,306 shares of common
stock for forgiveness of debt by former
parent ......................................... 2,075 3,424,919 - 3,426,994
Sale of 3,200,000 shares of common stock
through private placement offering, net
of offering costs of $165,187 .................. 3,200 1,431,613 - 1,434,813
Net loss for the year ended March 31, 1998 ......... - - (2,552,290) (2,552,290)
------- ----------- ------------ -----------
Balance at March 31, 1998 .......................... $10,497 $12,398,933 $(11,673,599) $ 735,831
======= =========== ============ ===========

See Accompanying Notes.

F-5
42
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS

CUMULATIVE FROM
YEARS ENDED MARCH 31 OCTOBER 8, 1992
---------------------------------------------- (INCEPTION) TO
1998 1997 1996 MARCH 31, 1998
------------ ------------ ------------ ---------------

OPERATING ACTIVITIES
Net loss .................................... $(2,552,290) $(2,630,573) $(1,640,805) ($11,673,599)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization ............. 217,034 143,634 143,969 776,692
Loss on disposal of property and
equipment ............................... 178,596 33,905 - 237,976
(Gain) loss on marketable securities ...... - - (76,441) 627,512
Amortization of bond discount ............. - - (779) (4,855)
Changes in operating assets and
liabilities:
Change in prepaid expenses and other
current assets ...................... (15,150) 20,203 (55,505) (115,749)
Change in other assets .................. (517) 1,174 2,502 (4,336)
Change in cash overdraft ................ (119,514) 119,514 - -
Change in accounts payable .............. (97,110) 199,761 20,510 173,936
Change in accrued expenses .............. 66,536 (6,580) (49,868) 82,876
----------- ----------- ----------- ------------
Net cash used by operating activities ....... (2,322,415) (2,118,962) (1,656,417) (9,899,547)
INVESTING ACTIVITIES
Sale of marketable securities ............... - - 3,285,625 3,285,625
Purchase of marketable securities ........... - - - (3,908,281)
Purchases of property and equipment ......... (59,380) (52,540) (21,514) (596,777)
Proceeds from sale of property and
equipment, net ............................ 80,828 - - 80,828
Additional patent costs ..................... (1,403) - (15,687) (39,239)
----------- ----------- ----------- ------------
Net cash provided (used) by investing
activities ................................ 20,045 (52,540) 3,248,424 (1,177,844)
FINANCING ACTIVITIES
Sales of common stock ....................... 1,600,000 - - 10,221,226
Expenses of stock offering .................. (165,187) - - (1,675,850)
Payments of loan to parent .................. - - (1,428,538) (1,917,057)
Payment of loan by parent ................... - - 1,634,762 1,634,762
Proceeds of loan payable - parent ........... 1,464,811 1,668,179 - 4,715,067
Payment of loan payable - parent ............ - - - (1,299,782)
Proceeds of note receivable - parent ........ - 282,295 - -
Proceeds of capital leases .................. - - - 101,572
Payments of capital leases .................. - (28,019) (28,960) (105,293)
Proceeds of brokerage loan payable .......... - - 1,000,000 2,674,683
Payments of brokerage loan payable .......... - - (2,569,592) (2,674,683)
----------- ----------- ----------- ------------
Net cash provided (used) by financing
activities ................................ 2,899,624 1,922,455 (1,392,328) 11,674,645
----------- ----------- ----------- ------------
Increase (decrease) in cash and cash
equivalents ............................... 597,254 (249,047) 199,679 597,254
Cash and cash equivalents at beginning
of period ................................... - 249,047 49,368 -
----------- ----------- ----------- ------------
Cash and cash equivalents at end of period .. $ 597,254 $ - $ 249,047 $ 597,254
=========== =========== =========== ============

F-6
43
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS

(CONTINUED)

CUMULATIVE FROM
YEARS ENDED MARCH 31 OCTOBER 8, 1992
---------------------------------------------------------- (INCEPTION) TO
1998 1997 1996 MARCH 31, 1998
---------------- ---------------- ---------------- ----------------

SUPPLEMENTAL DISCLOSURE OF
CASH INFORMATION:
Cash paid for interest .......................... $ 35,486 $ 5,873 $ 71,882 $ 192,046
================ ================ ================ ================
Noncash operating activities:
Value of common stock issued and
additional paid-in capital for
consulting services ......................... $ 150,000 $ - $ - $ 150,000
================ ================ ================ ================
Noncash investing activities:
Value of assets transferred to lessor
in lieu of payment on capital leases ........ $ 71,405 $ - $ - $ 71,405
================ ================ ================ ================
Noncash financing activities:
Value of common stock issued and
additional paid-in capital for the
transfer of assets from Parent .............. $ 344,000 $ - $ - $ 781,060
================ ================ ================ ================
Value of common stock issued to
Parent and additional paid-in capital
for the forgiveness of debt ................. $ 3,160,502 $ - $ - $ 3,160,502
================ ================ ================ ================

See Accompanying Notes.

F-7
44
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BUSINESS

LifePoint, Inc. ("LifePoint"), formerly named U.S. Drug Testing, Inc.,
was incorporated on October 8, 1992 under the laws of the State of Delaware as a
wholly-owned subsidiary of Substance Abuse Technologies, Inc. ("SAT" or
"Parent"), formally named U.S. Alcohol Testing of America, Inc., a
publicly-owned corporation and, as of September 30, 1997, SAT owned 5,575,306
shares of the LifePoint Common Stock, $.001 par value (the "LifePoint Common
Stock"), or 76.4% of the 7,297,206 then outstanding shares of the LifePoint
Common Stock. SAT ceased providing advances to LifePoint in August 1997 as a
result of its inability to secure financing for its own programs. On September
10, 1997, SAT filed a petition under Chapter 11 of the Federal Bankruptcy Code.
LifePoint temporarily suspended its product development activities on September
19, 1997, but did not file for bankruptcy. On October 29, 1997, the controlling
stockholder interest in LifePoint was sold to an unaffiliated party for
$250,000. LifePoint is now completely independent from SAT. LifePoint commenced
activities on January 1, 1993 and is engaged in the design of certain patented
technology known as the "Flow Immunosensor" developed by U.S. Navy Department
scientists for the detection of drugs of abuse.

BASIS OF PRESENTATION

As LifePoint is devoting its efforts to research and the development of
its products and there has been no revenue generated from product sales as yet,
LifePoint's financial statements are presented as statements of a development
stage enterprise.

USE OF ESTIMATES

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

CASH AND CASH EQUIVALENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

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

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost. Depreciation is computed by
the straight-line method over the estimated useful lives of the related assets
that range from 5 to 13 years. Expenditures for maintenance and repairs are
charged to expense as incurred whereas major betterments and renewals are
capitalized. Property and equipment under capital leases are included with
property and equipment and amortization of these assets are included in
depreciation expense.

F-8
45
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PATENTS

The cost of patents is being amortized over its expected useful life of
17 years using the straight-line method. At March 31, 1998 and 1997, accumulated
amortization of patents was approximately $6,300 and $2,600, respectively.

RESEARCH AND DEVELOPMENT COSTS

Research and development costs are expensed as incurred.

ACCOUNTING FOR STOCK BASED COMPENSATION

LifePoint grants stock options for a fixed number of shares to
employees with an exercise price equal to or above the fair value of the shares
at the date of grant. LifePoint accounts for stock option grants in accordance
with APB Opinion No. 25, Accounting for Stock Issued to Employees, and
accordingly, recognizes no compensation expense for employee stock option
grants. (See Note 5.)

NET LOSS PER COMMON SHARE

Loss per common share is based upon the weighted average number of
common shares outstanding during the periods reported. Common stock equivalents
have not been included in this calculation because their inclusion would be
anti-dilutive.

In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings per Share (SFAS
No. 128), which is effective for annual and interim periods ending after
December 15, 1997. SFAS No. 128 replaced the previously required primary and
fully diluted earnings per share (EPS) with basic and diluted EPS. Unlike
primary earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants and convertible securities. Diluted earnings per
share is very similar to the previously required fully diluted earnings per
share. All earnings per share amounts for all periods have been presented and,
where necessary, restated to conform to SFAS No. 128. There were no adjustments
necessary to net loss in calculating the income available to common stockholders
after assumed conversions of stock options and warrants that are considered to
be dilutive. The adjusted weighted average shares to give effect for the assumed
conversion of dilutive stock options and warrants is presented on the Statements
of Operations.

INCOME TAXES

LifePoint accounts for income taxes under SFAS No. 109, Accounting For
Income Taxes. In accordance with SFAS No. 109, deferred tax assets and
liabilities are established for the temporary differences between the financial
reporting basis and the tax basis of the Company's assets and liabilities at
enacted tax rates expected to be in effect when such amounts are realized or
settled.

F-9
46
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998

2. CONTINUING OPERATIONS

LifePoint has incurred recurring operating losses. LifePoint will
require additional capital to continue the research, development and ultimate
manufacture and marketing of its product and to fund its working capital
requirements for the next 12 months.

The aforementioned conditions raise substantial doubt about the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments to reflect the possible future effects, if any, on
the recoverability and classification of assets or the amounts and
classification of liabilities that may result from the outcome of this
uncertainty.

LifePoint continues to pursue parallel paths to secure funding:
strategic partnering, venture capital investors, a private placement, and a
possible public offering. There can be no assurance that any of these additional
sources of financing will be available and, in such event, LifePoint will not be
able to complete its research and development on a timely basis.

3. PROPERTY AND EQUIPMENT

Property and equipment is summarized as follows:

March 31
1998 1997
----------- -----------

Furniture, Fixtures and Equipment $ 287,502 $ 363,229
Test Equipment 425,768 400,798
Leasehold Improvements 209,155 208,822
----------- -----------
922,425 972,849
Less: Accumulated Depreciation 636,237 467,050
----------- -----------
$ 286,188 $ 505,799
=========== ===========

4. NOTE FROM PARENT

To increase working capital, LifePoint converted outstanding
indebtedness to SAT, its former parent, into shares of the LifePoint Common
Stock and additional paid-in capital. Through August 1997, SAT advised LifePoint
that the debt owed was approximately $2,594,000, all of which SAT agreed to
treat as a capital contribution. LifePoint authorized the issuance to SAT of
2,075,306 shares of the LifePoint Common Stock prior to the sale of the
LifePoint Common Stock to an outside third party. It was later determined that
the outstanding debt was approximately $3,427,000 and the remaining indebtedness
of approximately $833,000 was reflected as additional paid-in capital as of
September 30, 1997.

F-10
47
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998

5. STOCKHOLDERS' EQUITY

COMMON STOCK

On May 24, 1997, the Board of Directors of LifePoint authorized the
issuance of additional shares of the LifePoint Common Stock to SAT on the basis
of a share of the LifePoint Common Stock for each $1.25 of indebtedness of
LifePoint to SAT. Based on SAT's advice that the amount of indebtedness owed by
LifePoint to SAT was approximately $2,594,000 all of which SAT agreed to treat
as a capital contribution, LifePoint authorized the issuance to SAT of 2,075,306
shares of the Common Stock. As of September 30, 1997, SAT owned 5,575,306 shares
of the LifePoint Common Stock or 76.4% of the 7,297,206 outstanding shares of
the LifePoint Common Stock. SAT ceased providing advances to LifePoint in August
1997 as a result of its inability to secure financing for its own programs. On
September 10, 1997, SAT filed a petition under Chapter 11 of the Federal
Bankruptcy Code. LifePoint temporarily suspended its product development
activities on September 19, 1997, but did not file for bankruptcy. On October
29, 1997, the controlling stockholder interest in LifePoint was sold to an
unaffiliated party for $250,000. LifePoint is now completely independent from
SAT.

The purchaser of the LifePoint Common Stock also loaned money to
LifePoint to allow LifePoint to recommence product development. During the third
quarter of 1997, LifePoint repaid the loans from the net proceeds of a private
placement pursuant to Regulation D under the Securities Act of 1933, as amended,
which sold 3,200,000 shares of the LifePoint Common Stock at $0.50 per share or
an aggregate purchase price of $1,600,000. The net proceeds of the private
placement totaled approximately $1,434,000 after the payment of capital
formation costs of approximately $166,000, including $160,000 in the form of a
finder's fee to Jonathan J. Pallin, who, on October 31, 1997 was elected
Chairman of the Board and a director of LifePoint. These capital formation costs
have been reflected as a reduction in additional paid-in capital.

STOCK OPTION/STOCK ISSUANCE PLAN

In August 1997, the Board of Directors ratified the 1997 Stock Option
Plan (the "Plan"), which reserves 1,000,000 shares of the LifePoint Common Stock
to be issued under the Plan. Options granted under the Plan may be either
incentive stock options designed to meet the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended, or non-statutory options not intended
to satisfy such requirements. The exercise price per share for incentive stock
options will not be less than 100% of the fair market value per share of the
LifePoint Common Stock on the grant date. For non-statutory options, the
exercise price per share may not be less than 85% of such fair market value. No
granted option will have a maximum term in excess of ten years.

On August 14, 1997, options to purchase an aggregate of 467,500 shares
were granted to all LifePoint employees at an exercise price of $1.25, which
reflected the value of LifePoint Common Stock when trading was suspended on May
12, 1997. A private placement was initiated and completed during November and
December 1997; on December 5, 1997, the Board of Directors re-priced the options
to the then current value of $0.50 per share. Through March 31, 1998, options to
purchase an aggregate of 950,000 shares have been granted to a total of 11
employees:

F-11
48
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998

5. STOCKHOLDERS' EQUITY (CONTINUED)

INCENTIVE STOCK OPTIONS NON-STATUTORY OPTIONS
-------------------------- --------------------------
NUMBER OF PRICE RANGE NUMBER OF PRICE RANGE
SHARES PER SHARE SHARES PER SHARE
--------- ----------- --------- -----------

Outstanding - April 1, 1995 ....... 218,000 $ 7.00 10,000 $ 7.00
Canceled ........................ (66,000) 7.00 (10,000) 7.00
-------- -------
Outstanding - March 31, 1996 ...... 152,000 7.00 - -
Canceled ........................ (152,000) 7.00 - -
-------- -------
Outstanding - March 31, 1997 ...... - - - -
Granted ......................... 950,000 0.50 300,000 1.00-4.00
-------- -------
Outstanding - March 31, 1998 ...... 950,000 0.50 300,000 1.00-4.00
======== =======

WARRANTS

In connection with its initial public offering in October and November
1993, LifePoint granted to the underwriter, for a nominal fee, Common Stock
purchase warrants expiring October 13, 1998 to purchase 150,000 shares of the
LifePoint Common Stock at $7.50 per share. LifePoint granted Common Stock
purchase warrants, expiring on various dates through March 19, 2003, to purchase
1,577,289 shares of the LifePoint Common Stock at $0.50 to $1.00 per share
during fiscal 1998.

WARRANTS
---------------------------
NUMBER OF PRICE RANGE
SHARES PER SHARE
--------- ------------

Outstanding - April 1, 1995 ....... 150,000 $ 7.50
=========
Outstanding - March 31, 1996 ...... 150,000 7.50
=========
Outstanding - March 31, 1997 ...... 150,000 7.50

Granted ........................... 1,577,289 0.50 - 1.00
---------
Outstanding - March 31, 1998 ...... 1,727,289 0.50 - 7.50
=========

F-12
49
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998

5. STOCKHOLDERS' EQUITY (CONTINUED)

A summary of the status of the stock option and warrant grants as of
March 31, 1998, 1997 and 1996, and activities during the years ending on those
dates, is presented below:

1998 1997 1996
-------------------------- --------------------------- ---------------------------
Weighted Weighted Weighted
Average Average Average
Options and Exercise Options and Exercise Options and Exercise
Warrants Price Warrants Price Warrants Price
-------- ----- -------- ----- -------- -----

Outstanding at
beginning of year 150,000 7.50 302,000 7.25 378,000
Granted 2,827,289 0.75 - - - -
Canceled - - (152,000) 7.00 (76,000) 7.00
---------- --------- ---------
Outstanding at end
of year 2,977,289 1.09 150,000 7.50 302,000 7.25
========== ========= =========
Options and warrants
exercisable at year
end 2,027,289 1.36 150,000 7.50 150,000 7.50
========== ========= =========
Weighted-average fair
value of options and
warrants granted
during the year $ 0.53 $ - $ -

The following table summarizes information about stock options and warrants
outstanding as of March 31, 1998:

Options and Warrants Options and Warrants
Outstanding Exercisable
--------------------------------------------------------------------------
Weighted-
Average Weighted- Weighted-
Range of Remaining Options and Average Options and Average
Exercise Prices Life (Years) Warrants Exercise Price Warrants Exercise Price
--------------- ------------ -------- -------------- -------- --------------

$0.50 to $4.00 6.0 2,827,289 $ 0.75 1,877,289 $ 0.87
$4.01 to $7.50 0.5 150,000 $ 7.50 150,000 $ 7.50

The Company applies Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations in
accounting for its plans. Accordingly, no compensation expense has been
recognized for the Company's stock-based compensation plans other than for
compensation and performance-based stock awards. Had compensation cost for the
Company's stock option plan been determined based upon the fair value at the
grant date for the awards under the plan consistent with the methodology
prescribed under Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation ("FAS 123"), using the minimum value option pricing
method due to the lack of trading activity for the Company's stock, there would
have been no effect on the Company's net loss and net loss per share.

F-13
50
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998

For income tax purposes, LifePoint has a net operating loss
carryforward ("NOL") at March 31, 1998 of approximately $10,109,000 expiring in
2008 to 2013 if not offset against future federal taxable income. There may be
certain limitations as to the future annual use of the NOLs due to the fact that
50% or more of the stock of the Company changed ownership during the current
year. In addition, LifePoint has a capital loss carryover of approximately
$625,000 which expires in 2001 if not offset against future capital gains.

Income tax benefit attributable to net loss differed from the amounts
computed by applying the statutory Federal Income tax rate applicable for each
period as a result of the following:

MARCH 31
1998 1997 1996
----------------- ---------------- ----------------

Computed "expected" tax benefit .......................... $ 586,000 $ 869,000 $ 557,000
Decrease in tax benefit resulting from net
operating loss for which no benefit is
currently available .................................... (586,000) (869,000) (557,000)
----------------- ---------------- ----------------
$ - $ - $ -
================= ================ ================

The tax effects of temporary differences that give rise to significant
portions of the net deferred tax asset are presented below:

MARCH 31
1998 1997
--------------- ---------------

Deferred tax assets:
Net operating loss carryforwards ................ $ 3,436,000 $ 2,850,000
Capital loss carryforwards ...................... 213,600 213,600
--------------- ---------------
3,649,600 3,063,600
Less:
Valuation allowance under SFAS 109 .............. 3,649,600 3,063,600
--------------- ---------------
Net deferred tax assets ........................... $ - $ -
=============== ===============

SFAS No. 109 requires a valuation allowance to reduce the deferred tax
assets reported if, based on the weight of the evidence, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
After consideration of all the evidence, both positive and negative, management
has determined that a $3,649,600 valuation allowance at March 31, 1998 is
necessary to reduce the deferred tax assets to the amount that will more likely
than not be realized. The change in the valuation allowance for the current year
is $586,000.

7. COMMITMENTS AND CONTINGENCIES

COMMITMENTS

LifePoint has entered into a lease agreement which commenced October 1,
1997 and terminates on September 30, 1998, with a month-to-month option
thereafter for the office and research facilities in Rancho Cucamonga,
California. In addition to rent, LifePoint will pay for real estate taxes and
other occupancy costs. Rent expense for the fiscal years ended March 31, 1998,
1997 and 1996 was $44,000, $45,000 and $36,000, respectively.

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51
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998

7. COMMITMENTS AND CONTINGENCIES (CONTINUED)

SIGNIFICANT CONTRACTS

Effective January 1, 1993, LifePoint entered into a sub-license
agreement with SAT in which LifePoint sublicensed all of SAT's rights under a
license agreement with the Department of the Navy (the License Agreement).

SAT and the Department of the Navy on January 24, 1992 had entered into
a ten-year agreement granting SAT a partial exclusive patent license to products
for drug testing in the United States and certain foreign countries. In June
1995, SAT's License Agreement with the Department of Navy was renegotiated and
amended to provide for minimum royalties of $100,000 per year which commenced
October 1, 1995 and terminate September 30, 2005. Additional royalties will be
paid pursuant to a schedule based upon sales of products. LifePoint was a
sub-licensee under this agreement from SAT and, accordingly, had an obligation
to SAT for the royalty payments required by the License Agreement. Royalties
expensed under the License Agreement by LifePoint were $40,000, $100,000 and
$50,000 for the years ended March 31, 1998, 1997 and 1996, respectively.

With the sale of SAT's majority owned position in LifePoint, the U.S.
Navy also agreed to transfer its License Agreement with SAT directly to
LifePoint. An amendment dated November 12, 1997 was executed to modify the
up-front $100,000 annual minimum payment to be paid in several payments over the
year; it also included a onetime payment of $10,000 for any outstanding debt due
to the Navy from SAT. LifePoint has assumed all of SAT's rights and undertaken
all of SAT's obligations under the License Agreement. On March 3, 1998, the
notification period in the Federal Register was completed and the Navy agreed in
principle to expand the license to a worldwide, exclusive license for human
diagnostic testing on saliva. The terms of this agreement have not yet been
negotiated. LifePoint is developing its own proprietary "Immunoassay Chemistry"
for these five drugs that will work within the Navy-developed technology.

8. INTERCOMPANY ALLOCATIONS

LifePoint was originally obligated to pay a fixed annual management fee
of $420,000 plus three percent of its gross revenues to SAT. LifePoint paid
$420,000 per year for the years ended March 31, 1997 and 1996. In addition, the
Company was allocated overhead expenses such as rent, utilities, etc. based on
estimated usage. In March of 1997, the Management Agreement was again amended to
provide for a percentage of time and services agreement whereby the costs of
certain SAT employees and facilities were allocated to LifePoint based on a
percentage of usage. As the activity of LifePoint had been increasing, there had
been a tremendous increase in time required by SAT employees and expanded use of
leased space to satisfy LifePoint's needs. The services provided to LifePoint by
SAT pursuant to the Management Agreement included management, administrative,
accounting and other financial services and advice, including, without
limitation, the services then performed by the Treasurer of LifePoint (who was
also the Treasurer of SAT), for which he was not directly compensated by
LifePoint; services relating to LifePoint's financial and banking relationships;
services relating to the preparation of financial statements, budgets, forecasts
and cash flow projections; cash management advice; and other miscellaneous
services and advice. The management fee was discontinued after June 30, 1997
because no services were being provided after that date.

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52
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998

9. LOSS PER SHARE

The following table sets forth the computation of basic and diluted
earnings per share for the years ended March 31:

1998 1997 1996
---- ---- ----

Numerator:

Net loss and numerator for basic and
diluted loss per share ...................... $(2,552,290) $(2,630,573) $(1,640,805)

Denominator:

Denominator for basic loss per share -
weighted-average shares ..................... 8,032,231 5,221,900 5,221,900

Effect of dilutive options .................... 831,045 - -
----------- ----------- -----------
Denominator for diluted loss per share -
adjusted weighted-average shares and
assumed conversions ......................... 8,863,276 5,221,900 5,221,900
=========== =========== ===========

Net loss per common share-basic ............... $ (.32) $ (.50) $ (.31)
=========== =========== ===========

Net loss per common share, assuming
dilution .................................... $ (.29) $ (.50) $ (.31)
=========== =========== ===========

For additional disclosures regarding the outstanding employee stock
options, see Note 5.

The following table discloses the number of vested and outstanding
warrants during fiscal 1998, 1997 and 1996 that were not included in the
computation of diluted earnings per share because the warrants' exercise price
was greater than the fair value of the common shares and, therefore, the effect
would be antidilutive.

1998 1997 1996
---- ---- ----

Number of antidilutive options and warrants ....... 550,000 150,000 302,000

Range of option and warrant prices for the
antidilutive options and warrants ............... $1.00 - $7.50 $7.50 $7.00-$7.50

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53
LIFEPOINT, INC.
ANNUAL REPORT ON FORM 10-K FOR
FISCAL YEAR ENDED MARCH 31, 1998
EXHIBITS FILED WITH REPORT

EXHIBIT PAGE
NUMBER EXHIBIT NUMBER
- ---------- ------------------------------------------------------- ------

3(a)(2) Copy of Amendment to Certificate of Incorporation filed
in Delaware on February 25, 1998. E-2
10(g)(2) Copy of LifePoint's 1997 Stock Option Plan E-3
10(g)(3) Form of Stock Option used under Plan filed as
Exhibit 10(g)(2). E-9
10(j) Copy of Severance Agreement Dated as of
October 27, 1997 between LifePoint and
Linda H. Masterson. E-22
10(k) Copy of Severance Agreement dated as of October 24, 1997
between LifePoint and William B. Benken. E-28
23(a) Consent of Independent Auditors E-34
23(b) Consent of Independent Certified Public Accountants E-35

E-1