UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
Commission File Number: 1-12362
LIFEPOINT, INC.
(Exact name of registrant as specified in its charter)
DELAWARE #33-0539168
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1205 South Dupont Street, Ontario, CA 91761
(Address of Principal Executive Offices) (Zip Code)
(909) 418-3000
Registrant's Telephone Number, Including Area Code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
[x] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the last practicable date.
As of November 7, 2000 - Common Stock, $.001 Par Value, 30,277,391 shares
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
LIFEPOINT, INC.
(a development stage enterprise)
<TABLE>
<CAPTION>
BALANCE SHEET
<S> <C> <C>
September 30 March 31,
2000 2000
(Unaudited)
------------ -----------
ASSETS
Current Assets:
Cash and cash equivalents $ 6,168,374 $ 9,483,624
Prepaid expenses and other
current assets 104,388 102,633
----------- -----------
Total current assets 6,272,762 9,586,257
Property and equipment, net 821,138 401,309
Patents and other assets, net 202,563 93,830
----------- -----------
$ 7,296,463 $10,081,396
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 249,564 $ 274,902
Accrued expenses 317,774 425,481
Capital leases short-term 101,386 101,386
----------- -----------
Total current liabilities 668,724 801,769
Capital leases long-term 61,401 104,955
----------- -----------
731,125 906,724
=========== ===========
Commitments and contingencies (Note 4)
Stockholders' equity:
Common stock, $.001 par value;
75,000,000 shares authorized,
30,046,201 and 29,769,501
issued and outstanding at
September 30, 2000 and
March 31, 2000, respectively 30,205 29,769
Additional paid-in capital 29,708,245 29,145,385
Notes receivable - stockholders (1,171,510) (1,116,875)
Deficit accumulated in the
development stage (22,000,602) (18,883,607)
----------- -----------
Total stockholders' equity 6,566,338 9,174,672
----------- -----------
$ 7,296,463 $10,081,396
=========== ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
LIFEPOINT, INC.
(a development stage enterprise)
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(Unaudited)
<S> <C> <C> <C> <C> <C>
Cumulative From
For the For the October 8, 1992
Three Months Ended Six Months Ended (Inception) to
September 30 September 30 September 30,
2000 1999 2000 1999 2000
Revenues $ - $ - $ - $ - $ -
Costs and Expenses:
General and
Administrative Expenses 525,407 389,212 976,292 689,876 6,561,751
Research and Development 1,184,039 559,707 2,281,463 1,042,893 11,566,834
Depreciation and Amortization 45,000 24,085 90,000 48,171 1,108,772
Interest Expense - Parent - - - - 95,790
Management Fees - Parent - - - - 2,089,838
----------- ----------- ------------ ----------- ------------
Total Costs and Expenses 1,754,446 973,004 3,347,755 1,780,940 21,422,985
----------- ----------- ------------ ----------- ------------
Loss from Operations (1,754,446) ( 973,004) (3,347,755) (1,780,940) (21,422,985)
Other income (expense):
Interest income, net 84,835 44,263 230,760 71,960 723,740
Loss on disposal of
property and
equipment - - - - (212,501)
Loss on sale of
marketable
securities - - - - (627,512)
Interest income - parent - - - - 102,167
----------- ----------- ------------ ----------- ------------
Total other income (expense) 84,835 44,263 230,760 71,960 (14,106)
----------- ----------- ------------ ----------- ------------
Net Loss $(1,669,611) $ (928,741) $(3,116,995) $(1,708,980) $(21,437,091)
=========== =========== ============ =========== ============
Earnings per Common Share:
Weighted Average Common
Shares Outstanding 30,137,846 15,003,145 30,010,295 14,483,992
=========== =========== ============ ===========
Net Loss Per Common Share $ (0.06) $ (0.06) $ (0.10) $ (0.12)
=========== =========== ============ ===========
Earnings per Common
Share, Assuming Dilution:
Weighted Average Common
Shares Outstanding 30,137,846 15,003,145 30,010,295 14,483,992
=========== =========== ============ ===========
Net Loss Per Common
Share, Assuming
Dilution $ (0.06) $ (0.06) $ (0.10) $ (0.12)
=========== =========== ============ ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
LIFEPOINT, INC.
(a development stage enterprise)
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
(Unaudited)
<S> <C> <C> <C>
Cumulative From
For the Six Months Ended October 8, 1992
September 30 (Inception) to
2000 1999 Sept. 30, 2000
------------ ----------- --------------
Cash flow from operating
activities:
Net loss $(3,116,995) $(1,708,980) $(21,437,091)
Adjustments to reconcile
net loss to net cash
used by operating
activities:
Depreciation and
amortization 90,000 46,470 1,108,772
Consulting expense - - 361,160
Loss on disposal of
property and
equipment - - 237,976
Loss on marketable
securities - - 627,512
Amortization of
bond discount - - (4,855)
Changes in operating assets
and liabilities:
Change in prepaid
expenses and other
current assets (1,755) (14,500) 20,013
Change in other assets (106,842) 11,429 (139,863)
Change in accounts payable (25,338) (48,121) 303,923
Change in accrued expenses (16,727) 19,793 (107,625)
----------- ----------- -----------
Net cash used by
operating activities (3,177,657) (1,693,909) (19,030,078)
----------- ----------- -----------
Cash flow from investing
activities:
Sale of marketable
securities - - 3,285,625
Purchases of marketable
securities - - (3,908,281)
Purchases of property
and equipment (509,829) (91,099) (1,204,217)
Proceeds from sale of
property and equipment - - 80,828
Patent costs (1,891) - (72,708)
----------- ----------- -----------
Cash used by investing
activities (511,720) (91,099) (1,818,753)
----------- ----------- -----------
Cash flow from financing
activities:
Sales of common stock - 63,000 20,446,226
Expenses of common
stock offering - - (2,286,292)
Sales of preferred
stock - - 6,000,000
Expenses of preferred
stock offering - (18,374) (738,451)
Exercise of stock options 47,341 1,875 82,691
Exercise of warrants 370,340 - 474,440
Advances on note
receivable - Parent - - (1,917,057)
Collection on note
receivable - Parent - - 1,634,762
Proceeds of loan
payable - Parent - - 4,715,067
Payment of loan
payable - Parent - - (1,299,782)
Proceeds of capital
leases - - 101,572
Payments of capital
leases (43,554) - (195,971)
Proceeds of brokerage
loan payable - - 2,674,683
Payments of brokerage
loan payable - - (2,674,683)
----------- ----------- -----------
Net cash provided by
financing activities 374,127 46,501 27,017,205
----------- ----------- -----------
Increase (decrease) in cash
and cash equivalents (3,315,250) (1,738,507) 6,168,374
Cash and cash equivalents
- beginning of period 9,483,624 4,796,432 -
----------- ----------- -----------
Cash and cash equivalents
- end of period $ 6,168,374 $ 3,057,925 $ 6,168,374
=========== =========== ===========
Supplemental disclosure of cash information:
Cash paid for interest $ 8,172 $ 2,546 $ 235,904
=========== =========== ===========
Non-cash operating activities:
Value of common stock for
consulting services $ - $ - $ 203,340
=========== =========== ===========
Non-cash investing activities:
Value of assets transferred
to lessor in lieu of
payment on capital leases $ - $ - $ 71,405
=========== =========== ===========
Non-cash financing activities:
Value of common stock issued
and additional paid-in capital
for the transfer of assets
from Parent $ - $ - $ 781,060
=========== =========== ===========
Value of common stock issued
to Parent and additional
paid-in capital for the
forgiveness of debt $ - $ - $ 3,160,502
=========== =========== ===========
Value of common stock
warrants issued for
consulting services $ - $ - $ 187,500
=========== =========== ===========
Value of common stock
issued and additional
paid-in capital issued
as dividends on preferred
stock conversions $ - $ 33,707 $ 552,110
=========== =========== ===========
Value of common stock
warrants issued for
preferred stock offering $ - $ - $ 133,559
=========== =========== ===========
Value of preferred stock
converted to common stock $ - $ 2,207 $ 12,000
=========== =========== ===========
Value of common stock
warrants converted to
common stock in exchange
for note $ - $ - $ 1,060,000
=========== =========== ===========
Value of common stock
options converted to
common stock in exchange
for note $ 54,635 $ - $ 111,510
=========== =========== ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
LIFEPOINT, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited)
NOTE 1 - Basis of Presentation
In the opinion of LifePoint, Inc. (the "Company" or "LifePoint"), the
accompanying unaudited financial statements reflect all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows for the periods
presented. Results of operations for interim periods are not necessarily
indicative of the results of operations for a full year due to external
factors that are beyond the control of the Company. This Report should be
read in conjunction with the Company's Annual Report on Form 10-KSB for the
fiscal year ended March 31, 2000 (the "Annual Report").
NOTE 2. - Continuing Operations and Liquidity
During the period from October 8, 1992 (inception) through September 30,
2000, the Company has realized no revenues and has accumulated losses of
$21,437,091. Recovery of the Company's assets is dependent upon future
events, including commercialization of the Company's product and ultimately
achieving profitable operations. The outcome of these events is
indeterminable.
On July 14, 1999 the Company entered into an equipment lease financing
agreement for $300,000 with FirstCorp of Portland, Oregon which is discussed
further in Note 4 under the caption "Lease Commitments."
On August 28, 2000 the Company entered into a lease financing agreement with
Finova Capital Corporation ("Finova") of Scottsdale, Arizona whereby Finova
agreed to provide LifePoint with a $3,000,000 lease line for the purchase of
equipment including up to $500,000 of leasehold improvements. The master
lease agreement provides for individual closing schedules of not less than
$250,000 (up to three schedules may have an aggregate closing cost of not
less than $100,000). Each closing schedule will be financed for 36 months
at a rate equal to the current three-year U.S. Treasury Notes, but not less
than 6.79%. At the end of each schedule, LifePoint will have the option to
purchase all (but not less than all) of the equipment at 15% of the original
equipment cost. The first schedule was submitted to Finova in October 2000
and a second schedule will be submitted in November which will result in
approximately $700,000 increase in cash as reimbursement for assets purchased
in the first and second quarters. Included in cash and cash equivalents is
$900,000 of restricted cash the Company is required to maintain in accordance
with the master lease agreement.
The Company successfully completed a private placement of units, each
consisting of shares of the Company's Common Stock, $.001 par value (the
"Common Stock"), and a Common Stock purchase warrant (the "Investor Warrant"),
in the fiscal year ended March 31, 2000, resulting in net proceeds of
$8,577,000. As a result, management believes that the Company has sufficient
cash on hand at September 30, 2000 to finish the product commercialization,
build a manufacturing facility, generate field trials and pilot studies and
initiate marketing. Management estimates that it will take $5.8 million to
reach the market post-prototype (which was completed on May 15, 2000.)
NOTE 3 - Property and Equipment
Property and equipment is summarized as follows:
September 30, March 31,
2000 2000
Furniture and Fixtures $ 799,714 $ 601,743
Test Equipment 425,768 425,768
Leasehold Improvements 557,849 245,991
---------- ----------
1,783,331 1,273,502
Less: Accumulated
Depreciation 962,193 872,193
---------- ----------
$ 821,138 $ 401,309
========== ==========
LIFEPOINT, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2000
(Unaudited)
(Continued)
NOTE 4 - Commitments and Contingencies
Lease Commitments
LifePoint has entered into a lease agreement commencing October 1, 1997 and,
as extended by an amendment, terminating on March 31, 2002, for the research
facilities in Rancho Cucamonga, California. In addition to rent of $72,000
per year for the fiscal years ending March 31, 2000 through March 31, 2002,
LifePoint will pay for real estate taxes and other occupancy costs.
On April 26, 2000, the Company entered into a lease agreement for
administrative offices and a manufacturing facility commencing May 1, 2000
and terminating on July 31, 2005. In addition to rent of $226,000 per year,
LifePoint will pay for real estate taxes and other occupancy costs. The
Company may elect to terminate the lease at the end of four years and has two
two-year renewal options. The lease also allows for rent abatement in three
of the first 12 months as a tenant improvement allowance in addition to the
$30,000 paid by the lessor.
The Company leases certain equipment under noncancelable lease arrangements.
These operating leases expire in various dates through 2002 and may be renewed
for up to 12 months. Furniture, fixtures and equipment includes $253,466 of
assets acquired under capital leases as of September 30, 2000.
Significant Contracts
Substance Abuse Technologies, Inc. ("SAT"), the former parent of the Company,
and the United States Navy (the "USN") 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. This
license was transferred from SAT to the Company effective with the sale of
SAT's majority ownership of the Common Stock in October 1997.
In April 1999, the Company and the USN completed negotiations for an
expansion of the License Agreement. The license expires with the expiration
of the patent in February 2010. The new terms expand the field-of-use from
drugs of abuse and anabolic steroids on urine samples to include all possible
diagnostic uses for saliva in addition to the urine application. The royalty
rate has been reduced to 3% on the technology-related portion of the
disposable cassette sales and 1% on instrument sales from the previous 10%
on all the Company's product sales. The minimum royalty payment has been
reduced to $50,000 in 2001 (anticipated first year of product sales) and
$100,000 a year thereafter versus the previous $100,000 per year. The Company
is further developing the USN-developed technology for application in its own
proprietary test system.
NOTE 5 - Stockholders' Equity
During the quarter ended September 30, 2000, stock options were granted
pursuant to the LifePoint, Inc. 1997 Stock Option Plan (the "1997 Option
Plan") to seven employees to purchase 114,750 shares of the Common Stock at
$4.81 per share. During the quarter ended September 30, 2000, the Company
formed a Substance Abuse Advisory Board ("SAAB") consisting of distinguished
scientists, medical experts, and well known advocates for the fight against
substance abuse in the United States. Each of the six SAAB members were
granted an option pursuant to the LifePoint, Inc. 2000 Stock Option Plan (the
"2000 Option Plan") to purchase 10,000 shares at $4.81, and similar options
will be granted to any future member of the SAAB. As of September 30, 2000
there were outstanding, under the stock option plans , stock options to
purchase an aggregate of 1,693,567 shares held by a total of 34 employees, 2
Scientific Advisory Board members, 6 SAAB members and 4 directors.
As indicated in Item 4 of Part II of this Report, on August 25,2000, the
stockholders approved the 2000 Option Plan which would permit the granting of
options to purchase an aggregate of 2,000,000 shares of the Common Stock. As
of September 30, 2000, options to purchase 60,000 shares of Common Stock had
been granted.
In addition, at the Annual Meeting of Stockholders on August 25th, the
stockholders approved an increase in the authorized shares of the Common
Stock from 50,000,000 to 75,000,000.
During the quarter ended September 30, 2000, the Company issued a warrant to
Finova Capital Corp. to purchase 44,025 shares of Common Stock at $4.77 in
connection with the equipment leasing arrangement described in Note 2 under
the caption "Continuing Operations and Liquidity". As of September 30, 2000,
there were warrants outstanding to purchase 9,272,088 shares of the Company's
stock, including the Investor Warrants issued as part of the March 2000 unit
offering which raised $9.2 million gross proceeds for the Company.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
General
LifePoint, Inc. is a late development stage company designing a unique
product that will provide immediate, on-site diagnostic results without
the need to take blood or urine. LifePoint is currently focused on the
commercialization of the flow immunosensor technology licensed from the USN.
This patented technology, when used in conjunction with LifePoint's own
patented and proprietary technologies on collecting and processing saliva as
a non-invasive test specimen, has allowed LifePoint to develop a broadly
applicable non-invasive, rapid, on-site diagnostic test system. The
LifePoint(tm) Test System could be used for rapid diagnostic testing, for
screening and therapeutic drug monitoring in non-medical environments such as
the workplace, home health care, ambulances, pharmacies and law enforcement.
The first product under development is for the simultaneous detection of drugs
of abuse and alcohol. The market potential for this product is estimated to be
over $1.5 billion by 2002. Marketing to the non-medical markets is anticipated
to begin not earlier than the first quarter 2001.
Liquidity and Capital Resources.
The Company is a development stage enterprise with no earnings history. Since
its inception, the Company has devoted substantially all of its resources to
research and development and has experienced an ongoing deficiency in working
capital. The Company does not anticipate generating revenue from product sales
until late the first quarter or early the second quarter 2001. There can be
no assurance as to when the Company will achieve profitability, if at all.
Because the Company has not produced any revenues as a result of its being a
development stage company, it has been dependent, since gaining its
independence from SAT in October 1997, on the net proceeds derived from four
private placements pursuant to Regulation D under the Securities Act of 1933,
as amended, to fund its operations. The succeeding three paragraphs describe
the private placements in Fiscal 1999 and 2000.
On July 23 and August 26, 1998, the Company closed as to the sales of an
aggregate of 1,025,000 shares of the Common Stock at $1.00 per share and the
Company realized $1,025,000 in gross proceeds. There were no underwriting
discounts or commissions paid related to the private placement. However, a
Warrant expiring December 13, 2003 to purchase 50,000 shares of the Common
Stock at $1.08 was granted to an unaffiliated person for his assistance in
completing $500,000 of this offering.
On January 21, 1999, the Company closed as to the sale of 600,000 shares of
its Series A Preferred Stock, $.001 par value, at $10.00 per share and the
Company realized $6,000,000 in gross proceeds. Finders' fees were paid to
various consultants and bankers for their assistance in helping the Company
to complete this private placement consisting of an aggregate of $592,078 in
cash fees, including $420,451 to a then director of the Company, and Warrants
expiring January 20, 2004 to purchase an aggregate of 404,725 shares of the
Common Stock (net of a cancellation) at $2.41 per share.
On February 29 and March 14, 2000, the Company closed as to the sales at
$5,000 per unit of an aggregate of 1,840 units, each unit consisting of 2,500
shares of the Common Stock and an Investor Warrant expiring February 28 or
March 13, 2005 to purchase 2,500 shares of the Common Stock at $3.00 per share.
The Investor Warrants first became exercisable on September 14, 2000 and the
shares included in the units are restricted securities for at least one year.
The Company realized $9,200,000 in gross proceeds. Finders' fees were paid to
various consultants and bankers for their assistance in helping the Company to
complete this private placement consisting of an aggregate of $604,706 in cash
fees and Finder's Warrants expiring March 13, 2005 to purchase an aggregate of
273,075 shares of the Common Stock at $3.00 per share.
Management believes that, with the net proceeds from the private placement
described in the preceding paragraph, the Company has sufficient funds to
finish the product development, build a manufacturing facility, generate
field trials and pilot studies and initiate marketing. Management estimates
that it will take $5.8 million after prototype (which was completed May 15,
2000) to reach the market with its product. The proceeds from the last
private placement should provide working capital post-revenue. There can be
no assurance that management's estimate as to costs and timing will be correct.
Any delays may further increase the Company's costs and, accordingly, the
requirement for additional financing.
On October 11, 2000, the Company made an offer to the holders of the Investor
Warrants, for a period beginning October 16, 2000 and ending December 19, 2000,
that the holder of an Investor Warrant may exercise at a 20% discount, or
$2.40 per share ("the Offer"). Based upon meetings with medium to large
institutional investors and top-tier investment bankers, management believes
that acceptance of the Offer by a significant number of holders would enable
the Company to meet several objectives. First, it would increase the number
of shares outstanding and decrease the number of warrants outstanding. This
provides a material reduction in the ratio between the number of shares
outstanding and the number of shares on a fully-diluted basis and
significantly reduces the perception of certain institutional investors and
investment bankers of a market "overhang".
Additionally, it allows LifePoint to raise funds without further dilution to
the current stockholders on a fully-diluted basis. If the Company sought to
raise funds either through another private placement or a public offering, it
would have to issue additional shares of Common Stock. There are shares
reserved for the Investor Warrants, the two stock option plans and other
outstanding Common Stock purchase warrants and, accordingly, these reserved
shares are included in the calculation of ownership on a fully diluted basis.
If all of the shares currently reserved as of September 30, 2000 were issued,
there would be 43,192,138 shares outstanding.
Another benefit of this Offer is that the Company shall not have to pay fees
to placement agents, underwriters or finders, as in a private placement or
public offering. The gross proceeds from the warrant exercises will be
substantially available to accomplish the Company's purposes for an offering.
LifePoint has several reasons to seek additional funds at the current time:
* LifePoint had previously announced that the recent March 2000 private
placement generated enough funds to complete development of its product
and then bring the product to market. The Company is currently on track
to meet that goal. However, additional funds are needed (as has been
previously announced) to bridge the gap between the time the first product
is brought to market and the time the resultant revenues from sales of such
product result in profitability. Management believes that some or all of
this gap will be filled with up-front marketing fees from potential
strategic partners. Although the terms of one partnering agreement have been
agreed to and approved by the Boards of Directors and is anticipated to
produce $5 million in fees over 2.5 years, we are still in discussion with
another potential partner but cannot count on this as a source of funds
in the immediate future.
* LifePoint will need to maintain its stockholders' equity at a level
sufficient to meet the maintenance requirements of the American Stock
Exchange LLC for continued listing of its Common Stock during the next
year. As previously reported, the Company anticipates the continuance of
operational losses for at least some period in 2001, thereby reducing
stockholder equity.
* The Company desires to increase its available cash reserves to meet any
future cash requirements whether or not currently anticipated. LifePoint
would like to keep a minimum of $5 million in cash reserves. Management
believes that the stock market is "rewarding" companies that have adequate
cash reserves on hand.
The Company continues to pursue parallel paths to secure additional funding,
including strategic partnering and capital leasing companies, to help offset
the cash required to establish a manufacturing facility. There can be no
assurance that any of these additional sources of funding will be available
and, in such event, the Company may not be able to complete the
commercialization and marketing of its product on a timely basis.
The Company continues to pursue strategic partnering through the Venture
Merchant Group. Several large corporations have expressed initial interest
in partnering with the Company. The terms of one partnering agreement have
been agreed to and approved by the Boards of Directors. Management continues
to be in discussions with other potential partners and anticipates completion
of another partnering agreement prior to fiscal year end.
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. However, to date the Company has generally not
attracted large institutional investors, although lately there has been an
increase in such interest and, unless this interest in the Common Stock
further develops, this fact may adversely affect any future public offering.
In addition, there can be no assurance that stock market conditions later in
2000 or early in 2001 would be receptive to a public offering by the Company,
especially in view of the volatility in the market generally in 2000. In
addition, competitive conditions in the substance abuse testing industry at
that time may make the Company less attractive to potential public investors.
Having successfully consummated four private placements pursuant to Regulation
D under the Securities Act since November 1997, the Company may seek to raise
additional financing through this method. As with a public offering, there
can be no assurance that potential investors would be receptive to a private
placement by the Company when the Company seeks to sell, either because of
general stock market conditions, conditions generally in the substance abuse
testing industry or conditions relating specifically to the Company.
There can be no assurance that the Company will be successful in securing
additional financing, whether through the Investor Warrant Offer, a strategic
partner, a public offering or a private placement.
If all of the Warrants to purchase an aggregate of 9,272,088 shares of the
Common Stock which were outstanding on September 30, 2000 were subsequently
exercised, the Company would realize $21,008,176 in gross proceeds. If all
of the Options pursuant to the 1997 and 2000 Stock Option Plans to purchase
an aggregate of 1,693,567 shares outstanding on September 30, 2000 were
subsequently exercised, the Company would realize $3,793,802 in gross
proceeds. However, there can be no certainty as to when or if any of these
securities will be exercised, especially as to the Options and certain of the
Warrants that were not all currently exercisable as of September 30, 2000.
Accordingly, management believes that the Company cannot rely on these
exercises as a source of financing.
Results of Operations
Three Months Ended September 30, 2000 vs. September 30, 1999
During the quarter ended September 30, 2000, the Company spent $1,184,039 on
research and development and an additional $525,407 on general and
administrative expenses, as compared with $559,707 and $389,212, respectively,
during the quarter ended September 30, 1999. The increase of $624,332, or
112%, in research and development expenditures in the 2000 period is directly
attributable to finalizing the prototype of the LifePoint(tm) Test System on
May 15, 2000 and beginning the commercialization phase of the product.
Staffing in research and development, including pilot manufacturing, have
increased 50% from the quarter ended September 30, 1999. In the quarter ended
September 30, 2000, the Company has also employed the services of several
outside consultants for final product design and to assist in the build out
of the manufacturing facility. General and administrative expenses increased
$136,195, or 35%, as a result of accelerating pre-marketing and lobbying
efforts through attendance at tradeshows, presentation of technical papers
and working with various governmental agencies to set standards for the
approval of a saliva-based evidential instrument.
Six Months Ended September 30, 2000 vs. September 30, 1999
During the six-month period ended September 30, 2000, the Company spent
$2,281,463 on research and development and an additional $976,292 on general
and administrative expenses, as compared with $1,042,893 and $689,876,
respectively, during the quarter ended September 30, 1999. The increase of
$1,238,570, or 119%, in research and development expenditures in the 2000
period is directly attributable to finalizing the prototype of the
LifePoint(tm) Test System on May 15, 2000 and beginning the commercialization
phase of the product. Staffing in research and development, including pilot
manufacturing, has doubled from the six-month period ended September 30, 1999.
In the quarter ended September 30, 2000, the Company has also employed the
services of several outside consultants for final product design and to
assist in the build out of the manufacturing facility. General and
administrative expenses increased $286,416, or 42%, as a result of increased
staffing and accelerating pre-marketing and lobbying efforts.
From inception on October 8, 1992 to September 30, 2000, the Company has
spent $11,566,834 on research and development and $6,561,751 on general and
administrative expenses. Management fees paid to SAT aggregated an additional
$2,089,838 during such period.
Forward-Looking Statements
This Management's Discussion and Analysis of Financial Condition and Results
of Operations contains forward-looking statements which involve risk and
uncertainties. Such forward-looking statements reflect management's current
views that the necessary financing will be available, when needed, to complete
the research and development program, that the product will be commercialized
at the contemplated cost and within the projected timetable, that, during the
interim period before the Company begins marketing, competitors will not
begin to market a competitive saliva-based testing product and that the
other risks described in the Annual Report and other filings by the Company
with the Securities and Exchange Commission will not materially adversely
affect the Company's operations. Because there can be no assurance that
management's expectations will be realized, actual results may differ.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders was held on August 25, 2000.
(b) At the Meeting, Peter S. Gold was elected as a Class A director
to serve until the Annual Meeting of Stockholders in 2001, Paul
Sandler and Stanley Yakatan were elected as Class B directors to serve
until the Annual Meeting of Stockholders in 2002, and Charles J.
Casamento and Linda H. Masterson, were elected as Class C directors to
serve until the Annual Meeting of Stockholders in 2003. Each director
serves until his or her successor is duly elected and qualified.
(c) At the Meeting, votes were taken as to five proposals as follows:
(1) On the proposal to approve an Amendment to the Company's Restated
Certificate of Incorporation to classify the directors into three
classes and to provide that the number of directors shall not be less
than three nor more than nine:
Broker
For Against Withheld Non-Votes
16,248,857 77,652 43,263 9,024,717
(2) On the proposal to elect five directors:
Broker
Nominee For Withheld Non-Votes
Peter S. Gold 25,312,927 6,562
Paul Sandler 25,312,927 6,562
Stanley Yakatan 25,312,927 6,562
Charles Casamento 25,312,927 6,562
Linda Masterson 25,312,927 6,562
(3) On the proposal to ratify the appointment of Ernst & Young, LLP
as independent auditors for the fiscal year ending March 31, 2001:
Broker
For Against Withheld Non-Votes
24,511,435 71,046 37,008
(4) On the proposal to approve an Amendment to the Company's Restated
Certificate of Incorporation to increase the authorized number of
shares of the Common Stock, $.001 par value, from 50,000,000 shares to
75,000,000 shares:
Broker
For Against Withheld Non-Votes
24,043,303 555,233 95,953
(5) On the proposal to adopt and approve the 2000 Option Plan:
Broker
For Against Withheld Non-Votes
16,003,571 168,968 122,233 9,024,717
(d) Not Applicable.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Number Exhibit Title
3(a)(5) Copy of Certificate of Amendment to the Certificate
of Incorporation as filed in Delaware on September 1,
2000
3(a)(6) Copy of Restated Certificate of Incorporation as filed
in Delaware on September 1, 2000
3(b)(2) Copy of By-Laws of LifePoint as effective on
September 1, 2000 superseding those filed as Exhibit
3(b) to LifePoint's Annual Report on Form 10-K for
the fiscal year ended March 31, 1999.
10(o) Lease Agreement dated August 28, 2000 between
LifePoint and Finova Capital Corporation
(b) Reports on Form 8-K
None
SIGNATURES
Puruant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned therein to be duly authorized.
LIFEPOINT, INC.
(Registrant)
Date: November 15, 2000 By /s/ Michele A. Clark
Michele A. Clark
Controller and Chief
Accounting Officer
