EXHIBIT 99.1
[LifePoint logo]
CORPORATE HEADQUARTERS
1205 South Dupont Street
Ontario, CA 91761
Tel: 909-418-3000
Fax: 909-418-3003
June 29,2004,
Dear Stockholders and Friends of LifePoint:
I am pleased to report that LifePoint has continued to make progress
against the re-start plans outlined to you in our letter to you in August 2003.
We have previously completed the first step in our three-pronged strategy, which
was to put the appropriate management team in place to help LifePoint execute
its plans. Now, with the senior and key management team in place, and with the
support of our strengthened board of directors, we are confident that we will be
able to scale the manufacturing and to implement our sales efforts in the field.
Our second goal, to successfully re-launch the IMPACT(R) Test System with an
enhanced, updated product, has also now been completed. We are now focusing on
our final objective, to implement a definitive, targeted plan to facilitate
rapid market acceptance of the product. Since our last letter to you on April
19, 2004, LifePoint has accomplished the following:
o The Barcelona Transit Authority has selected the LifePoint IMPACT Test
System to routinely drug-test all drivers in the Spanish state of Catalonia
who are involved in serious accidents or driving under the influence;
IMPACT was chosen for it high level of accuracy and reliability as
consistently demonstrated in product trials.
o Obtained additional cash through warrant exercises from previous
financings.
o Continued to expand manufacturing capability for both instruments and
disposables.
SALES & MARKETING
The most important news to report is that the IMPACT Test System's
redeployment has been a success and customers are enthusiastic about using the
product and the results they are getting. In fact, several customers have
already referred additional customers to LifePoint because of their positive
experience with our product.
As outlined above, we have already completed shipping our enhanced IMPACT
Test System to all current law enforcement and industrial workplace customers
who are confidently using the product again. Additionally, we have completed the
initial shipments to our current international distributors and have had
follow-up meetings with all of them; we are pleased to report that they have all
re-initiated their sales and marketing efforts. We still have not completed all
of the initial stocking orders for the international distributors since the
contract for several large European countries are still being negotiated, which
we anticipate may take several months longer. These warranty replacement
shipments will not generate revenues since these customers and distributors had
already paid for their product.
Our revised business plan now focuses on the two major markets that have
large market demand and where we believe we can penetrate the market most
quickly - the international law enforcement market and the U.S. industrial
market.
On the international law enforcement front, in conjunction with our
distributors, we have studies completed, planned or underway in: Australia, Hong
Kong, China, Germany Spain, the UK, Austria and Switzerland. The first study in
Barcelona, Spain, has been successfully completed, and has led to the selection
of the IMPACT Test System for routine drug testing of drivers involved in
serious accidents or cited for reckless driving for the entire Catalonia region.
In this case, our product was chosen for its high level of accuracy and
reliability as it consistently demonstrated in product trials. The Catalonia
government is now deciding how to implement the testing program.
Concurrently with getting our international distribution back on-line, we
have initiated our efforts into our other significant sales opportunity, the
industrial workplace. We have now started to implement our plans to try to
establish industrial sites that will serve as sources for third-party
publications and also be sites that provide geographically and market diverse
customer referrals. With this base of referral sites, we plan to then be able to
leverage those customers with a geographically focused market launch into
employers with a small direct sales force. We already shipped product to five
companies and expect to start the remainder of the initial target customers
using the product during the next few months. As a testament to the product's
strong performance and acceptance in the marketplace, one of our early customers
who has implemented our product at one site, is now looking to expand the use of
the IMPACT Test System to additional sites. We have recently hired a key
accounts sales manager to take advantage of this.
Although we are not immediately focusing on the US law enforcement market,
we have plans to establish geographically diverse law enforcement sites, split
between law enforcement and drug court sites. As in the industrial market, we
expect that these sites will become the basis of customer referrals and third
party publications when we finally initiate our launch into this market. We
already have product being tested or routinely used in six law enforcement
agencies and five drug courts and expect to start the remainder of the initial
target customers using the product during the next few months.
MANUFACTURING & PRODUCT SUPPORT
Our goal to successfully re-launch the IMPACT(R) Test System with an
enhanced, updated product, was met; we re-launched in mid-February 2004.
We have continued to make progress on our production scale-up efforts. At
the end of March, we had reached a production level of 3-4 instruments per week,
or 12-16 instruments per month, and approximately 600 Saliva Test Modules
(STM's) per week, or 2,400 per month. Although we experienced a part
interruption in components at one point during the quarter, the issue has been
resolved and we have now reached a routine production rate of 5-6 instruments
and 800 - 1,000 STM's per week. Although we will continue to grow our capacity
at an aggressive pace, we expect planned demand to exceed output for the next
several months. In addition to the continued instrument production scale-up, we
have also completed the addition of a 12V option for customers using the
instrument in DUI vans.
REGULATORY / QUALITY ASSURANCE
We are still awaiting clearance from FDA for our product for use in the
medical markets in the United States. We completed our first response to the FDA
in December 2003. In April, we received a letter from the FDA requesting that we
provide additional information, which we provided at the end of April. Although
we believe we have consistently provided them with sufficient information in
response to their follow-ups, the FDA indicated in June several issues that
related only to the industrial workplace and one that related to our medical
submission. Additionally, since the FDA allotted time has now elapsed, the FDA
requested that we resubmit our application. Since the FDA has only just closed
its comment period on the proposed draft guidelines for FDA oversight in the
industrial market, we believe the process involving the industrial workplace is
still in transition at the FDA. Therefore, we decided to resubmit to the FDA
with two separate applications, one for medical and one for industrial uses, so
as to not have our medical clearance delayed while the FDA works out the details
on the industrial side. Since there was only one minor issue on the medical
submission, we expect that clearance to occur quickly. The industrial
marketplace is too new to speculate on how the FDA will respond or how long it
will take for a clearance in that market.
FINANCE
As mentioned above, during February the Company started to ship replacement
instruments and disposable STM's to current customers and distributors. The
Company decided to provide all previous customers and distributors with
replacement enhanced instruments at no charge to thank them for their patience
and perseverance during our difficult situation. In certain instances, we also
provided free replacement disposables at no charge for the same reason. Since
our revenue recognition policy requires receipt of cash, there were no revenues
in the quarter ended March 31, 2004, and since we only started to ship to new
customers at the end of April, we do not expect any significant revenues in the
quarter ending June 30, 2004.
Our cash position of approximately $3.7 million at the end of the year is
ahead of our internal plan. We have been able to maintain our cash position
partly due in part to early exercise of certain warrants and also due to our
efforts to prudently manage cash. Fortunately, our inventory level of components
has not required any significant cash outlays, and should continue in that
fashion for a period of time.
With the senior and key management team in place, the re-launch of an
enhanced product, a focused business plan, and with the support of our board of
directors, we are confident that we will be able to scale up our manufacturing
and implement our sales efforts in the field. LifePoint management looks forward
to an exciting year and we remain very positive about our progress and prospects
for the future here at LifePoint.
We will continue to do our best to communicate developments at LifePoint
through press releases, stockholder updates, conference presentations and our
web site. If you have any questions going forward, or would like more
information about LifePoint, please feel free to contact us. We thank you for
your commitment to and continued interest in LifePoint.
Sincerely,
/s/ Linda H. Masterson
Linda H. Masterson
Chief Executive Officer and President